Tennessee anticipating re-domestication activity as tax deadline approaches

Tennessee headquartered companies have until the end of the year to move an out-of-state captive home in order to take advantage of the state’s tax forgiveness law on self-procurement tax.

In 2016, Tennessee Governor Bill Haslam signed Senate Bill 2402 into law, which as well as providing a one-year premium tax holiday, stated any unpaid self-procurement taxes related to an out-of-state captive would be forgiven if it re-domesticated on or before 31 December 2018.

Speaking to Captive Review at the CICA International Conference, Ben Whitehouse, supervising attorney and assistant general counsel within Tennessee’s captive insurance section, said they were expecting to see more activity before the deadline.

“The deadline for companies to take advantage of that provision is 31 December 2018,” he said. “In practice, that means companies will have to move their captive home before the end of this year to get that forgiveness on previous self-procurement taxes owed.

“We have already had significant re-domestications resulting from that and we expect to receive more before that deadline.”

There was no legislative update in Tennessee this year, with Whitehouse and Michael Corbett, director of the State’s captive insurance section, content with the statute as it stands.

“We have taken a look at agency captives and feel that our statute is already robust enough to accommodate agency captives in Tennessee,” Whitehouse added. “We did not see the need for special legislation for that.”

Corbett said: “This year our focus has really been to get our examination section well-staffed and up and running. It was our commitment to the industry that if you brought your captive to Tennessee then it will be examined here, not in another location.”

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