SECTION 2. BACKGROUND

.01 Section 831(a) imposes a tax for each taxable year on the taxable income of every insurance company other than a life insurance company (non-life insurance company). Section 831(b) provides an alternative tax to the tax imposed by § 831(a) for certain non-life insurance companies (alternative tax). The alternative tax for these non-life insurance companies is a tax computed for each taxable year by multiplying the taxable investment income (as defined in § 834(a)) of the company for the taxable year by the rates in § 11(b).

.02 Section 831(b)(2)(A) provides that the alternative tax applies to every non-life insurance company if (1) the company’s net written premiums (or, if greater, direct written premiums) for the taxable year do not exceed $2,200,000 (adjusted for inflation ² ), (2) the company meets the diversification requirements in § 831(b)(2)(B), and (3) the company makes an election to apply the alternative tax (§ 831(b) Election) for the taxable year.

.03 Pursuant to § 301.9100-8(a)(2), the non-life insurance company must make a § 831(b) Election by the due date (taking into account any extensions of time to file obtained by the taxpayer) of the tax return for the first taxable year for which the election is effective. In general, under § 301.9100-8(a)(3), a § 831(b) Election is

made by attaching a statement to the tax return for the first taxable year for which the election is to be effective.

.04 Section 1010(f)(1) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. No. 100-647, 102 Stat. 3342, 3454 (1988), added flush language to § 831(b) (2)(A). The flush language provides that a § 831(b) Election applies to the taxable year for which it is made and for all subsequent taxable years for which the requirements of § 831(b)(2)(A)(i) and (ii) are met and that a § 831(b) Election, once made, may be revoked only with the consent of the Secretary. The legislative history explains that “[t]his clarification reflects Congress’s intent that the [§ 831(b)] election not be used as a means of eliminating tax liability (e.g., by making the election only for the years the taxpayer does not have net operating losses).” S. Rep. No. 445, at 127 (1988). .05 To secure the Secretary’s consent, a taxpayer seeking revocation of its § 831(b) Election has been required to submit a request for a letter ruling under the procedures set forth in Rev. Proc. 2025-1, 2025-1 I.R.B. 1 (Dec. 30, 2024) (or successor) and pay a user fee.

.06 The Department of the Treasury and the Internal Revenue Service (IRS) published proposed regulations that would designate certain micro-captive transactions as listed transactions and certain other micro-captive transactions as transactions of interest in a notice of proposed rulemaking published in the Fed- eral Register (88 FR 21547) on April 11, 2023 (proposed regulations). Comments on the proposed regulations requested a streamlined process by which the IRS will approve requests for revocation of a § 831(b) Election.

.07 In response to the comments received on the proposed regulations, this revenue procedure provides a streamlined procedure for a taxpayer that has made a § 831(b) Election to obtain the automatic consent of the Secretary to revoke such election effective for the taxable year for which consent is sought (revocation year), which may be the taxable year in which

1 Unless otherwise specified, all “Section” or “§” references are to sections of the Code or the Procedure and Administration Regulations (26 CFR part 301).

2 See § 831(b)(2)(E). For taxable years beginning in 2025, the limit on net written premiums or direct written premiums (whichever is greater) is $2,850,000. See section 2.36 of Rev. Proc. 2024-40, 2024-45 I.R.B. 1100, 1107 (Nov. 4, 2024).

February 18, 2025 816 Bulletin No. 2025–8

year taxpayer that submits a revocation request during calendar year 2025 may request that 2025 be the revocation year. Alternatively, the taxpayer may request that calendar year 2024 be the revocation year provided the taxpayer submits the revocation request described in section 4.02 of this revenue procedure no later than the date on which the taxpayer files its timely-filed (including extensions) Federal income tax return for calendar year 2024.

(2) The request includes representations that the taxpayer (a) has made a § 831(b) Election that is in effect as of the date of filing the request; (b) has no net operating losses arising in a taxable year that was prior to the revocation year to which the § 831(b) Election applied that can be carried over to the revocation year; (c) is timely submitting the request (as provided in section 4.02(3) of this revenue procedure) no later than the date on which it files its timely-filed (including extensions) Federal income tax return for the revocation year; and (d) will not make a § 831(b) Election for the five taxable years following the revocation year.

(3) The request is signed in accordance with section 7.01(13) of Rev. Proc. 2025-1 (or successor), dated, and submitted (as described in section 4.02(3)(a) or (b) of this revenue procedure) no later than the date on which the taxpayer files its timely-filed (including extensions) Federal income tax return for the revocation year. Requests submitted by an authorized representative of the taxpayer must adhere to the authorized representative requirements set forth in section 7.01(14) of Rev. Proc. 2025-1 (or successor), and the request must be accompanied by a duly executed Form 2848, Power of Attorney and Dec- laration of Representative, in accordance with section 7.01(15) of Rev. Proc. 2025-1 (or successor).

(a) A request submitted on paper must be sent to the Commissioner of Internal Revenue, Attn: CC:FIP:4, Room 3547, 1111 Constitution Avenue, NW, Washington, DC 20224. The principles of § 7502 apply to determine whether a mailed statement is submitted timely.

(b) A request submitted by facsimile (fax) must be sent to the Commissioner of Internal Revenue, Attn: CC:FIP:4, to (855) 574-9026.

(4) The request must be accompanied by the following declaration, which is signed in accordance with section 7.01(16)(b) of Rev. Proc. 2025-1 (or successor): “ Under penalties of perjury, I declare that I have examined this request, including the representations set forth herein and any accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. ”

.03 A taxpayer within the scope of section 3 of this revenue procedure may choose not to seek the automatic consent of the Secretary to revoke its § 831(b) Election under this revenue procedure and instead submit a request for a letter ruling granting consent to revoke its § 831(b) Election under the procedures set forth in Rev. Proc. 2025-1 (or successor) and pay the applicable user fee.