What does a captive have to file with the state each year?
An annual statement in March, and an audit you can choose
Mark Wiedeman describes a light annual cycle with one real decision inside it. Every captive files an annual statement, typically due around the middle of March, the fifteenth by statute. An audit is not actually required by statute in Tennessee. The choice matters because of what it changes downstream: a captive that does not audit is put on a three year examination cycle, while one that does can expand that exam cycle to five years, and the audit requirement then also includes a statement of actuarial opinion. He says the analysts use those reports to read governance and compliance status, solvency and liquidity, and whether the captive is still financially viable.
The fixed obligation is the annual statement, which Wiedeman puts around the middle of March, the fifteenth by statute. That is the date to work backwards from.
Everything else in the cycle follows from one election. Tennessee does not require an audit by statute, which makes the audit a choice rather than a cost of entry.
Key takeaways
Every Tennessee captive files an annual statement, typically due around the middle of March, the fifteenth by statute.
An audit is not required by statute, but skipping it puts the captive on a three year examination cycle.
Choosing to be audited expands the exam cycle to five years and adds a statement of actuarial opinion to what gets filed.
The trade is between annual expense and examination frequency. No audit means a three year examination cycle. An audit expands that exam cycle to five years, and brings a statement of actuarial opinion with it.
For a captive with a stable program, buying the audit to be examined less often can be the cheaper path once the disruption of an exam is counted rather than just the invoice. For a small captive it may not be, and the answer leaves that arithmetic to the owner.
From the conversation
Mark Wiedeman
Director, Captive Insurance Section, Tennessee Department of Commerce and Insurance
“in Tennessee, an audit is not actually”
This answer begins at 13:43 of the full conversation. Watch or listen to the whole thing.
Citations
Sources
- Captive Insurance Section, Tennessee Department of Commerce and Insurancehttps://www.tn.gov/commerce/insurance/captive-insurance.html
The views expressed are those of the featured guest, drawn from a recorded conversation, and reflect their own professional experience. Nothing on this page is insurance, tax, legal, or investment advice. Consult your own advisors about your specific situation.
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