This case is the latest salvo in the Internal Revenue Service’s (“IRS”) attack on small captive (or “micro-captive”) insurance companies. Micro-captive insurance is a form of insurance that States carefully regulate, which Congress specifically encouraged and is now at risk of extinction by administrative fiat. In a final rule titled Micro-Captive Listed Transactions and Micro-Captive Transactions of Interest, 90 Fed. Reg. 3,534 (Jan. 14, 2025) (the “Final Rule”) (attached as Exhibit 1), the IRS manifested an existential threat to the micro-captive insurance industry by purporting to categorize a vast swath of micro-captive insurance transactions—which lawfully provide insurance under state law and comply with the strictures that Congress established for special income tax treatment—as not insurance at all, but rather as presumptively illegal tax shelters. The Final Rule impermissibly allocates to the IRS new powers as a de facto federal regulator of captive insurance companies and is contrary to the statutory text and basic administrative law requirements for reasoned decision making. If upheld, the Final Rule will gut the federal income tax benefit Congress created to make micro-captives economically viable, devastating small businesses’ ability to leverage these necessary insurance arrangements for themselves and their employees.