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IRS Offers New, Stricter Settlement Offer to Micro-Captive Owners

The Internal Revenue Service (IRS) has announced a new limited-time settlement offer to certain taxpayers that the agency alleges participated in abusive micro-captive insurance transactions. The IRS said that in the coming days that it will begin sending settlement offers with stricter terms than its first limited-time settlement initiative that began last year.
October 23, 2020 Read More
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Reserve Tax Case Brief Argues Transactions Did Constitute Insurance

A reply brief filed in the US Tenth Circuit Court of Appeals on behalf of Reserve Mechanical Corp. in Reserve's tax case with the Internal Revenue Service argues that its captive insurance arrangements did meet the requirements to constitute insurance for federal tax purposes.
October 09, 2020 Read More
  Internal Revenue Service

IRS Indicates It's Stepping Up Enforcement of Abusive Micro-Captives

The Internal Revenue Service (IRS) has indicated that it's expanding its enforcement focus on abusive micro-captive schemes, encouraging taxpayers participating in micro-captive arrangements to consult an independent tax adviser ahead of the October 15 filing deadline. The IRS encouraged participants in such arrangements to consider exiting them.
October 06, 2020 Read More
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Minnesota Includes Captives in Direct Procurement Tax Form Changes

The Minnesota Department of Revenue is taking comment on proposed changes that, among other things, would specify that the state's nonadmitted premium tax for direct procured insurance applies to captive insurance. The proposal would modify Form IG255, the state's nonadmitted insurance premium tax return form, to specifically mention captives.
September 08, 2020 Read More
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New Federal Report Examines Possible Micro-Captive Role in Tax Abuse

So-called micro-captives have been in the crosshairs of the Internal Revenue Service for several years. Now, a newly released report from the US Government Accountability Office warns that offshore micro-captives may be used for abusive tax schemes.
September 02, 2020 Read More
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Coalition of Captive Industry Groups Files Amicus Brief in CIC Case

A coalition of 23 captive industry associations has filed an amicus brief before the US Supreme Court in the case of CIC Servs., LLC v. Internal Revenue Service, et al. Earlier this year, the high court agreed to hear CIC's appeal of a lower court ruling favoring the IRS.
July 27, 2020 Read More
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Micro-Captives Missing from this Year's IRS "Dirty Dozen" List

Micro-captives are not included in this year's Internal Revenue Service (IRS) "Dirty Dozen" list of "tax scams," though an IRS statement suggests the agency will continue monitoring the small captive insurance companies. It is the first time in 5 years that the IRS did not include micro-captives on its annual list.
July 20, 2020 Read More
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SIIA Seeks Treasury Department Review of IRS 831(b) Captive Activities

In a letter to US Treasury Secretary Steven Mnuchin and Russel Vought, acting director of the Office of Management and Budget, the Self-Insurance Institute of America (SIIA) has asked the Treasury Department to review activities of the Internal Revenue Service (IRS) related to 831(b) captive insurance companies.
June 19, 2020 Read More
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North Carolina Captive Group Seeks Relief from IRS Micro-Captive Letter

The North Carolina Captive Insurance Association (NCCIA) is one of a number of state captive insurance associations protesting recent Internal Revenue Service (IRS) activities aimed at micro-captives. The NCCIA wrote North Carolina's congressional delegation for help in securing relief from a letter the IRS sent in March to micro-captive owners.
May 08, 2020 Read More
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Supreme Court Agrees To Hear CIC Services Micro-Captive Case

The US Supreme Court has agreed to hear the CIC Services, LLC, challenge of the Internal Revenue Service (IRS) position that micro-captives are "transactions of interest" that should be reported to the IRS. In 2019, a federal appeals court upheld a lower court ruling supporting the position of the IRS.
May 06, 2020 Read More
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VCIA Letter Addresses IRS Treatment of Micro-Captives

The Vermont Captive Insurance Association (VCIA) has spoken out about the US Internal Revenue Service's (IRS) treatment of micro-captives. In a letter to US Treasury Secretary Steven T. Mnuchin and IRS Commissioner Charles Rettig, VCIA President Richard Smith says a March 20, 2020, IRS letter raises concerns about IRS tactics.
May 01, 2020 Read More
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Letter Challenges IRS Treatment of Small Captive Insurance Companies

A letter to US Rep. Kevin Brady (R–Texas) takes issue with Internal Revenue Service (IRS) treatment of so-called 831(b) captive insurance companies. The current COVID-19 pandemic underscores the importance of captive insurance programs to midmarket companies, the letter says, but the IRS is targeting and harassing small captives.
April 03, 2020 Read More
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COVID-19 Crisis Demonstrates Need for Captives for Risk Mitigation

The fallout from the COVID-19 pandemic highlights the role of captive insurance companies as a risk mitigation tool.
March 26, 2020 Read More
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Quiet Settlement in 831(b) Captive Insurance Tax Case

Wilson v. Comm’r, Docket 26547-13 (Tax Court) was quietly settled at the end of February. The case had been in the Tax Court for some time, and after Avrahami was decided, supplemental briefs were requested by the court. The facts of the case are very similar to Avrahami.
March 19, 2020 Read More
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Captive Insurance Groups File Brief Supporting Reserve Tax Case Appeal

A group of captive insurance associations filed a friend of the court brief supporting Reserve Mechanical Corp.'s appeal of a US Tax Court insurance tax case. The group expressed concern about areas of the Tax Court’s ruling concerning prior loss history, standardized versus manuscripted policies, and risk pooling.
March 06, 2020 Read More
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OECD Recognizes the Legitimacy of Captive Insurance

The captive chapter in a new Organization for Economic Cooperation and Development (OECD) report discusses the numerous business (nontax) reasons why a multinational enterprise group might use a captive insurance company to manage risks within the group while setting out indicators for genuine insurance business.
March 04, 2020 Read More
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Reserve Files Opening Appeals Brief in Captive Insurance Tax Case

Reserve Mechanical Corp.'s first appeals brief outlines ways it says the US Tax Court erred in ruling against it in a captive insurance tax case, arguing that the captive insurance arrangement met necessary criteria for insurance.
March 02, 2020 Read More
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Cayman Islands Added to the EU "Blacklist"

The Council of the European Union recently revised its so-called blacklist of noncooperative tax jurisdictions to include Cayman Islands.
February 24, 2020 Read More
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IRS Settlement Offers Accepted by Majority of Micro-Captive Owners

The Internal Revenue Service (IRS) announced last week that around 80 percent of so-called 831(b) micro-captive owners who received settlement offers have accepted them.
February 03, 2020 Read More
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Board of Tax Appeals Considers Moody's Captive Insurance Company

The Board of Tax Appeals recently considered tax issues involving the relationship between Moody's and its captive insurance company.
January 13, 2020 Read More