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Taxation

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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
  Sorry Closed for COVID-19 on Standing Advertising Sign on Sidewalk

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
  Legitimate Highlighted in Pink and Defined in Dictionary

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
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BEAT Update: New Provisions Provide Some Help to Captives

Treasury recently issued new proposed and final regulations on the base erosion anti-abuse tax (BEAT). The new provisions provide some helpful news to captive insurance companies.
December 19, 2019 Read More
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Starbucks Disputes Captive Premium Taxes Levied by Washington State

Starbucks disputes premium taxes and fines levied by Washington State for its Vermont-domiciled captive insurance company.
December 12, 2019 Read More
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No Sign of Tax Battles Easing for Captive Insurance Companies

For decades, captive insurance companies have fought legal battles over tax issues with federal regulators and, more recently, state regulators, and there is no sign those battles are easing.
October 28, 2019 Read More
  Bruce Wright

Why Move Your Captive to a Different Jurisdiction

People often have an issue that causes them to consider moving their captive insurance company to a different jurisdiction, according to Bruce Wright of Eversheds Sutherland. While, for instance, a company's management may decide that having the captive in a specific jurisdiction is perceived unfavorably, other reasons are more substantive.
October 23, 2019 Read More
  Audit IRS or Financial-SF

The IRS's Settlement Offer to Micro-Captive Insurance Companies

To begin dealing with the swell of micro-captive cases amid shrinking resources, last month the Internal Revenue Service (IRS) issued a notice announcing the mailing of a settlement offer for certain taxpayers under examination for participating in "abusive micro-captive insurance transactions." Brown Smith Wallace discusses the issue.
October 21, 2019 Read More
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Johnson & Johnson Successful on Appeal of New Jersey Tax Court Decision

Johnson & Johnson was successful on appeal of a New Jersey Tax Court decision regarding independently procured tax. The court found Johnson & Johnson liable only for independent procurement tax on New Jersey risk related to premium paid to its captive insurance company.
October 04, 2019 Read More
  "Internal Revenue Service" letters on white stone

IRS Will Mail Settlement Offers to Micro-captive Owners

The Internal Revenue Service (IRS) said Monday that it is mailing settlement offers to about 200 owners of so-called 831(b) micro-captives who participated in what the IRS calls "abusive" insurance transactions.
September 17, 2019 Read More
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Alaska Air Opposes Washington State Fines for Its Captive Coverages

Alaska Air Group Inc. is opposing Washington State Insurance Department's move to impose significant financial fines for not paying premium taxes on coverage its captive insurer provides to Alaska Air subsidiaries operating in Washington.
September 12, 2019 Read More
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Syzygy Insurance Co. v. Commissioner: What You Should Know

Syzygy Insurance Company, a microcaptive created by Highland Tank & Manufacturing Co. and its associates did not qualify as an 831(b) microcaptive entity between the years of 2009 and 2011. Find out what you should know about this Tax Court case.
July 23, 2019 Read More
  Mark Sims

Bulletproofing Your Captive Insurance Company

Mark Sims, vice president of business development at Captive Alternatives, LLC, says that best practices for bulletproofing a captive insurance company so that it meets the definition of an insurance company involve consideration of five criteria: risk sharing (shifting), risk distribution, premium pricing, policies, and claims.
July 17, 2019 Read More
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Treasury's Proposed Regulations on the PFIC Rules Insurance Exception

Treasury has issued proposed regulations on the insurance exception to the passive foreign investment company rules. This article focuses on only one of the aspects of the regulations, albeit a very important one for captive insurance companies—the active conduct requirements.
July 16, 2019 Read More