IRS Creates Office To Focus on Abusive Micro-Captive Transactions

IRS written on a sign next to a big stack of papers

April 22, 2021

IRS written on a sign next to a big stack of papers

The US Internal Revenue Service (IRS) has created an Office of Promoter Investigations (OPI) to coordinate the agency's focus on abusive tax avoidance transactions, including abusive micro-captive insurance arrangements.

The new office expands on the efforts of the IRS's promoter investigations coordinator that began in the summer of 2020.

"By establishing the Office of Promoter Investigations, we are continuing our increased focus on promoters of abusive tax avoidance transactions, which we have demonstrated over the last year," IRS Commissioner Chuck Rettig said in a statement. "This office will coordinate efforts across multiple business divisions to address abusive syndicated conservation easements and abusive micro-captive insurance arrangements, as well as other transactions."

Lois Deitrich, a 20-year IRS veteran, was named the new office's acting director. Though OPI will be positioned within the IRS's Small Business/Self-Employed Division (SB/SE), Ms. Deitrich will work on agency-wide compliance issues, including coordination of promoter activities with promoter teams in other IRS business divisions, including Large Business and International, Tax Exempt/Government Entities, the Office of Fraud Enforcement, and Criminal Investigations.

Ms. Deitrich will serve as the principal adviser and consultant to IRS division commissioners and deputy commissioners on issues involving promoters of abusive transactions and their schemes, the IRS statement said. The OPI will also develop strategic plans, programs, and policy.

In her new position, Ms. Deitrich, who began her work with the IRS as a revenue agent in 2001, takes over work the agency has been pursuing for the past year under Brendan O'Dell, who was selected as promoter investigation coordinator in early 2020.

Prior to this position, Ms. Deitrich served as director of the southwest area of SB/SE's Field Examination, where she was responsible for overseeing SB/SE field operations for abusive transaction investigations.

Earlier this month, the IRS urged participants in abusive micro-captive arrangements to exit those arrangements as soon as possible. At the time, the IRS noted that it has increased examinations of micro-captive arrangements and that it recently won another US Tax Court case that determined that the arrangement in question wasn't eligible for the benefits the small captive's owners claimed.

April 22, 2021