419 Problems: Captive Insurance: Captive Insurance : have helped clients save hundreds of thousands of dollars defending them from penalties, "IRS audits" and laws...
In September of 2019, the IRS reached settlement offers with around 200 captives, bringing in a cash windfall and boldening their efforts. As a result, the IRS is ramping up its war on 831(b) "abusive micro-captives".
Is Your Micro-Captive Abusive under IRC 831(b)? abusive micro-captives It recently created twelve more examination teams, with one of their charters being to chase down taxpayers using 831(b) captives to avoid taxes. This is on top of the IRS' recent score of victories against a number of notable micro-captives operating as abusive tax shelters in the last few years. The message from the IRS is clear - engaging with the IRS in the area of 831(b) abusive micro-captive tax shelters will be neither quick, cheap, nor easy.
This move indicates that the IRS will widen the net it cast in fighting these tax shelters, hinting that they will move on to those that have escaped their attention so far. The IRS is expected to open and vigorously pursue examinations of potentially thousands of taxpayers over the next few months, using all available enforcement tools, including summonses.
Targeted taxpayers can expect to face serious consequences including total disallowance of insurance deductions claimed through the captives and inclusion of income. Taxpayers also risk facing substantial penalties of up to 40% on the understatement of their tax liability.
Reviewing Compliance with an 831(b) Captive With the IRS putting enforcement into high gear, it's imperative that those owners of captives that have made an 831(b) election take steps now to review their compliance. There are options Captive Insurance Owners can take to shut-down their captives without needing to recognize taxes on their Captive surplus, BUT only if they structure the unwinding the right way.
On June 19, 2020, the Tax Division of the U.S. Department of Justice filed a Petition To Enforce Summons against the Delaware Department Of Insurance, which seeks testimony and certain documents relating to Artex Risk Solutions, Inc. and Tribeca Strategic Advisors, LLC in connection with its promoter audits of those companies. Concurrently with the Petition, the DOJ also filed the Declaration of IRS Revenue Agent Bradley Keltner and the Summons that it is attempting to enforce. Artex/Tribeca is affiliated with publicly-traded Arthur J. Gallagher.nizing those captives. As an expert witness my side has never lost a case. Lance Wallach.
In September of 2019, the IRS reached settlement offers with around 200 captives, bringing in a cash windfall and boldening their efforts. As a result, the IRS is ramping up its war on 831(b) "abusive micro-captives".
ReplyDeleteIs Your Micro-Captive Abusive under IRC 831(b)?
abusive micro-captives
It recently created twelve more examination teams, with one of their charters being to chase down taxpayers using 831(b) captives to avoid taxes. This is on top of the IRS' recent score of victories against a number of notable micro-captives operating as abusive tax shelters in the last few years. The message from the IRS is clear - engaging with the IRS in the area of 831(b) abusive micro-captive tax shelters will be neither quick, cheap, nor easy.
This move indicates that the IRS will widen the net it cast in fighting these tax shelters, hinting that they will move on to those that have escaped their attention so far. The IRS is expected to open and vigorously pursue examinations of potentially thousands of taxpayers over the next few months, using all available enforcement tools, including summonses.
Targeted taxpayers can expect to face serious consequences including total disallowance of insurance deductions claimed through the captives and inclusion of income. Taxpayers also risk facing substantial penalties of up to 40% on the understatement of their tax liability.
Reviewing Compliance with an 831(b) Captive
With the IRS putting enforcement into high gear, it's imperative that those owners of captives that have made an 831(b) election take steps now to review their compliance. There are options Captive Insurance Owners can take to shut-down their captives without needing to recognize taxes on their Captive surplus, BUT only if they structure the unwinding the right way.
On June 19, 2020, the Tax Division of the U.S. Department of Justice filed a Petition To Enforce Summons against the Delaware Department Of Insurance, which seeks testimony and certain documents relating to Artex Risk Solutions, Inc. and Tribeca Strategic Advisors, LLC in connection with its promoter audits of those companies. Concurrently with the Petition, the DOJ also filed the Declaration of IRS Revenue Agent Bradley Keltner and the Summons that it is attempting to enforce. Artex/Tribeca is affiliated with publicly-traded Arthur J. Gallagher.nizing those captives. As an expert witness my side has never lost a case. Lance Wallach.
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