What are captive insurance companies?

[@rrrrrrrr1036]

This video started playing randomly after I stepped away from watching a different video on the general topic of "captive market." The funny thing is, I worked as an Associate Agent in the same office as this speaker Wes Sierk when he was still a young agent at Northwestern Mutual in DTLA back in 1998. Small world and good to see he's still at it.

[@lancewallach353]

IRS practice is to identify Promoters who are selling captive insurance companies and to open audits of the Promoters. From those audits, the IRS obtains customer lists and opens individual audits of the customers.

[@lancewallach3201]

According to the IRS, there are about 500 cases in the court system dealing with micro-captive insurance issues. Anyone with this kind of arrangement or considering one should get out ASAP. We have learned from discussions with IRS Representatives that the IRS is now opening a large number of captive audits. One of the things IRS agents and auditors greatly frown upon is the practice of creating tax shelters and shell companies to deliberately flout tax laws or claim deductions for which you are not legally eligible. One of the new tax-avoidance schemes that has begun to appear with more and more regularity in the last decade is the creation of micro-captive insurance companies in order to claim tax deductions involving exorbitant premiums. The IRS has cracked down hard on this type of tax shelter scheme, sending letters out in late 2019 to hundreds of taxpayers they believed were fraudulently using micro-captive insurance to avoid taxes and offering them a possible way back into compliance without the risk of criminal tax prosecution. Lance wallach has received hundreds of calls to fight the IRS and sue the promoters of these scams. Google Lance Wallach and your advisor. Who do you trust? 516-236-8440 [e-mail]

[@lancewallach3201]

The IRS has put out yet another news release, IR-2020-226, to warn taxpayers who have engaged in abusive risk-pooled 831(b) captive insurance transactions (a/k/a "microcaptives") to consult with independent tax counsel before making any tax filings regarding the transaction. The IRS is also warns that its previous settlement terms offered to taxpayers are probably not going to be available to them in the future, and that any settlement with the IRS "will require additional concessions by the taxpayer." What additional concessions? The IRS then explains: For those taxpayers that do not exit the transaction and continue taking such deductions, the IRS will disallow tax benefits from transactions that are determined to be abusive and may also require domestic captives to include premium payments in income and assert a withholding liability for foreign captives. The IRS will also assert penalties, as appropriate, including the strict liability penalty that applies to transactions that lack economic substance. Google Lance Wallach and your advisor. Who do you trust? 516-236-8440 [e-mail]

[@lancewallach3201]

The IRS released an advance version of Notice 2016-66 that identifies a type of transaction involving a “micro-captive insurance” structure as a “transaction of interest”-i.e., a tax avoidance transaction-for purposes of Reg. section 1.6011-4(b)(6) and sections 6111 and 6112. Notice 2016-66 [PDF 44 KB] states that these “micro-captive transactions” have the potential for tax avoidance or evasion. Taxpayers engaged in these transactions must disclose the transactions. A failure to disclose will be subject to the penalty under section 6707A or section 6707(a). in 2019, the IRS added syndicated conservation easement transactions to its annual "Dirty Dozen" list of tax scams. Lance Wallach has received hundreds of phone calls to fight the IRS, and to get all peoples money back from the promoters that sold these scam tax shelters. As an expert witness Lance Wallach has never lost a case. If you are in a captive or conservation easement and want to be made whole contact [e-mail] or 516 2368440. Google Lance Wallach and your advisor. WHO do YOU trust?

[@lancewallach2845]

On December 23rd 2016, the IRS published Notice 2017-10, which identified a specific type of conservation easement, a ‘syndicated’ easement transaction, as a ‘listed transaction.’ This type of conservation easement allows investors to obtain charitable contribution deductions that significantly exceed the value of their original investment in the entity that donates the easement, typically a partnership. Since the publication of Notice 2017-10, the IRS has audited numerous syndicated conservation easements, with dozens of these cases being docketed in the Tax Court. Micro-captive insurance audits: armed with significant Tax Court wins and the settlement of 80% of micro-captive taxpayer cases under audit, the IRS now has declared that it intends to collect a significant amount of revenue lost because of abusive micro-captive insurance transactions. Nevertheless, advisors continue to actively promote micro-captives, which makes it crucial that taxpayers seek guidance on the characteristics of bona fide insurance for income tax purposes. Anyone with questions regarding micro-captive insurance transactions and the increased enforcement actions by the IRS with respect to them should contact Lance Wallach. [e-mail]. Google Lance Wallach and your advisor, WHO do YOU trust. 516-236-8440

[@lancewallach3201]

Syndicated conservation easement transactions, and captive insurance, get audited by the IRS Service announced today a significant increase in enforcement actions for syndicated conservation easement transactions, a priority compliance area. According to the announcement, coordinated audits are being conducted throughout various examination divisions of the IRS. At the same time, the IRS Criminal Investigation division has criminal investigations underway in this area. Recently, the IRS has confirmed that 80% of taxpayers under audit for their micro-captive insurance have settled with the IRS. This has only fueled the position of the IRS, and it has now announced that 12 new IRS audit teams have been established. If you are in a captive or have use a conservation easement you must act quickly. Lance Wallach has helped hundreds of people in these plans fight the IRS and get their money back from the promoter that sold these scams. 516-236-8440. Google Lance Wallach and your advisor, who do YOU trust. [e-mail]

[@josephmclaren1933]

Wes made several references to congress…are captives not state regulated?

[@christopher6337]

You posted this long ago, but to answer your question insurance, especially life insurance in managed on a state basis. Federal laws, when passed take precedence over any state regulations, but life insurance is managed state to state. Similar to the legal field, New York, Florida, and California hold the most weight for national adoption and reciprocation.

[@AufBerghofNAM]

@@christopher6337 important to remember that life is not the major component of captive tech applications

[@lancewallach3201]

The Supreme Court rarely hears tax cases which makes the recent oral arguments in CIC Services v IRS exciting. That is about all that makes them exciting to ordinary mortals as what was going on at the Supreme Court was an argument about whether they could have an argument. In 2017, CIC Services and Ryan LLC brought an action in the United States District Court for the Eastern District of Tennessee asking to set aside IRS Notice 2016-66 as modified by IRS Notice 2017-08. Both the District Court and the Sixth Circuit ruled that the action was barred by the Anti Injunction Act. The notices concern micro-captive transactions. Micro-captive has a science fiction sound to it, Makes me think of Kandor - the Kryptonian city in a bottle that Superman kept in his Fortress of Solitude. That's not it, though. It is about insurance, sort of. Simplistically, a captive is an insurance company that is owned by the insured or related parties. Micro means it takes in less than $2.3 million in premiums. (I'm simplifying. The threshold has been changing. [e-mail] 516-236-8440