What are the tax advantages? | Captive Insurance Companies

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The Internal Revenue Service is offering less generous settlement terms to participants in micro-captive insurance schemes as part of its clampdown on the transactions. The IRS has long worried that micro-captive insurance transactions could be used for tax avoidance. Accordingly, several years ago, the IRS issued Notice 2016-66, identifying certain transactions with micro-captives as "transactions of interest," and requiring taxpayers participating in such micro-captive insurance transactions on or after November 2, 2006, (and their material advisors) to disclose the transactions as described in Treas. Reg. Section 1.6011-4 (see Tax Alert 2016-1885). More recently, the IRS has won three Tax Court cases challenging micro-captive transactions (See Avrahami v. Commissioner, 149 TC 144 (2017), Syzygy Insurance Co., Inc. v. Commissioner, TC Memo. 2019-246, and Reserve Mechanical Corp. v. Commissioner, TC Memo. 2018-211). In 2019, the IRS offered settlements to certain taxpayers involved in these transactions. Google Lance Wallach and your advisor. Who do YOU think knows more? [e-mail] for help before the IRS takes everything from YOU. Lance Wallach 516-236-8440

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During the early 2010s, the IRS started investigating captives for abusive transactions. In 2016, the IRS published Notice 2016-66 in which the agency advised that micro-captive insurance transactions have the potential for tax avoidance or evasion. The IRS filed suit against companies paying premiums to captives and won three major lawsuits starting in 2017. The Tax Court articulated four factors that indicate an arrangement constituting insurance: Insurance risk, Risk shifting to the insurer, Risk distribution, and Commonly accepted notions of insurance. In these three cases, the Tax Court concluded that contracts between the captives and defendant companies had not passed the risk. In 2019, the IRS offered settlements to companies paying premiums to captives, which the IRS reported were accepted by 80% of the companies receiving such notice. The IRS will audit all small captives. Google Lance Wallach and your advisor, who do YOU think is better?

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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.

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Taxpayers should expect the IRS to take an even harder stance on “micro-captive” insurance arrangements after a recent U.S. Tax Court decision in the agency’s favor,

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This is a very good overview of the basic tax advantages of captive insurances and definitely a must-watch for those deep in the insurance industry!

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Examinations impacting micro-captive insurance transactions of several thousand taxpayers will be opened by these teams in the coming months. Potential civil outcomes can include full disallowance of claimed captive insurance deductions, inclusion of income by the captive entity and imposition of all applicable penalties. The IRS reminds taxpayers and advisors that disclosure of participation in micro-captive insurance transactions is required with the IRS Office of Tax Shelter Analysis under Notice 2016-66. Failure to properly disclose can result in significant civil penalties. Taxpayers involved in these abusive transactions should immediately consult with independent, competent tax advisors on the proper treatment for past and future tax years to consider best available options. Google Lance Wallach and whoever advises you, WHO do YOU Believe?

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Help! My Captive Insurance Company is Under IRS Audit. We have learned from discussions with IRS Representatives that the IRS is now opening a large number of captive audits. If you are a taxpayer who has come under audit by the IRS with respect to a captive insurance company, here are some things you should know. Google Lance Wallach and your advisor, Lance is all over the net helping people stuck in captives that will be audited.

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Lance WallachAbusive tax shelters, 419, section 79, 412i micro captive insurance, VEBA, expert witness, author, speaker48m • 48 minutes ago IRS Warns Taxpayers to Exit Captive Insurance TransactionsAs previously noted, the IRS has warned taxpayers numerous times to consider exiting these transactions and consult with an independent tax advisor on next steps. The IRS previously issued letter 6336 to those taxpayers identified in having the reportable transaction listed on their return. The letter asks the taxpayer to state whether the captive is discontinued or the last year of deductions taken, or invites them to file a corrected amended return. google Lance Wallach and whoever is selling you this IRS audit target. Who do YOU trust?

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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]

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]

[@lancewallach2845]

The Internal Revenue Service is offering less generous settlement terms to participants in micro-captive insurance schemes as part of its clampdown on the transactions. The IRS has long worried that micro-captive insurance transactions could be used for tax avoidance. Accordingly, several years ago, the IRS issued Notice 2016-66, identifying certain transactions with micro-captives as "transactions of interest," and requiring taxpayers participating in such micro-captive insurance transactions on or after November 2, 2006, (and their material advisors) to disclose the transactions as described in Treas. Reg. Section 1.6011-4 (see Tax Alert 2016-1885). More recently, the IRS has won three Tax Court cases challenging micro-captive transactions (See Avrahami v. Commissioner, 149 TC 144 (2017), Syzygy Insurance Co., Inc. v. Commissioner, TC Memo. 2019-246, and Reserve Mechanical Corp. v. Commissioner, TC Memo. 2018-211). In 2019, the IRS offered settlements to certain taxpayers involved in these transactions. Google Lance Wallach and your advisor. Who do YOU think knows more? [e-mail] for help before the IRS takes everything from YOU. Lance Wallach 516-236-8440