What To Know About IRS Microcaptive Insurance Settlements

Law360 (February 10, 2020, 5:14 PM EST) -- As taxpayers participating in microcaptive insurance arrangements are well aware, on the heels of three victories in the three captive decisions issued by the U.S. Tax Court — Avrahami v. Commissioner[1], Reserve Mechanical Corp. v. Commissioner,[2] and Syzygy Insurance Co. Inc. v. Commissioner,[3] — the Internal Revenue Service has increasingly approached Internal Revenue Code Section 831(b)[4] captive audits with a take-no-prisoners attitude.

That has not prevented the service, however, from attempting to reduce the heavy load of captive audits and cases filed in Tax Court by offering settlements to certain taxpayers "to advance broader tax administration and compliance objectives.”

Although the offers to settle...

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