Skip to Main Content
 

Rachel Partain Comments on IRS Imposing Reporting Requirements on Micro-Captive Insurance Deals

November 4, 2016, Bloomberg BNA

A recent IRS notice imposing reporting requirements on certain “micro-captive” insurance arrangements is likely to send a seismic wave through the industry, attorneys told Bloomberg BNA.  For the full article, please visit Bloomberg BNA’s website (subscription required).

Rachel L. Partain, a member of Caplin & Drysdale, said the IRS should expect a flood of captives coming under these new reporting requirements, especially since the notice is retroactive to Nov. 2, 2006. This date is consistent with Treasury Regulations Section 1.6011-4(h)(1), which provides the effective and applicability dates for “transactions of interest.”

“There's a large, large percentage of the captive industry that's going to have to report,” she said. Even now there are “large numbers of captives and managers under examination,” in appeals or in Tax Court, she said.

Partain said her gut reaction is that the IRS will pursue a settlement initiative, because there are “just too many cases for them to work.” She pointed to the Son of Boss Settlement Initiative in the early 2000s as an example. “Boss” stands for bond and option sales strategy. “Son of Boss” was a type of tax shelter promoted as a way to reduce federal income tax on capital gains.

In 2004 the IRS issued Announcement 2004-46 that offered Son of Boss investors an opportunity to “quickly close out of their tax disputes,” according to the agency's website.

Excerpt taken from the article “Is ‘Micro-Captive’ Insurer Guidance the IRS's Nuclear Option?” by Allyson Versprille for Bloomberg BNA.

________________________________________________

About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of tax, tax controversy, and litigation legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills - combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment - make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:

-Bankruptcy
-Business, Investment & Transactional Tax
-Complex Litigation
-Corporate Law
-Employee Benefits
-Exempt Organizations
-International Tax
-Political Law
-Private Client
-Tax Controversies
-Tax Litigation
-White Collar Defense

For more information, please visit us at www.caplindrysdale.com.

Washington, DC Office:
One Thomas Circle, NW
Suite 1100
Washington, DC 20005
202.862.5000
        New York, NY Office:
600 Lexington Avenue
21st Floor 
New York, NY 10022
212.379.6000

___________________________

Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.

© 2017 Caplin & Drysdale, Chartered
All Rights Reserved.

Related Professionals

Related Practices