ATTORNEY NEWSLETTER
Microcaptive Insurance Tax Abusers
Corporations Use Small Captive Insurance Companies To Avoid Tax
The Internal Revenue Service (IRS) has begun sending letters to up to 200 companies, offering to settle open investigations of abusive insurance transactions with the companies’ own small, insurance subsidiaries (known as “microcaptives”). These companies take advantage of Section 831(b) of the Internal Revenue Code, which allows insurance companies to elect to be taxed only on investment income, and not at all on premiums under $2.2 million. According to the IRS, promoters of microcaptive schemes encourage companies to create small insurance companies to engage in insurance transactions, and then claim tax deductions on any premiums paid as a business expense.
Over the past few years, the IRS won three cases in the US Tax Court, against Syzygy, Reserve Mechanical, and Avrahami,[1] on this abuse, and now the IRS is offering to settle current investigations in return for waiving tax benefits and paying penalties. If you have information regarding tax fraud, including similar insurance schemes, offshore tax avoidance schemes and violations of foreign bank account reporting requirements, the California and San Francisco whistleblower/qui tam attorneys at Evans Law Firm, Inc. know how to present your evidence to the IRS with the best chance for you to receive an eventual reward. Call the IRS whistleblower/qui tam attorneys at Evans Law Firm, Inc. (415)441-8669, and we can help.
The IRS Whistleblower Office maintains the confidentiality of whistleblowers represented by counsel and is required to respond promptly to tips. We recommend that you consult with counsel before making any submission to the IRS in order to best protect your chances for a reward should the IRS recover money. The law prohibits your employer from retaliating against you for bringing any tax fraud to light. Our attorneys can represent you in any suit for wrongful termination in addition to representing you in your whistleblower application.
Contact Us
If you have information regarding offshore tax avoidance schemes, violations of foreign bank account reporting requirements, abusive tax shelters, or other tax fraud contact Ingrid M. Evans and the other IRS whistleblower and tax fraud attorneys at the Evans Law Firm at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Our whistleblower attorneys also handle cases involving bank fraud under FIRREA/FIAFEA, the Commodities Futures Trading Commission Whistleblower Program, the Securities and Exchange Commission Whistleblower Program, False Claims Act cases, the FINRA Whistleblower Office and the California False Claims Act. We can help guide your case through a jury trial or toward an equitable settlement. We also handle cases involving physical and financial elder abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.
[1] Evans Law Firm, Inc. was not involved in any of these cases. The cases are reported at Syzygy Insurance Co., Inc., et al. v. Comm’r of Internal Revenue, T.C. Memo. 2019-34 (U.S. Tax Court April 10, 2019); Reserve Mechanical Corp. v. Comm’r Internal Revenue, T.C. Memo. 2018-86 (U.S. Tax Court June 18, 2018); Avrahami v. Comm’r Internal Revenue, 149 T.C. No. 7 (U.S. Tax Court August 21, 2017).
