The Internal Revenue Service (IRS) has made a second time-limited settlement offer to certain taxpayers under audit who it believes participated in abusive microcaptive insurance transactions.
The US Tax Court has ruled in favour of Jesus Oropeza, the shareholder of a microcaptive called FIRM, in a case against the Internal Revenue Service, ruling that penalties imposed by the IRS were made improperly and do not stand.
The Internal Revenue Service is turning up the pressure on micro-captive insurance schemes that it deems abusive, warning those that do not settle now are likely to incur additional penalties later.
The Minnesota Department of Revenue (MDR) has proposed changes to Form IG255 that will mean individuals or businesses buying insurance directly from captives or other non-admitted insurers must report their non-admitted direct procured insurance premium tax.
Roundstone, a Lakewood-based health insurance provider offering self- funded group captive solutions, has made more than $10 million in cash distributions to business owners across the US.
It relates to Notice 2016-66 that forces some captives owners to report tax details to the IRS.
While the penalty is lower in the Oropeza case, this is an exception.
It addresses specific concerns the captive insurance industry has around recent actions by the IRS.
The IRS has petitioned the US District Court for the District of Delaware to enforce a summons for documents held by the Delaware Department of Insurance (DDOI) related to the IRS’ microcaptive investigation.
US states could increase their efforts to raise tax from captives in coming months as they seek to raise money to offset reduced revenues during the COVID-19 pandemic, according to Dan Kusaila, a tax partner at Crowe.