Micro captives dodge IRS ‘Dirty Dozen’ but singled out for future attention


The Internal Revenue Service has left micro captives off a much-anticipated list of tax scams, which it publishes annually, for the first time in five years. But the sector should not breathe a sigh of release as it also promised to address the captive sector specifically in a future attention.

The IRS publishes an annual list of the 12 worst tax scams, which it calls the "Dirty Dozen". The use of micro captives has been noted in the list for each of the past five years.

This year, the IRS said its list was focused more on scams that target taxpayers and schemes that have evolved as a result of things like coronavirus tax relief, including Economic Impact Payments.

As such, micro captives have been left off the list, which instead details: phishing, fake charities, impersonator phone calls, social media scams, EIP or refund theft, senior fraud, scams targeting non-English speakers, unscrupulous return preparers, offer in compromise mills, fake payments with repayment demands, payroll and HR scams, and ransomware.

"Tax scams tend to rise during tax season or during times of crisis, and scam artists are using pandemic to try stealing money and information from honest taxpayers," said IRS Commissioner Chuck Rettig. "The IRS provides the Dirty Dozen list to help raise awareness about common scams that fraudsters use to target people. We urge people to watch out for these scams. The IRS is doing its part to protect Americans. We will relentlessly pursue criminals trying to steal your money or sensitive personal financial information."

But the IRS also said that it was not going to be ignoring some of the topics that it has focused on in previous years. It promised that an upcoming series of press releases will emphasize other “illegal schemes and techniques businesses and individuals use to avoid paying their lawful tax liability”. It said the topics of these will include such “scams as abusive micro captives and fraudulent conservation easements”.

IRS, Micro Captives, Insurance, Reinsurance, Tax, Chuck Rettig, North America

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