12 August 2022Reinsurance

IRS wins judgement on access to captives documents

Law firm Moore, Ingram, Johnson & Steele cannot block an IRS demand that it hands over documents detailing captive insurance arrangements by asserting broad attorney-client privilege, an appeals court has ruled.

The case was brought after the law firm allegedly failed to fully comply with an IRS summons issued as part of an investigation into whether it owes tax penalties for playing a role in what the IRS calls an “abusive” captive insurance plan or arrangement.

The ruling by the Eleventh Circuit supports the US District Court's original ruling that the law firm would have to claim privilege on a document-by-document basis.

The IRS alleges that Moore Ingram was a promoter of abusive 831(b) risk-pooled captive insurance companies, or microcaptives. Moore Ingram sought to protect its communications with clients on the basis of attorney-client privilege. The IRS argued that this cannot apply as it also acted as a manager of clients’ microcaptives.