FBAR - Foreign Bank Account Reporting - The IRS is assessing huge penalties for undisclosed foreign bank accounts, assets and income.
FBAR FILING DEADLING HAS BEEN
EXTENDED
Section 79, Captive Insurance, IRS Audits and Lawsuits on 419 and 412i Plans ...
831(b) captives draw scrutiny from IRS and Congress
Large companies have been forming captive insurance companies (captives) to self-insure their risks since the 1950’s. In general, these captives were formed to lower insurance costs, provide access to the reinsurance market, and cover exposures where there are gaps in the commercial market. When congress enacted section 831(b) of the Internal Revenue code in 1986, it was intended to extend the benefits of self-insurance, from large publicly traded companies to smaller middle market closely held business entities.
Section 831(b)
Section 831(b), provides a tax advantage to small property and casualty insurance companies. Under section 831(b), a company can elect to be taxed solely on its net investment income when gross annual premium is $1.2 million or less. The 831(b) captive can also provide tax benefits for its owner in the form of deductible premiums paid to the captive as ordinary business expenses.
IRS scrutiny of tax benefits
The number of tax benefits available to small captive owners has made the IRS wary that some of these 831(b) captives are being marketed for abusive purposes. So much so, the IRS added captive insurance to its annual “dirty dozen” list of tax scams for the 2015 filing season. In late 2014, the IRS began to take a more active look at the use of captive insurance companies and specifically, 831(b) captives. In September 2014, Artex Risk Solutions Inc., a subsidiary of Arthur J. Gallagher Inc, and one of the largest captive managers, announced that they were subject to an IRS investigation related to the formation of captives under section 831(b).
ReplyDelete831(b) captives draw scrutiny from IRS and Congress
Large companies have been forming captive insurance companies (captives) to self-insure their risks since the 1950’s. In general, these captives were formed to lower insurance costs, provide access to the reinsurance market, and cover exposures where there are gaps in the commercial market. When congress enacted section 831(b) of the Internal Revenue code in 1986, it was intended to extend the benefits of self-insurance, from large publicly traded companies to smaller middle market closely held business entities.
Section 831(b)
Section 831(b), provides a tax advantage to small property and casualty insurance companies. Under section 831(b), a company can elect to be taxed solely on its net investment income when gross annual premium is $1.2 million or less. The 831(b) captive can also provide tax benefits for its owner in the form of deductible premiums paid to the captive as ordinary business expenses.
IRS scrutiny of tax benefits
The number of tax benefits available to small captive owners has made the IRS wary that some of these 831(b) captives are being marketed for abusive purposes. So much so, the IRS added captive insurance to its annual “dirty dozen” list of tax scams for the 2015 filing season. In late 2014, the IRS began to take a more active look at the use of captive insurance companies and specifically, 831(b) captives. In September 2014, Artex Risk Solutions Inc., a subsidiary of Arthur J. Gallagher Inc, and one of the largest captive managers, announced that they were subject to an IRS investigation related to the formation of captives under section 831(b).
Captives for estate planning
IRS Audits Captive Owners – Know the Red Flags!
ReplyDeleteThe IRS is currently auditing owners of captive insurance companies