The formation of a Captive Insurance Company (CIC) has become a common practice among both the Fortune 1000 and small and mid-sized companies, offering businesses an alternative to appropriately manage risk while at the same time taking into account future tax and business planning. With this growth of CICs, the IRS has begun tax shelter promoter examinations into this area. The IRS has publicly stated concern and has initiated audits of hundreds of taxpayers with captive insurance companies. For those taxpayers in examination, the penalties and interest can be significant. The IRS is also examining practitioners that are assisting CICs with compliance.
Ramesh Sarva Veba
ReplyDeleteThe formation of a Captive Insurance Company (CIC) has become a common practice among both the Fortune 1000 and small and mid-sized companies, offering businesses an alternative to appropriately manage risk while at the same time taking into account future tax and business planning. With this growth of CICs, the IRS has begun tax shelter promoter examinations into this area. The IRS has publicly stated concern and has initiated audits of hundreds of taxpayers with captive insurance companies. For those taxpayers in examination, the penalties and interest can be significant. The IRS is also examining practitioners that are assisting CICs with compliance.
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