Oct. 15 Filing Deadline: IRS Increases Abusive Micro-Captive Insurance Schemes Regulations

The IRS has set a deadline of Oct. 15 for those who may have participated in an abusive micro-captive insurance transaction to negotiate a settlement. That deadline is fast approaching, and the IRS is encouraging taxpayers to consult with an experienced Gilbert tax lawyer now about their options to avoid additional penalties.

Some taxpayers may have already negotiated a settlement for their micro-captive insurance transaction, and they were given Oct. 15 as a deadline to pay. However, many have yet to meet the deadline and paid in full. The IRS is counseling those who still owe that they should consult with a tax advisor, such as a Chandler tax attorney, to work out potential adjustments to their settlements. But, in doing so, the IRS warns that these taxpayers may need to make additional concessions.

The IRS encourages taxpayers who participated in a micro-captive insurance transaction to exit the transaction and not to report deductions associated with the transaction. The IRS contacted many taxpayers in March and July of this year encouraging them to do just that. Those who have not taken those actions or who were not contacted by the IRS but who may be in need of taking action are encouraged to consult with a tax professional in Gilbert now.

The IRS will take action against those it determines have participated in abusive micro-captive insurance transactions. It will disallow deductions and other tax benefits related to the transaction, and it may require additional penalties.

“Any future settlement terms will only get worse, not better,” said IRS Commissioner Chuck Rettig. “The IRS has never been better positioned in its quest to eradicate abusive transactions following the stand-up of a dedicated promoter office, a new Fraud Enforcement Office, enhanced service-wide coordination with Criminal Investigation and the Office of Professional Responsibility, and our advanced data analytics and mining capabilities. Taxpayers are strongly encouraged to use this opportunity to put this behind them and get into the compliance.”

Abusive micro-captives have been a top concern for the IRS since at least 2014, when they appeared on its “Dirty Dozen” list of tax scams. Earlier this year, the IRS continued its enforcement efforts by sending out letters to those suspected of engaging in the illegal activity and inviting them to end their activities and negotiate a settlement with the IRS. Twelve additional teams have been formed to investigate and prosecute these transactions.

The IRS has also increased investigations of variations and offshoots of the micro-captive insurance scheme.
If you are engaged in a micro-captive insurance transaction, or you have received a letter from the IRS about such transactions, you should call Silver Law PLC to explore your legal options. Our Chandler tax attorneys can help you negotiate a settlement with the IRS, represent you in legal proceedings, or help you explore other strategies for minimizing your penalties. Do not put off taking action. The longer you delay, the more likely you are to face serious penalties and consequences. Call us in Arizona today to talk to a tax attorney about your options.

Silver Law PLC

Arizona Location
7033 E. Greenway Pkwy, Ste 200
Scottsdale, AZ 85254
Office:480-429-3360
Email: lchapman@silverlawplc.com
Website: taxcontroversy.com

Nevada Location
410 South Rampart Blvd, Suite 390
Las Vegas, Nevada 89145
Office: 702-318-7130
Email: lchapman@silverlawplc.com
Website: taxcontroversy.com