IRS Audits Captive Insurance Plans

Under scrutiny are so-called tax shelter captives, where the promoter dummies up insurance policies and risks so that the captive owners can artificially generate large deductions.

It’s important to understand that the IRS has extended this offer to only 200 taxpayers. There are at least 2,000 captive arrangements that are under audit and probably well north of 10,000 captive arrangements that may ultimately come under scrutiny by the IRS.

The offer will not be extended to captive arrangements and their owners “with pending docketed years under IRS Counsel’s jurisdiction.”