Bloomberg Tax
March 31, 2020, 8:53 PM UTC

Timing of IRS Insurance Tax Shelter Probe Brings Scrutiny

Allyson Versprille
Allyson Versprille
Reporter

The IRS’s latest enforcement push against small insurance companies seen as tax shelters comes as businesses, including insurers, deal with the economic fallout of the coronavirus pandemic.

Owners of small insurance companies, known as micro-captives, recently received letters from the IRS—Letter 6336 (3-2020)—stating the agency had information that they may have claimed tax benefits for which they weren’t eligible. The letters, which warned the owners that they may be subject to a future audit and penalties, include a May due date for taxpayer responses.

The IRS has increased scrutiny of micro-captive arrangements in recent years, asserting that some lack the ...

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