Captive Insurance Audit Representation

Zerbe Fingeret Frank & Jadav is one of the nation’s most experienced law firms handling captive insurance audit defense and compliance. Representation of captive insurance company owners and service providers nationwide gives ZMFF&J a coordinated perspective on the issues and concerns regularly raised by the IRS in their examinations of taxpayers on this issue. IRS scrutiny of captive insurance gained substantial momentum in early 2014 as The Service launched a series of 6700 promoter examinations aimed at multiple captive management firms. In short order, these examinations led to informal documentation requests, and audits of captive insurance company owners nationwide. By 2015, The IRS listed captives on its Dirty Dozen List acknowledging that captives were legal when done properly, but including captive insurance among potential “tax scams,” along with identity theft, phishing, preparer fraud and offshore tax avoidance.

Highly coordinated, the audits of captive clients tend to involve voluminous documentation requests which occasionally include IRS summons/enforcement proceedings requiring experienced legal counsel with familiarity both in terms of the captive owner’s documentation, and also with the documentation of the relevant service provider. The IRS commonly requests interviews, which can be recorded, and taken under oath with participation by IRS counsel. ZMFF&J works regularly with risk managers and CPA’s, often through the use of Kovel agreements to protect privileged communications between counsel and its captive insurance clients. ZMFF&J follows current case law closely, and is intimately familiar with captive insurance cases such as Renta Center, Securitas Holdings, and others.

ZMFF&J also regularly assists clients with independent third party compliance reviews aimed at shoring up captive companies, and insuring that the necessary substantiation is in place to insure the best possible audit defense in the event of IRS scrutiny. Having handled a large number of these matters, chronicling key issues, ZMFF&J is able to review clients with a lens toward issues key in ongoing IRS examinations to provide real time advice on how to strengthen and improve documentation.