IRS Wins Against Tribal-Domiciled Captive Insurer
Last month, the Internal Revenue Service (the “IRS”) notched another win at the U.S. Tax Court (the “Tax Court”). In its opinion, the Tax Court commented that it has decided seven cases involving similar captive insurance arrangements, all decided in favor of the IRS. The usual red flags pertaining to circular funds, premium calculations independent of loss experience, and sudden increase in claims following IRS inquiry are all present. In this instance, the Tax Court considered a new factor – the tribal domicile.
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