Captive Insurance Litigation

Former IRS Chief Counsel attorney Cal Bomar and the attorneys at Bomar Law Firm assist clients who are undergoing an audit relating to a captive insurance company, and who have cases in US Tax Court or US District Court relating to captive insurance companies.  The Firm also works extensively on cases involving the allegation of malpractice or negligence by promoters or attorneys who have set up captive insurance companies for clients.

Bomar Law Firm's principal office is located in Atlanta, Georgia.  However, the firm assists clients in tax matters throughout the United States and around the World.

Each year, the IRS lists a "Dirty Dozen" list of items that it considers abusive. For 3 years in a row, it has included the abusive use of "micro" captive insurance companies.

In Notice 2016-66 the IRS acknowledged that some taxpayers may use captive insurance companies that make elections under Section 831(b) "for risk management purposes that do not involve tax avoidance."

The IRS is seeking to argue that some of these entities do not provide real insurance, and that the transactions have no "economic substance."  Therefore, they asser that the IRS should be able to assess tax, interest and severe penalties against the captive insurance company and it's insured. They will also seek penalties against promoters that are setting up these captives.

In addition to a disastrous tax result, there is also potential for criminal charges in certain cases.

In cases where an attorney or promoter set up a captive insurance company negligently or fraudulently, they could have massive exposure for the damages that they caused to their client.

The IRS will be litigating captive insurance companies for the foreseeable future. For a detailed analysis of your captive insurance audit or case, or a malpractice claim related to a captive insurance company, call Bomar Law Firm at (404) 841-6561. Cal Bomar represents taxpayers in captive insurance cases, as well as other tax controversies.