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Captive Insurance Companies Pre-Audit Compliance and Audit Defense

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The IRS is cracking down on captive insurance companies. Are you prepared?

The formation of a Captive Insurance Company (CIC) has become a common practice among both the Fortune 1000 and small and mid-sized companies, offering businesses an alternative to appropriately manage risk while at the same time taking into account future tax and business planning. With this growth of CICs, the IRS has begun tax shelter promoter examinations and has publicly stated their concern with captive insurance companies, going so far as to add captive insurance companies to the IRS's “Dirty Dozen” list of tax scams for 2015.

The IRS has initiated audits of hundreds of taxpayers with captive insurance companies and is also examining practitioners that are assisting CICs with compliance. For those businesses and practitioners found uncompliant with IRS standards, the consequences are severe and could include understatement and negligence penalties, as well as potential unwinding of the captive formation and loss of important tax benefits.

For those seeking to protect their CIC, don't wait until the IRS starts an examination to ensure you are up to code. With a staff that includes former IRS commissioners, experienced litigators and tax and legal specialists, alliantgroup's Tax Controversy Services team can help ensure that you or your client's CIC is fully compliant and in line with IRS standards. Our services include:

  • Risk pool review
  • UTP review
  • FIN 48 analysis
  • Review and prepare areas of concern
  • Analysis of foreign bank report filings
  • Review of foreign bank report filings
  • IRS audit/exam representation  
  • State audit/exam presentation
  • Substantiation and documentation assistance
  • Internal procedures and best practices consultation
  • Evaluation of insured risks
  • Compliance review

If you or your client's CIC is already facing IRS examination, now is the time to let our experts defend your interests in the following areas:

  • Audit defense
  • Substantiation and documentation assistance
  • Risk assessment of your captive (pooling analysis)
  • Audit readiness
  • Strategic help on future compliance


For more information on alliantgroup and our captive insurance services, please contact John Dies at john.dies@alliantgroup.com or 713.877.9600.

Dean Zerbe and Steve Miller quoted in Captive Insurance Times: Micro Captives on Thin Ice

Accounting Today: Captive Insurance on the IRS Dirty Dozen List: What Every CPA Needs to Know