1403, 2018

CICA: Standing up to the IRS can be good for the industry

By |March 14th, 2018|captives, publishedarticles|0 Comments

March 14, 2018
By Ned Holmes
Published in captive insurance times

For a good captive, standing up to the Internal Revenue Service (IRS) may be the right answer and could positive for the industry as a whole, says John Dies, managing director of tax controversy at alliantgroup.

Speaking at Captive Insurance Companies Association’s (CICA) 2018 Conference, Dies suggested the impact of winning a case against the IRS could be felt across the captive industry.

He said: “It is great for the industry when a captive stands up to the IRS, wins and creates a precedent that the industry can use.”

“We have seen the impact in cases where outsiders thought there was not a chance a captive could win and they made changes in the industry–and I believe that is positive for the industry.”

According to Dies, in the right context fighting the case is the correct move for a captive.

He explained: “In many cases, great […]

903, 2018

How Will TCJA Affect Individuals Electing Corporate Taxation?

By |March 9th, 2018|publishedarticles|0 Comments

March 9, 2018
By Andre Velarde
Published in Tax Notes

The Tax Cuts and Jobs Act has brought newfound attention to an election by individuals to treat themselves as corporations, as well as important questions about uncertainties surrounding its interplay with newly enacted international provisions.

Section 962 was drafted in 1962 and until recently was largely unknown to many practitioners. Under that section, U.S. individual shareholders may annually elect to be taxed at the corporate tax rate for their section 951(a) subpart F inclusions. The taxpayer may also claim the deemed- paid foreign tax credit under section 960. The election has its limits, however, as under section 962(d), when an actual distribution is made, the earnings and profits from a controlled foreign corporation that exceed the tax applicable under the section 962 election are also treated as income.

The TCJA committee report, in a terse footnote about section 965, cites to the section 962 […]

2602, 2018

Republicans Just Bought the IRS

By |February 26th, 2018|publishedarticles|0 Comments

February 26, 2018
by Mark W. Everson, former IRS Commissioner and alliantgroup Vice Chairman
The Hill

After nine years of a contentious relationship with the Internal Revenue Service, Republicans find themselves in the uncomfortable position of needing the IRS to deliver on tax reform. The stakes are high. In 2016 there were 30 percent more individual income tax returns processed by the IRS than votes cast in the presidential election. And execution matters. Just think of the ObamaCare exchanges, when a botched rollout of the website – involving only a small fraction of the people who interact with the IRS – did lasting damage to a signature legislative achievement supported by a single political party. Here’s what should be done:

Give the IRS the money it needs to pull this off. The service will have to staff up and train personnel in its call centers to accommodate a spike in taxpayer and practitioner […]

1402, 2018

Transition Tax Guidance Restricts Tax-Year Changes for 2017

By |February 14th, 2018|publishedarticles|0 Comments

February 14, 2018
By Ryan Finley
Published in Tax Notes

To prevent unintended deferral of transition tax, calendar-year specified foreign corporations (SFCs) will be barred from changing their tax years if the resulting 2017 year would end before December 31, new IRS guidance says.

With its February 13 release of Rev. Proc. 2018-17, the IRS modified prior guidance on changes of tax year to address foreign entities classified as SFCs under the Tax Cuts and Jobs Act (P.L. 115-97). The revenue procedure amends Rev. Proc. 2002-39 and Rev. Proc. 2006-45 to deny any request to change the tax year of an SFC with deferred earnings and profits and a 2017 tax year beginning January 1, 2017, to any date other than December 31, 2017. (Related analysis.)

The new rules will prevent “changes to the annual accounting periods of certain foreign corporations in 2017 under either the existing automatic or general procedures if such change […]

1701, 2018

TAS Report Could End ‘Hall of Mirrors’ in IRS Appeals Talks

By |January 17th, 2018|publishedarticles|0 Comments

January 17, 2018
By Stephanie Cumings
Published in Tax Notes

IRS Appeals could reverse course on letting counsel and compliance employees participate in its work, after the latest Taxpayer Advocate Service report said the collaboration threatens Appeals’ independence.

If the IRS continues allowing this type of participation, it will further erode taxpayer faith in the appeals process, practitioners told Tax Analysts.

Sheri A. Dillon of Morgan, Lewis & Bockius LLP hopes the TAS report leads to compliance and counsel only being invited to an appeal when “it’s mutually agreed upon with the taxpayer.” Not only will this ensure that taxpayers “do not get caught in an IRS hall of mirrors” during the negotiations, it will also protect Appeals’ independence, efficiency, and integrity, Dillon said January 12. She also wants Appeals to reestablish face-to-face conferences.

Kathy Petronchak of Alliantgroup LP said compliance personnel’s participation in appeals needs to change. “There are substantial opportunities for compliance to […]

1001, 2018

John Dies: Captives Must Be Mindful of Trump’s Tax Reform

By |January 10th, 2018|captives, publishedarticles|0 Comments

January 10, 2018
By Ned Holmes
Published in captive insurance times

Captives need to be mindful of the changes brought by Trump’s US tax reform plan, despite its positive effect on the insurance industry in general, according to John Dies, managing director of tax controversy at alliantgroup.

The Tax Cuts and Jobs Act, which was signed into law on 22 December 2017 by President Trump, brings a permanent cut on corporate tax rates and a temporary cut on individual rates.

The decrease in tax rate means improved profitability and therefore represents a positive for the insurance industry in general.

Although this improved profitability will in turn impact the competitiveness of the market, Dies explained that while rates may go down, he doesn’t expect this to have a huge effect on the captive market.

Dies commented: “I don’t expect captive insurance to take a competitiveness hit, although, it’s undeniable that insurance rates and other things may go […]

512, 2017

How Tax Reform Could Hinder Innovation in the U.S.

By |December 5th, 2017|publishedarticles|0 Comments

December 5, 2017
By Lydia DePillis
CNN Money

In its frenzied rush to write a tax bill that could win enough votes, the Senate inadvertently weakened a powerful tool for promoting innovation.

The research and development tax credit allows companies to write off a portion of their spending on experimentation for new and better products. It’s been particularly popular with drug companies and the software industry since first being enacted in 1981.

After the credit was made permanent in 2015, the Treasury Department estimated it would cost $148 billion between 2017 and 2026, making it one of the largest tax breaks in the revenue code.

The credit survived in both the House and the Senate tax bills, which eliminated several tax breaks in order to justify lowering the corporate tax rate to 20%. And it would have continued to help corporations lower their taxes even further, but for a last-minute decision by the Senate to […]

3110, 2017

Tax Reform Eve

By |October 31st, 2017|publishedarticles|0 Comments

October 31, 2017
By BERNIE BECKER
Politico

T-MINUS ONE DAY: House Ways and Means Chairman Kevin Brady (R-Texas) is scheduled to drop his eagerly anticipated tax bill in just one day, and there’s still a lot of frenzy surrounding the House GOP’s efforts.

In fact, you’d be excused for thinking the House Republican tax writers are having something like a last-minute cram session today. Ways and Means Republicans are supposed to start huddling early this morning, and meet into the evening as Brady and company try to put the finishing touches on their tax overhaul. The Ways and Means chairman, along with Speaker Paul Ryan, is then expected to brief the GOP conference-at-large on his work on Wednesday morning.

That schedule comes amid open conversations both on K Street and among congressional staffers about whether Wednesday’s scheduled release will be fully fleshed out and ready for the Ways and Means Committee to mark up.

MORE […]

1310, 2017

Tax Pros Seeking Clue On Small Captive Insurance Cos.

By |October 13th, 2017|captives, publishedarticles|0 Comments

October 13, 2017
By Eric Kroh
Law 360

As the Internal Revenue Service continues to scrutinize the tax treatment of small captive insurance companies, tax practitioners are looking to a trio of cases before the U.S. Tax Court to discern where the lines will be drawn between legitimate insurers and shams.

The cases — one that has already been decided and two in which decisions are pending — are the court’s first to make it to trial over the intersection of captive insurance companies and Section 831(b) of the tax code, under which companies can elect to be treated as small insurance companies subject to tax on investment income but exempt from tax on premiums received.

In its August opinion in Avrahami v. Commissioner, the Tax Court provided some guidance on how it will decide which captive firms are true insurance companies that merit the small insurer tax exemption, but left tax attorneys and their […]

1909, 2017

Avrahami Ruling On Microcaptives Offers Little Guidance

By |September 19th, 2017|publishedarticles|0 Comments

September 19, 2017
by Steven Miller, former IRS Acting Commissioner and alliantgroup National Director of Tax
Law360

On Aug. 21, the U.S. Tax Court released its long-awaited opinion in Avrahami v. Commissioner — the court’s first ever section 831(b) decision. Over the past few years the U.S. Internal Revenue Service has ramped up its scrutiny of “microcaptives,” as evidenced not only by a steadily increasing number of audits, but also by 1) the IRS’ placing such arrangements on its annual “dirty dozen” list for each of the past three years, 2) classifying these arrangements as transactions of interest under Notice 2016-66 and 3) making microcaptives one of the first IRS large business division campaigns.

However, even with this level of scrutiny, the captive insurance industry has been left in the dark with little to no […]

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