1804, 2019

Tax Court Issues section 831(b) Ruling in Syzygy Insurance

By |April 18th, 2019|alliantNational Blog, Resource Library|0 Comments

On April 10th, The Tax Court issued its latest opinion involving micro-captives. In mostly finding for the IRS, the Court maintains the analytical framework set forth in its opinions in Avrahami (2017) and Reserve Mechanical (2018). It also provides a window into what happens when the IRS invalidates the 831(b) election.

The Court found that Syzygy, a Delaware captive insurance company, failed to establish that it was an insurance company for tax purposes on the grounds that it failed to properly distribute risk and that the arrangement was not “insurance in the commonly accepted sense.”

In its analysis of Syzygy’s risk distribution, the Court relied on Avrahami and Reserve, focusing on aspects of the risk pool.  The insured entities in this case have 400 employees and operate in six different locations. Interestingly, the Court, however, did not analyze whether there were a sufficient number of independent risk exposure units to establish risk […]

2702, 2019

alliantNational Amicus Brief Helps Pave Way to Victory for Taxpayers at Ninth Circuit

By |February 27th, 2019|Resource Library|0 Comments

alliantNational is proud to announce that the U.S. Court of Appeals for the Ninth Circuit has ruled in favor of a taxpayer couple supported by the firm, saying the IRS failed to give the couple a meaningful opportunity to volunteer certain tax records on their own.

The Court determined that the Internal Revenue Service hadn’t provided sufficient notice to Joseph and Patricia Baxter when it issued a summons to the California Supreme Court seeking various documents as a part of the agency’s National Research Program.

The leadership of alliantNational, as parties of the associated law firm Zerbe Miller Fingeret Frank & Jadav LLP, submitted an amicus brief on behalf of the couple, arguing that the tax code and legislative history required the IRS to give the couple an adequate chance to respond to its document request before contacting a third-party.

The Ninth Circuit ruled on February 26 that the IRS had […]

1402, 2019

Writing the Playbook: alliantNational’s Miller and Amin Contribute to ABA’s Captive Insurance Handbook

By |February 14th, 2019|Resource Library|0 Comments

alliantNational’s own Steven T. Miller and Meeren Amin co-authored a chapter in the American Bar Association’s 2018 Captive Insurance Deskbook for the Business Lawyer. The book helps attorneys navigate the often-murky paths of captive insurance companies and offers suggestions on whether a captive is a suitable option for a business owner.

Miller and Amin co-authored a chapter on “Captive Insurance Tax Controversy,” where the two discussed how the Internal Revenue Service conducts audits of captives, the appeals process if the agency determines a captive has violated pertinent law, how to prepare for possible litigation and effective pre-audit strategies for managing a captive.

The book’s publication comes at a time when most Fortune 500 companies, as well as many small to mid-sized businesses and tax-exempt organizations are involved with captives. It features a wide-range of tax controversy professionals and serves as a comprehensive outline for any business that is looking into the […]

1309, 2018

Syndicated Conservation Easements Included in Next Wave of LB&I Compliance Campaigns

By |September 13th, 2018|Resource Library|0 Comments

On September 10, the Large Business and International Division (LB&I) of the IRS announced five additional compliance campaigns. Initially announced in January 2017, LB&I’s Compliance Campaigns are designed as an issue-based approach to address areas of tax that the Service has identified as having a high risk of compliance issues. Among the items listed in this newest rounds of campaigns, taxpayers will find Syndicated Conservation Easements. All in all, the Service has currently identified 45 areas of enforcement.

A conservation easement is a donation to certain tax-exempt and government organizations of a right in real property, made by a taxpayer for a conservation purpose. When established correctly and for proper purposes, a conservation easement allows a taxpayer to take a deduction for donating an easement on real property to a qualified organization, while continuing to own and enjoy the property.

However, not all conservation easements are created equal. The IRS has been […]

907, 2018

LB&I Continues to Expand its Campaign List

By |July 9th, 2018|Resource Library|0 Comments

On July 2, 2018, the Large Business and International (LB&I) Division of the IRS released five additional Compliance Campaigns. Initially announced in January 2017, LB&I’s Compliance Campaigns are designed as an issue-based approach to address areas of tax that the Service has identified as having a high risk of compliance issues. This determination is based on extensive data analyses as well as suggestions from IRS employees and other members of the tax community. Additionally, the Service has notified taxpayers and practitioners that they will be reviewing all campaigns in light of changes imposed by tax reform.

Of the five campaigns announced on July 2, the virtual currency campaign is perhaps the most notable. The remaining campaigns include Restoration of Sequestered Alternative Minimum Tax (AMT), S Corporation Distributions, repatriation via foreign triangular reorganizations, and application of the section 965 transition tax.

In line with the recent speculation of practitioners, LB&I has formally initiated […]

907, 2018

Supreme Court Issues Monumental Sales Tax Decision Involving Online Retailers

By |July 9th, 2018|Resource Library|0 Comments

On June 21, the US Supreme Court issued its decision in South Dakota v. Wayfair, clearing the path for states to impose sales tax on online and remote retailers. Previously it had long been established that a state could not impose a sales tax on a remote seller if they did not have a physical presence in the state. This meant that online retailers and other remote sellers were not required to collect and remit sales taxes in states in which they did not have a physical presence. However, in ruling in favor of South Dakota the Court has overturned this long established precedent.

Established in Quill Corp. v. North Dakota, the physical presence standard posited that in order for a taxpayer to be subject to a state’s sales tax, the taxpayer must have a physical presence in that state. This is an extension of the physical presence standard established in […]

2206, 2018

Tax Court Follows Avrahami Analysis in Reserve Mechanical Decision

By |June 22nd, 2018|Resource Library|0 Comments

Last August, the US Tax Court issued its decision in Avrahami v. Comm’r of Internal Revenue, No. 17594-13, (T.C. Aug. 21, 2017), the earliest Tax Court opinion involving a micro-captive. A second case has joined its ranks. On June 18, the Tax Court released its ruling in Reserve Mechanical v. Comm’r of Internal Revenue, No. 14545-16, (T.C. June 18, 2018). While it involved a small insurance company and whether it qualified under Internal Revenue Code section 501(c)(15), Reserve Mechanical provides additional information about the Tax Court’s views on captives and what the court considers insurance in this context.

Captive insurance owners and managers should note that even though the taxpayer’s facts in Reserve were different than those facts presented in Avrahami, the Court’s underlying analysis of the issues remained similar between the two cases. For example, both the Avrahami and Reserve decisions focused primarily on two of the four criteria required […]

406, 2018

Early 2018 is LB&I’s Campaign Season

By |June 4th, 2018|Resource Library|0 Comments

On May 21, 2018, the Large Business and International (LB&I) Division of the IRS released six additional Compliance Campaigns. Initially rolled out in January 2017, LB&I’s Compliance Campaigns are designed as an issue-based approach to address areas of tax that the Service has identified as having a high risk of compliance issues. This determination is based on extensive data analysis as well as suggestion from IRS employees and other members of the tax community.

Of the six campaigns announced on May 21, three revolve around nonresident aliens (NRA’s). These three campaigns, Nonresident Alien Tax Treaty Exemptions, Nonresident Alien – Schedule A and Other Deductions, and NRA Tax Credits, will attempt to increase compliance through both outreach, education and traditional examinations. The Nonresident Alien Tax Treaty Exemptions campaign is aimed at increasing compliance related to requests for exemptions under U.S. tax treaties. The Nonresident Alien – Schedule A and Other Deductions […]

2905, 2018

Cracking Down on Cryptocurrency

By |May 29th, 2018|Resource Library|0 Comments

While there are many reasons for people to invest in any given financial platform, the attraction of investing in cryptocurrency has long been rooted in the platform’s anonymity, lack of oversight, and inherent decentralization. As such, many investors, relying on the anonymous and unregulated nature of cryptocurrency, have not reported their earnings to the IRS and have avoided disclosure without consequence. However, recent indicators from prominent tax practitioners, the IRS, and the Department of Justice are hinting at the demise of the days of abject anonymity in the crypto-world.

At a recent May 12th tax conference, a specific panel called “Life Cycle and Tax Implications of a Cryptocurrency” discussed ways in which the tax landscape is changing for cryptocurrency investors. Two major themes emerged from the panel—the Internal Revenue Service (IRS) is stepping up their enforcement capabilities, and the Department of Justice (DOJ) is primed to prosecute cryptocurrency crimes.

First, the IRS […]

1804, 2018

Cryptocurrency Creating Taxpayer Conundrums

By |April 18th, 2018|Resource Library|0 Comments

As the tax season winds to a close, tax practitioners and taxpayers can once again begin the process of looking ahead. However, this tax filing season has left several questions unanswered. In particular, the treatment of certain cryptocurrency transactions have left taxpayers searching for answers without a clear path forward.

Generally, the basic tax treatment of cryptocurrency has been addressed. In Notice 2014-21, the IRS alerted taxpayers that cryptocurrency will be subject to the same laws surrounding other forms of property. Although this concept seems straightforward, the nature of cryptocurrency has already lead to several substantial complications. For instance, simply determining the value of a cryptocurrency at any given moment may depend greatly on the exchange you are looking at and, given the volatility of the market, the time of day.

Compounding these issues is the general lack of public understanding surrounding the taxability of cryptocurrency. In US v. Coinbase Inc., the […]

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