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IRS Finds New Target in Microcaptive Enforcement: The State of Delaware

By Anthony P. Daddino on June 23, 2020

Just when you thought the IRS hit full speed in its enforcement campaign against microcaptives, the IRS found another gear.  After pursuing captive management companies, tax advisors, and taxpayers alike, the IRS has set its sights on a new foe:  the Delaware Department of Insurance.

On June 18, 2020,  the Department of Justice Tax Division filed a petition to enforce an IRS summons against the Delaware Department of Insurance.   According to the petition, the IRS had previously summonsed the state agency for numerous documents relating to the issuance by the Department of Insurance of approximately 191 insurance certificates of authority to Artex Risk Solutions and its predecessor, Tribecca Strategic Advisors.  Those captive managers have been the subject of a years-long IRS promoter investigation, which has spawned hundreds of audits of taxpayer-clients.    Several of those unhappy clients have joined together in filing a lawsuit against Artex, Tribecca, and other professionals involved in the captive planning seeking damages sustained in connection with the promotion of allegedly illegal and abusive tax shelters.  

Among the documents summonsed by the IRS are emails between the Delaware Department of Insurance and Artex or Tribecca.   The petition references one email that the IRS secured from another source, where Artex invited a Department of Insurance official to a “thank you” dinner.  The insurance official politely declined the invitation citing pre-existing plans with another captive management company.   

This latest move shows that no one is outside the reach of Uncle Sam, and that the IRS is certainly not losing its appetite for microcaptives.

If you have any questions about this blog post or any other tax-related matter, please do not hesitate to contact me at (214) 749-2464 or adaddino@meadowscollier.com.