Captive Insurance Audit Representation

Previously the realm of large corporations, a growing number of mid-sized and small businesses, professional service companies, and nonprofit organizations have been taking advantage of domestic and offshore captive insurance arrangements.

Although the establishment and management of a captive insurance company (“captive”) is legal, some have come under IRS scrutiny.

Benefits of captive insurance

Captive insurance is a kind of self-insurance company formed to provide coverage for a wide variety of business property and casualty risks. Premiums are not paid to an outside insurance company, but are instead invested and accumulate over time. The funds can later be used to cover losses connected to business risks that are either uninsurable or for which commercial insurance coverage is unreasonably priced.

In addition to the primary benefits related to cash flow and risk management, if a captive has the required economic and business purpose its premiums provide significant tax, estate planning and asset protection benefits. Captives can also provide a company with access to the reinsurance market, which can also provide significant cost savings and an opportunity to make additional profits from insurance sales.

Types of captive insurance

Captives take many forms, including pure (single parent), association (group), agency, alien, branch, diversified, reciprocal (risk retention groups), microcaptives, rent-a-captives and special purpose vehicles/reinsurers.

Captive insurance audit attorneys

The international and domestic tax attorneys at Moskowitz, LLP have successfully represented businesses facing captive insurance audits and enforcement actions. We provide experienced, aggressive representation, and will ensure that your captive insurance plan is in compliance with federal and state laws and regulations.

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