June 13, 2016 (Houston, TX) - Stewart A. Feldman, CEO and General Counsel for Capstone, was a featured speaker at the Western Region Captive Insurance Conference, held May 9, 2016 in Phoenix, AZ. Mr. Feldman's presentation addressed state Independently Procured Premium Taxes (IPP) and the related provisions of Dodd Frank's Nonadmitted & Reinsurance Reform Act, both critical issues in alternative risk planning. The conference covered captive operations in Arizona, Missouri and Utah.
Feldman's presentation focused on certain land mines in captive planning that are typically ignored by most "captive managers." "Because most so-called 'captive managers' disclaim tax, legal and other professional services, they typically brush aside serious aspects of the planning, leaving their clients exposed. State tax liability has always been an overhang on captive planning," explained Feldman. "Clerical and administrative 'captive managers' leave their clients in a lurch by brushing over or ignoring many of the tax issues."
Capstone's participation received positive feedback from industry participants, many of whom were unaware of the state tax impact on captive insurers. "After forming 200 captives over eighteen years and seeing them through ultimate wind up, and occasionally a tax audit or IRS appeals, and U.S. Tax Court, we at Capstone have a healthy respect for the sophistication of captive/alternative risk planning. There are many moving parts to operating a bona fide insurance company. Unfortunately, many consider the planning to be a simple process of filling out a few forms. This usually comes home to roost in a bad way. We think this industry dialogue concerning state tax liability, the pitfalls of cell captive structures, and the dangers of not having a single person as the overall quarterback for the captive program is timely and necessary."
There were almost 200 attendees at the Phoenix conference which included representatives from CPA and insurance firms, in addition to retail and financial companies.