November 10, 2015 (Houston, TX) - In response to continuing inquiries, Capstone Associated Services, Ltd. along with its affiliated tax law firm, The Feldman Law Firm LLP, announces a new program enabling prospective captive insurers to leverage the Firm's extensive tax controversy experience. The Firm now offers audit defense and tax controversy services for captive insurers managed by third parties in select situations.
"For the last 17+ years, we have successfully guided captive insurers administered by Capstone through IRS audits, IRS Appeals and the U.S. Tax Court," states tax attorney, Logan R. Gremillion. "The Firm offers its services on a case-by-case basis to those who are involved in varying stages of tax controversy with the Internal Revenue Service in the captive insurance area. Our Firm is leveraging our decade-long experience and our excellent track record in captive tax issues.”
Although IRS audits are infrequent, the Firm explains that audits are comprehensive, time consuming, and demand a significant amount of supporting legal and financial documentation.The Firm also notes an increase in the sophistication of the IRS' inquires over the last six years. The design and implementation of captive insurance arrangements is an exacting and detailed process. In order for insurers to remain tax compliant, some clerical captive managers offer "support" and "assistance" to the professionals charged with handling the audit.
"Most captive insurance managers in the industry disclaim all legal and tax consequences of the planning offered. In a captive tax audit, it is critical to have legal representation that has substantial experience in captive insurance taxation and the detailed knowledge of captive operations in order to address the Service's examination. All too often, the work of so-called 'captive managers' is incomplete. Additionally, new captive 'management companies' are springing up, touting 'turnkey services'. Yet, tax and legal support, if not completely disclaimed, is passed off to outside general practice firms at an additional cost to the client," added Gremillion.
The Firm commented that most captive managers in the industry provide only the administrative and clerical work needed to form and operate a captive insurance company.
"We have seen many cases where captive managers come up short when asked for copies of insurance policies, feasibility studies, evidence of the payment of premiums and pricing support in audit," commented Stewart A. Feldman, CEO and General Counsel of Capstone.
The Firm has recently represented three Capstone-administered captives in cases docketed in the U.S. Tax Court where ultimately the IRS conceded the taxpayer's position in full, resulting in no change in tax due. This was a four-year process. The company successfully completed more than 50 captive tax controversies.
Another program offered by the Firm is a full-scale "captive health checkup" in which all aspects of planning carried out by third-party captive managers is examined for Federal and state tax and domicile compliance. The Firm cautions that results cannot be guaranteed because each captive insurance case is determined on its own individual facts and circumstances.
Capstone administers the design, implementation, and management of captive insurance arrangements, providing exceptional risk coverage for middle market organizations. Middle market businesses may obtain tailored risk coverages and fill in gaps in their existing commercial policies with a captive insurance arrangement. Insurance premiums paid to the captive insurer are made on a tax-deductible basis.
For more information on Capstone's 17-year work history in forming and operating captives, please contact a member of its executive team.
Editor’s Notes: As of CURRENT_YEAR, Capstone has been operating for CAP_YEARS_NUMBER years and has formed over CAPTIVE_FORMATIONS captives. As of CURRENT_YEAR, The Feldman Law Firm has been operating for LAW_YEARS_NUMBER years and has successfully resolved over TAX_CONTROVERSIES tax controversies. The current cap on captive insurance premiums is CURRENT_PREMIUM_CAP million, which carries a 0% Federal income tax rate under Section 831(b) of the Internal Revenue Code.