(Image: Allison Bell/ALM)
The Internal Revenue Service says it's forming 12 audit teams to go after what it sees as "several thousands" abusive micro-captive insurance arrangements.
The new examination teams will be made up of employees from the IRS Large Business and International and Small Business/Self-employed divisions, IRS officials announced Friday.
"These teams will use all available enforcement tools, including summonses, to obtain necessary information," the IRS said in the announcement. "Potential civil outcomes can include full disallowance of claimed captive insurance deductions, inclusion of income by the captive entity and imposition of all applicable penalties."
A "micro captive" is a small insurance company that focuses on serving one taxpayer, or one group of taxpayers.
The IRS has been expressing concerns about micro captives for years, and it put the arrangements on its "Dirty Dozen" problem tax arrangements list for 2014.
