Showing posts with label insurance. Show all posts
Showing posts with label insurance. Show all posts
Lance Wallach | Remodeling
Small Business Retirement Plans Fuel Litigation: Article from Dolan Media Newswires: "Originally published 1/22/2010 Small businesses facing audits and potentially huge tax penalties over certain types of retirement plans are..."
Abusive Insurance and Retirement Plans
Abusive Insurance and Retirement Plans
CAPTIVE INSURANCE MEMORANDUM
On January 14, 2014, the Tax Court published its decision in Rent-A-Center, Inc. and
Affiliated Subsidiaries v. Commissioner of the Internal Revenue Service, a case in which the
IRS challenged the deductibility of insurance premiums paid to a captive insurance company.
The Tax Court upheld the deductions and, in the process, dealt a significant blow to the IRS.
The facts of the case are relatively straight-forward. Rent-A-Center (“RAC”) is a
publicly-held corporation with retail locations in all fifty states, which it operated through
fifteen subsidiaries. It also had thousands of employees. It had significant insurance needs
and, for a number of years, purchased commercial insurance from independent, third-party
insurers. It obtained workers’ compensation, automobile and general liability insurance
through a bundled policy offered by Travelers. When it received an unexpected invoice of $3
million from Travelers for “claim handling fees”, it retained Aon Risk Consultants, Inc.
(“Aon”) to review its risk management program.
Aon reviewed RAC’s insurance program and suggested that RAC obtain an unbundled
policy to cover it workers’ compensation, automobile and general liability insurance needs. It
also determined that RAC could save significant dollars if it retained a portion of the risk.
Accordingly, RAC purchased an unbundled insurance policy from an independent, third-party
insurer and retained the first $350,000 of
CAPTIVE INSURANCE MEMORANDUM
On January 14, 2014, the Tax Court published its decision in Rent-A-Center, Inc. and
Affiliated Subsidiaries v. Commissioner of the Internal Revenue Service, a case in which the
IRS challenged the deductibility of insurance premiums paid to a captive insurance company.
The Tax Court upheld the deductions and, in the process, dealt a significant blow to the IRS.
The facts of the case are relatively straight-forward. Rent-A-Center (“RAC”) is a
publicly-held corporation with retail locations in all fifty states, which it operated through
fifteen subsidiaries. It also had thousands of employees. It had significant insurance needs
and, for a number of years, purchased commercial insurance from independent, third-party
insurers. It obtained workers’ compensation, automobile and general liability insurance
through a bundled policy offered by Travelers. When it received an unexpected invoice of $3
million from Travelers for “claim handling fees”, it retained Aon Risk Consultants, Inc.
(“Aon”) to review its risk management program.
Aon reviewed RAC’s insurance program and suggested that RAC obtain an unbundled
policy to cover it workers’ compensation, automobile and general liability insurance needs. It
also determined that RAC could save significant dollars if it retained a portion of the risk.
Accordingly, RAC purchased an unbundled insurance policy from an independent, third-party
insurer and retained the first $350,000 of
Small Business Retirement Plans Fuel Litigation: Article from Dolan Media Newswires: "Originally published 1/22/2010 Small businesses facing audits and potentially huge tax penalties over certain types of retirement plans are..."
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