House of Cards-Implosion of the Bleeding Edge 831b Captive Industry (Feb.2019)


captive insurance image

This article is discussing the same lawsuit discussed elsewhere in this issue, Shivkov v. Artex Risk Solutions, Inc., Case No. 2:18-cv- 04514-GMS (D. Ariz. Dec. 6, 2018), but references a different plaintiff. It should be noted that Mr. Cantley has a cocounsel arrangement with the tax shelter practice of Loewinsohn Flegle Deary Simon LLP, counsel for the plaintiffs.

Aftermath: IRS & Private Litigation In Captive Insurance Companies


lawyer in irs private litigation

Beckett G. Cantley teaches international taxation at Northeastern University and is a shareholder in Cantley Dietrich PC. Geoffrey C. Dietrich is a shareholder in Cantley Dietrich PC.

In this article, Cantley and Dietrich discuss two recent Tax Court opinions and their implications for section 831(b) captive insurance companies.

The Tax Shelter Disclosure Act: The Next Battle in the Tax Shelter War


The Tax Shelter Disclosure Act

Beckett G. Cantley, The Tax Shelter Disclosure Act: The Next Battle in the Tax Shelter War, 22 Va. Tax Rev 105 (2002). Summary.  This article analyzed the most important sections of the draft “Tax Shelter Disclosure Act” (“TSDA”), including the significant amendments to the Internal Revenue Code that would have been made by the TSDA.  Two of the main provisions of the TSDA define what constitutes a “tax shelter” and raise the penalties associated with tax shelters.  The article synthesized and analyzed the criticisms of several important organizations who issued public comments on the legislation and provided policy assessments of its likely benefits and burdens.

United States v. KPMG


Beckett G. Cantley, United States v. KPMG: Does Section 6103 Allow the IRS to Put Taxpayer Names on the Front Page of the Wall Street Journal?, 50 Clev. St. L. Rev. 1 (2002-2003). Summary.  This article discussed whether the IRS violated Section 6103 of the Internal Revenue Code (“IRC”) when it disclosed the names of several prominent taxpayers in a public lawsuit involving KPMG, a “Big Four” CPA firm.  The disclosure lead to a Wall Street Journal article titled “IRS Releases Names of People in Disputed KPMG Tax Shelters”.  Section 6103(a) sets forth the general rule that taxpayer “return information” is generally confidential, subject to certain limited exceptions.  Section 6103(b)(2) provides that “return information” includes taxpayer names as well as other information.  The article concluded that it is likely that the United States (“US”) violated the general rule of Section 6103 because the US improperly disclosed taxpayer names in the KPMG case.  However, the article further concluded that it is unlikely that the named taxpayers would recover damages because the US is likely to meet the exception where the disclosing party has a good faith, but erroneous, interpretation of Section 6103.

Taxation Expatriation: Will the Fast Act Stop Wealthy Americans from Leaving the United States?


Taxation Expatriation

Beckett G. Cantley, Taxation Expatriation: Will the Fast Act Stop Wealthy Americans from Leaving the United States?, 36 Akron L. Rev. 221 (2003). Summary.  This article analyzed the recently enacted legislative solution to the problem of wealthy American citizens expatriating to a foreign nation to avoid taxes.  The article also discussed the last major attempt to prevent tax expatriation through the enactment of IRC Section 877 and the fact that Section 877 was being easily circumvented by tax expatriates and their advisors.  To stem the tide of tax expatriation, certain tax provisions were added to the Foreign and Armed Services Tax Fairness Act (“Fast Act”) that would bolster the previsions existing under Section 877.  Under the draft Fast Act, two of the ways tax expatriates will be punished are by (1) treating all of the tax expatriate’s holdings as if they had been sold the day before expatriation, thereby triggering all inherent capital gains on the holdings and (2) requiring that estate taxes due from the death of a tax expatriate be collected against a domestic heir of the tax expatriate, rather than the tax expatriate’s estate.  The article analyzes the operational and policy implications of the FAST Act, and concluded that while it adds additional deterrents to tax expatriation, it cannot eliminate it.