ZMF Announces Significant Victory in Microcaptive Insurance Penalty Case

ZMF Law announces victory in a federal district court case involving IRS assessment of penalties in connection with microcaptive insurance arrangements.

HOUSTON, TX, UNITED STATES, April 8, 2024 /EINPresswire.com/ -- Attorneys at Zerbe, Miller, Fingeret, Frank & Jadav LLP (“ZMF Law”) are pleased to announce a significant victory on behalf of a captive manager in a federal district court case involving the Internal Revenue Service’s (“IRS²”) assessment of penalties in connection with microcaptive¹ insurance arrangements.

On April 4, 2024, the jury in Anker v. United States concluded that the IRS failed to show that the captive manager, Mr. Ankner and affiliated entities, was liable for Internal Revenue Code (“IRC”) Section 6700 penalties. Accordingly, after more than a decade disputing the issue, the taxpayer was determined to owe no penalties, and will receive a refund of penalties previously paid which were required to have his day in court.

The taxpayer’s victory in the U.S. District Court for the Middle District of Florida is the first of its kind in the captive insurance area and represents a significant victory for both the captive insurance industry and taxpayers alike.

“This is a big win for the industry. The case supports the sentiment of much of the small captive insurance industry, where there is concern that the lack of adequate guidance has made it difficult to anticipate what the IRS has now decided are the rules,” said Matthew Reddington, a partner at ZMF Law, who tried the case along with ZMF Law Senior Attorney, Janine Campanaro.

“We are glad that the jury did not allow the government to use a series of later Tax Court wins to assume what was known in the past and vilify our client and that they agreed he was simply trying to provide quality service to his clients in good faith using the guidance available at the time,” Reddington said.

The verdict follows several taxpayer losses in a series of Tax Court cases involving shareholders of “microcaptive” insurance companies.

“I am incredibly happy for our client who has been through so much,” said Steven Miller, partner at ZMF Law and former acting Commissioner of the IRS. “The taxpayer’s win echoes what we have been saying. There is a critical need for guidance in this area rather than leading only with aggressive enforcement. My hope is that it’s possible to work with the IRS in the future on such guidance to help taxpayers comply in what is a difficult area.”

The case is Ankner v. United States, Nos. 2:21-cv-330, 2:21-cv-331, 2:21-cv-333, and 2:21-cv-334 (M.D. Fla. 2024).

Contact:
Matthew Beddingfield
Senior Associate Attorney for Zerbe, Miller, Fingeret, Frank & Jadav LLP
mbeddingfield@zmflaw.com
713-552-5531

Amber Allman
alliantgroup
+1 713-513-8196
email us here

¹ https://zmflaw.com/
² https://zmflaw.com/
³ https://zmflaw.com/