IRS Micro-Captive Court Victories Spur Settlement Speculation

The IRS’s legal battle against one of its “dirty dozen” tax scams is still young, but early victories for the agency have some wondering if a large-scale settlement is on the horizon.

The U.S. Tax Court in Syzygy Ins. Co. v. Commissioner handed the Internal Revenue Service its third straight victory in a case involving an insurance arrangement known as a micro-captive. The April decision followed successive wins in Avrahami v. Commissioner and Reserve Mechanical Corp. v. Commissioner.

The IRS has accused some of the arrangements of being tax shelters, and in 2016 it put out a notice describing ...