A Step Forward for Captive Insurance - Securitas Holdings

In the matter of Securitas Holdings, Inc. v. Commissioner,  T.C. Memo. 2014-225 issued today by the the U.S. Tax Court, the Court found that Securitas had established a bona fide captive insurance arrangement among its U.S. companies and was entitled to interest expense and premium deductions.  As with all true insurance companies (which most captive arrangements are if done for business purposes), the  captive arrangement shifted risks, distributed risks, and constituted "insurance" in order to make the premiums deductible.  

Indeed, if a captive insurance company is applicable to your holding company structures, the tax and premium benefits may be substantial.  This Office is happy to answer any questions that you may have concerning captive insurance arrangements.

The opinion of the Court can be found at this link:
http://ustaxcourt.gov/InOpTodays/SecuritasHoldings,Inc.Memo.Buch.TCM.WPD.pdf

South Carolina Needs To Change Its Tax Climate - Tax Rankings Released

South Carolina is standing in the shadow of North Carolina (as well as the rest of the country) and needs to take the necessary steps to make the State more tax competitive to draw business as well as individuals.  Currently South Carolina received the following rankings from the Tax Foundation's 2015 State Business Tax Climate Index.  http://taxfoundation.org/sites/taxfoundation.org/files/docs/TaxFoundation_2015_SBTCI.pdf

South Carolina Overall Rank - 37th

Corporate Tax Rank - 13th

Individual Income Tax Rank - 41st 

Sale Tax Rank - 18th 

Unemployment Insurance Tax Rank - 40th

Property Tax Rank - 21st 

From these rankings its clear there needs to be substantial changes to the individual income tax and unemployment insurance tax regimes in South Carolina. North Carolina made the single largest annual jump in the history of the rankings to No. 16 from No. 44 by lowering its corporate and individual income tax and its sales taxes.  South Carolina should take the cue as there is no reason for us to be in the bottom percentile. 

Social Security Taxable Maximum Increased to $118,500

The maximum amount of earnings subject to Social Security tax will rise to $118,500 in 2015, from the current $117,000, the Social Security Administration announced today.

OVDP: Definition of Willful Left Broad

Jennifer Best of the IRS stated that the IRS has deliberately refrained from offering a lot of examples about what constitutes willful failure to disclose offshore assets.  Taxpayers are only allowed to use the Internal Revenue Service's streamlined offshore voluntary disclosure program when they have failed to report foreign income or foreign financial accounts or assets, if they can certify that their failure to do so was non-willful.  Every taxpayer has a unique set of circumstances, therefore, definition of the term of "Willful" was intentionally left broad.