U.S. Tax Court Victory

Oxford Risk Management Group: Release

FOR IMMEDIATE RELEASE: 

Oxford Risk Management Group LLC is pleased to announce that, on October 29, 2021, the U.S. Tax Court accepted the Internal Revenue Service’s concession of taxes and penalties initially proposed against the owners of Puglisi Egg Farms of Delaware LLC with respect to Puglisi Egg Farms’ captive insurance arrangement managed by Oxford.  Oxford is not a party to the Tax Court cases. 

Oxford congratulates Puglisi Egg Farms on its victory in the Tax Court, and on a similar result (tax of $1.00) obtained in the companion cases involving Series KF of Oxford Insurance Company LLC.  To the best of Oxford’s knowledge, the Puglisi Egg Farms and Series KF cases were the first Oxford-managed captive insurance cases that were scheduled for trial in the Tax Court.  

Oxford’s outside counsel reported that Puglisi Egg Farms resisted the IRS’s concession in order to obtain a ruling on the merits, but the Court ruled in favor of the concession, ending the litigation. 

In accepting the IRS’s concession, the Tax Court explained that “[t]he IRS eventually determined to concede the amounts of tax at issue (except for about 2 percent that petitioners conceded) and to concede the penalties.”  Oxford was informed by its outside counsel that the remaining 2 percent adjustment was unrelated to the captive insurance arrangement.

Oxford’s outside counsel also pointed out that in the Puglisi Egg Farms case, the IRS was willing to concede not only the captive insurance-related tax adjustments in the years before the Tax Court (2015 – 2018), but also similar tax reporting in subsequent tax years (2019 and 2020).

Oxford does not give tax advice and cannot interpret the Tax Court’s ruling or the effect of the IRS’s concession for other insureds or reinsurance companies.  Oxford urges its insureds, particularly those currently under IRS examination, to consult with their legal and/or tax advisors concerning this important development. 

Oxford is not publicly commenting further on this matter.

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Please remember that Oxford does not give tax advice and urges its insureds to consult with their legal and/or tax advisors concerning this important development.