Captive owners sue advisers after IRS imposes penalties

Source: Business Insurance

Gavin Souter July 09, 2019 The owners of an 831(b) captive that the Internal Revenue Service ruled did not qualify for various tax benefits is suing the lawyer who allegedly advised them to establish the microcaptive. Benyamin and Orna Avrahami, who own a jewelry firm and various other businesses in Phoenix, last week sued Celia Clark, a former partner and now of counsel at Clark & Gentry PLLC in New York, alleging that Ms. Clark and her firm knew that the “captive insurance strategies” she recommended “did not provide insurance recognized under the Internal Revenue Code,” court papers say. The Avrahamis’ relied on Ms. Clark for advice on “complex insurance and tax matters, including tax law and captive insurance,” according to the suit, which was filed in U.S. District Court in Phoenix and seeks class action status