Media Mentions
2009
Thomas Jones was quoted by Modern Healthcare in an August 3 story about an Arizona-based health system that is one of the first not-for-profit hospital operators to win U.S. Department of Labor approval for reinsuring employee benefits through a captive insurance company. Such expanded use of captives has been allowed in limited circumstances since 2000, but has not been widely adopted. “This is cutting edge,” Mr. Jones said of the system’s program, “This is not garden variety.”
Thomas M. Jones PC, Captive Insurance and Reinsurance, Nonprofit Organizations, Tax
Thomas Jones was quoted in Bermuda Insurance Update (2009 vol. 3) concerning SUMIT, the captive insurance company for Stanford University’s hospitals. SUMIT and its cells elected “disregarded entity” status to maintain onshore federal tax status, and Mr. Jones stated that, “As far as I know, SUMIT is the first captive to use this otherwise common procedure to achieve hybrid onshore tax/offshore regulatory status.” In a second article Mr. Jones stated that the IRS is moving “inexorably” toward treating every cell in a segregated cell company as a separate taxpayer. “While this IRS position involves quite a bit of ‘tax fiction’ given that nonvoting preference shares or even mere contract rights associated with a cell will be deemed equivalent to ownership of voting shares, such outcomes are common in other areas of federal taxation,” he said.
Thomas M. Jones PC, Captive Insurance and Reinsurance, International Tax
Thomas Jones was also quoted in Business Insurance on May 11 that the Obama plans to curb offshore tax breaks contain "nothing specific . . . that would seem to impact offshore captives in any particular manner." Mr. Jones explained that for 20-plus years IRS rules have blocked U.S. tax deferral by offshore captive insurers. "Tax deferral and tax avoidance in captives don't mix," he stated. "Almost never do captives enjoy tax avoidance or tax deferral by going offshore."
Thomas M. Jones PC, International Tax, Tax
Thomas Jones addressed in a May 11 Business Insurance story the implications for the property/casualty insurance industry of the Obama Administration's plan to curb the deferral of taxes on profits earned offshore. Mr. Jones noted that for property/casualty insurers "there is deferral available for certain situations," as when a U.S. insurance subsidiary in another country that underwrites risk in that country can defer taxes on the income. "A substantial erosion of deferral could be a negative factor," he stated, adding, "at this point it's too difficult to quantify until we see how this all plays out."
Thomas M. Jones PC, International Tax, Tax
2008
Tom Jones was mentioned in the May issue of The Risk Retention Reporter and the April issue of American Agent & Broker for receiving the Captive Insurance Companies Association's 2008 Distinguished Service Award.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Tax
Tom Jones was mentioned in the April issue of Chicago Lawyer for receiving the Captive Insurance Companies Association's 2008 Distinguished Service Award.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Tax
Tom Jones was quoted in the April issue of Rough Notes about how the IRS reversed its proposal concerning the taxation of captives. "The consolidated tax return area of the IRS has a huge amount of authority to promulgate regulations," Mr. Jones said. "Congress has given the Consolidated Returns Group the authority to write 'legislative regulations' as contrasted with 'interruptive regulations' that other code areas are limited to," he added.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Tax
Tom Jones was quoted in the March 2008 issue of Vermont Business Magazine about how the IRS withdrew the proposed regulation that would have prevented captive insurance companies based in the Unites States from claiming tax deductions for money set aside to cover future claims and losses. Under the existing tax code, Mr. Jones said, "We do have a level playing field." The proposed IRS regulation, "Will have the possibility of tilting the field," he said, toward the offshore domiciles.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Tax
Tom Jones was mentioned in the March 27 issue of Risk & Insurance for receiving the Captive Insurance Companies Association's 2008 Distinguished Service Award.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Tax
Tom Jones was quoted in the March 17 issue of Business Insurance about how the IRS reaffirmed its long-held position that excise taxes on insurance and reinsurance purchased from foreign insurers and reinsurers apply each time a risk is ceded, but also has offered an amnesty period to encourage compliance. "How will the information flow work, particularly if a U.S. risk is sliced and diced in co-mingled excess-of-loss treaties...lots of administrative problems," said Mr. Jones.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Tax
Tom Jones was mentioned in the March 14 issue of Chicago Daily Law Bulletin for going to the University of Illinois in Champaign to address the students in the class called "Law 794: International Business Organizations: The Cayman Islands."
Thomas M. Jones PC, Captive Insurance and Reinsurance, Tax
Tom Jones was quoted in the February 25 issue of Business Insurance about how the captive insurance industry is savoring a huge victory in last week's Internal Revenue Service decision to withdraw a proposed rule that would have stripped hundreds of captives of a key tax advantage, but other regulatory threats remain. "It really was a three-pronged approach," said Mr. Jones.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Tax
Tom Jones was quoted in the February 25 issue of the National Underwriter about how the IRS dropped its proposed captive tax proposal. Mr. Jones responded that the news is "gratifying -- a once-in-a-career event, maybe." He added that "apparently, they took the [industry's] comments seriously."
Thomas M. Jones PC, Captive Insurance and Reinsurance, Tax
Tom Jones was mentioned in the February 22 issue of Chicago Daily Law Bulletin for receiving the Captive Insurance Companies Association's 2008 Distinguished Service Award.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Tax
Tom Jones was quoted in the February 20 issue of Financial Week about how the IRS has dropped a proposed rule that would have stripped a key tax break utilized by hundreds of captive insurance companies. "The IRS took the comments to heart and this is the result. We are ecstatic," said Mr. Jones.
Thomas M. Jones PC, Captive Insurance and Reinsurance
Tom Jones was quoted in the January 16 issue of Business Insurance about how the IRS has provided examples of situations in which employers can and cannot take tax deductions for premiums paid in cell captive insurance arrangements. "Cells are attractive to businesses that don't want to go through the time and expense of setting up a captive insurer," said Mr. Jones.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Tax
2007
Tom Jones was quoted in the November 19 issue of Business Insurance on how Bermuda's regulatory regime is driving innovative insurance ideas. Unlike the crazy-quilt of state regulation that prevails in the United States, the Bermuda regime has always emphasized efficiency and sought to accommodate the needs of sophisticated policyholders, while also supervising insurer licensing and solvency, those familiar with the domicile say. "In the United States, Vermont has been particularly responsive to captive owners, amending captive laws to allow reciprocals, not-for-profit companies and other variations on the captive form," Mr. Jones said.
Tom Jones was mentioned in the October 22 issue of National Underwriter for chairing the task force reviewing the proposed IRS regulations and developing recommendations to the CICA board for an industry response.
Tom Jones was quoted in the October 15 issue of Business Insurance about how the captive insurance industry is gearing up to fight proposed Internal Revenue Service rules that would strip a key tax break now enjoyed by hundreds of captives. "Through the proposed rules, the IRS is attempting to override judicial decisions as well as its own prior rulings," said Mr. Jones.
Tom Jones was mentioned in the June 14 issue of National Underwriter Online News Service about speaking at the online seminar presented by Chicago-based insurance broker Aon Corporation titled “Evaluating and Developing an Effective Captive Strategy.”
Thomas M. Jones PC, Captive Insurance and Reinsurance, Health Care Industry Captive Insurance, Tax
Tom Jones was mentioned in the May 30 issue of National Underwriters about speaking at the CIC-DC’s “Solving Health Care Liability Risks Through Alternative Risk Transfer” session on June 5.
Tom Jones was quoted in the March 12 issue of Business Insurance in an article detailing the recent legislative activity on captive insurance laws around the globe. "Most of the domiciles are tweaking their statues, rather than changing them," Mr. Jones said.
Thomas M. Jones PC, Insurance, Insurance Companies and Products Tax, Tax
Tom Jones was quoted in the February 4 issue of the Hartford Courant in an article on the expansion of "captive" insurance companies in Connecticut. "Captives are not a 'tax dodge,' but if they meet certain IRS qualifications, they can take a tax deduction on the money the put into reserves for claims," Mr. Jones said.
Thomas M. Jones PC, Insurance, Insurance Companies and Products Tax, Tax
2006
Tom Jones was mentioned in the July 2006 edition of ABI/INFORM and Rough Notes about his suggestion leading to one of the International Center for Captive Insurance Education's newest initiatives. Mr. Jones' suggestion involved establishing an advisory counsel made up of various captive regulators.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Insurance, Tax
2005
Tom Jones was quoted in the September 13 issue of Bestwire in an article about how the IRS has moved to a position of loosening its tax treatment of captive insurers, "The IRS has given up a lot of ground on captive tax issues," Mr. Jones has said.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Insurance, Tax
Tom Jones was featured in a news brief in the August 29 issue of the Chicago Daily Law Bulletin on being chosen by the Vermont Captive Insurance Association as the recipient of its 2005 Industry Service Award.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Insurance, Tax
Tom Jones was quoted in the August 2005 issue of Captive & ART Review in an article about the hot legal issues likely to affect captives on both sides of the Atlantic. The U.S. Treasury's recent public opposition to the extension of the Terrorism Risk Insurance Act (TRIA) in its current form has those risk managers and captive owners, who thought the deal was as good as sold, in a slight disarray. However, Mr. Jones thinks few captives will rest on that decision. "Few captives are totally exclusive to writing TRIA, because the government issued informal guidance saying they wouldn't allow gaming of the system. Only a handful of captives would disappear if TRIA isn't extended," Mr. Jones said.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Insurance, Tax
Tom Jones was quoted in the July 14 issue of BestWire about the IRS ruling further clarifying tax treatment for captives. Mr. Jones said while the IRS ruling found that each of the four hypothetical arrangements had sufficient risk transfer for insurance states, in three of the four, "risk distribution" was lacking for federal tax purposes.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Insurance, Tax
Tom Jones was quoted in the June 27 issue of Business Insurance in an article about how the IRS is asking for public comment on whether a wide variety of captive insurance funding and design arrangements are, in fact, insurance and thus entitled to favorable tax treatment. "The IRS is trying to understand captive industry innovations before they make a definitive announcement. This is a good turn of events," Mr. Jones said.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Insurance, Tax
Tom Jones was quoted in the June 23 issue of BestWire about the IRS ruling hinting at outreach on thorny insurance issues. Mr. Jones said that "in practically, there are almost no entities" to which the ruling would seem to apply, either among offshore or domestic captives.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Insurance, Tax
Tom Jones was quoted in the May 2005 issue of Captive & ART Review regarding his 20 years of working with the tax, legal and regulatory aspects of captive insurance companies. "Much to my surprise, I think there is a tremendous interest in captive taxation. I believe there is a healthy interest in learning what is permissible and what may not be," Mr. Jones said.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Insurance, Tax
2003
Nancy Gerrie and Tom Jones were quoted in CFO Magazine on May 6 regarding the escalating costs of benefits and the use of captives to reinsure benefits. The big lure of using a captive to underwrite employee benefit risk is a decrease in taxes. Mr. Jones explained that for a company to qualify for a federal tax deduction on the premiums it pays to its captives, however, the captives must do as much as 50% of their business in risks unrelated to the parent company. Ms. Gerrie commented on the Department of Labor's (DOL) decision to fast-track procedures allowing employers to reinsure benefits through captives. "Usually it takes more than a year for the DOL to rule on an individual exemption," Ms. Gerrie commented, but that timeframe should be substantially reduced under the fast-track procedures.
Nancy S. Gerrie, Thomas M. Jones PC, Captive Insurance and Reinsurance, Employee Benefits & Pensions, Tax
Thomas Jones was quoted in the March 24 issue of Business Insurance regarding the decrease of IRS scrutiny on captive deals. Mr. Jones commented that the IRS is now more likely to examine captives individually and they are more willing to issue a private-letter ruling on whether a captive is engaged in insurance. "….the IRS has changed its posture, and it is possible to go in for a private-letter ruling on the insurance transaction for an entity such as a captive. It is remains to be seen how often this will be used because it is relatively new."
Thomas M. Jones PC, Captive Insurance and Reinsurance, Insurance, Tax
Thomas Jones was quoted in the March 10 issue of Business Insurance regarding the increased activity of captives. "….the record pace of captive activity in 2002 will continue at least through the end of 2003," predicted Mr. Jones.
Thomas M. Jones PC, Captive Insurance and Reinsurance, Insurance, Tax
2002
Tom Jones was extensively quoted in the July issue of CFO Magazine regarding issues surrounding how foreign income is taxed. Time and time again finance executives are having to defend international tax strategies aimed at maximizing value against patriotism. Mr. Jones, noting the current "disparity between what is right for the country and what is right for your company," commented that Congress, "should strive to achieve a tax system that aligns patriotism with good business sense."
Thomas M. Jones PC, International Tax, Tax
Tom Jones was quoted in the March 2002 issue of Risk & Insurance regarding the use of captives to fund long-term disability. Mr. Jones commented that these captives are not common because it can take a company months, possibly years to research and analyze the costs and benefits of such a captive, even before filing it with the U.S. Department of Labor.
Thomas M. Jones PC, Insurance, Insurance Companies and Products Tax, Tax
2001
Tom Jones was quoted in the November 29 issue of Insurance Day regarding the captive insurance environment in Bermuda.
Thomas M. Jones PC, Insurance, Insurance Companies and Products Tax, Tax
Tom Jones was quoted in an article published in the November 12 issue of Business Insurance regarding Bermuda’s insurance market, and the probability that the IAC is going to continue as the market develops.
Thomas M. Jones PC, Insurance, Insurance Companies and Products Tax, Tax
Tom Jones was quoted in the June 25 issue of Business Insurance in response to a recent appeals court victory for United Parcel Service of America, Inc. Mr. Jones said the decision, which ruled a UPS package reinsurance program had legitimate business purpose and that reducing UPS’s taxes was an acceptable aim of the plan, lifted a cloud of doubt for tax lawyers and captive owners regarding tax planning and structuring.
Thomas M. Jones PC, Insurance, Tax
Tom Jones was quoted in the June 11 issue of Business Insurance in regard to the IRS’s decision to drop its long-standing position that premiums paid to captives are not deductible under the "economic family."
Thomas M. Jones PC, Insurance, Insurance Companies and Products Tax, Tax
Tom Jones was quoted in the April 2001 issue of CFO Magazine. Mr. Jones warned readers of the "uncharted waters" of rent-a-captive taxation, citing the lack of case law and IRS pronouncements on the subject.
Thomas M. Jones PC, Insurance, Insurance Companies and Products Tax, Tax
