Skip to Main Content

Tax Notes Quotes Christopher Rizek and Melissa Wiley on Tax Shelters

November 17, 2021, Tax Notes

The IRS has been transparent in letting tax professionals know what it considers to be abusive microcaptive arrangements or syndicated easement deals, several agency officials said in a heated discussion.

. . .

Christopher S. Rizek of Caplin & Drysdale said taxpayers and their advisers have some guidance from court decisions holding that a microcaptive insurance company didn’t qualify as an insurance company for federal tax purposes, or that a conservation easement donation didn’t qualify as a charitable contribution.

But tax professionals still don’t have any guidance from Treasury or the IRS on what kinds of microcaptive arrangements or easement donations are considered valid, according to Rizek. He added that he had been hoping that a Tax Court microcaptive case in which he represented the taxpayers (Puglisi v. Commissioner) would proceed to trial because he thinks the court would have found that the arrangement was valid under section 831(b).

The IRS instead conceded the case, and the Tax Court, over the taxpayers’ objections, on November 5 entered an order accepting the IRS’s concessions and resolving the dispute without an opinion. According to Rizek, the taxpayers wanted an opinion “precisely for this reason of there being a lack of guidance as to what does work as opposed to what doesn’t, and I can say very confidently that taxpayers are still waiting for that guidance out there and would love to know the answer to that question.”

Melissa L. Wiley, also with Caplin & Drysdale, said uncertainty on what the IRS considers to be valid microcaptives or easement donations has many tax return preparers and tax attorneys worried about how they can give advice without subjecting their clients or themselves to possible IRS scrutiny and onerous penalties.

Some taxpayers have microcaptive arrangements that appear to pass muster, but with no IRS guidance spelling out what works under the law, return preparers and attorneys want to make sure they are giving appropriate advice, Wiley said.

. . .

Schenck also disputed Rizek’s contention that IRS exam agents in easement and microcaptive cases are being told to issue administrative summonses for information even if taxpayers have already provided that information via disclosure forms or in response to information document requests (IDRs).

According to Rizek, having to tell clients that they must comply with a summons for information the IRS already has puts him in a difficult position. “I think you’re undercutting the IDR process and/or issuing unenforceable summonses, but it’s really tough on the taxpayers and the practitioners to sort out what to do there,” he said.

For the full article, please visit Tax Notes’ website (subscription required).


About Caplin & Drysdale
Celebrating our 55th Anniversary in 2019, Caplin & Drysdale continues to be a leading provider of legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills -- combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment -- make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:
For more information, please visit us at
Washington, DC Office:
One Thomas Circle NW
Suite 1100
Washington, DC 20005
New York, NY Office:
295 Madison Avenue
12th Floor
New York, NY 10017


This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.
© 2022 Caplin & Drysdale, Chartered
All Rights Reserved.

Related Professionals

Related Practice Area(s)