Promoter of Captive Insurance Program Settles IRS Enforcement Action

Bruce Molnar, co‑founder and majority owner of Alta Holdings, agreed to pay IRS penalties under Internal Revenue Code § 6700 for promoting micro‑captive insurance programs sold between 2005 and 2012. The IRS determined that Molnar’s program—including entities like US Risk and Newport Re—misrepresented contracts as insurance, which did not qualify under federal tax law. A 2019 Tax Court ruling (Syzygy case) found the captive arrangements didn’t meet the definition of insurance and disallowed the associated tax deductions. In January 2025, the IRS issued final regulations requiring disclosure of certain micro‑captive structures and identifying abusive patterns.

The settlement demonstrates the IRS’s intensified focus on micro‑captives, targeting promoters of dubious or aggressive tax shelter schemes.

Source: Captive.com

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