Ross Cohen Quoted in Bloomberg BNA Daily Tax Report
The Daily Tax Report released by Bloomberg BNA on Oct. 9, 2013 featured commentary from Bingham Greenebaum Doll LLP attorney Ross D. Cohen. The particular story in which Cohen is quoted regards an Illinois court’s Oct. 8 decision concerning Wendy’s International Inc. and its subsidiary captive insurance company, Scioto Insurance Co. (“Scioto”). Scioto was part of a multi-year audit of Wendy’s by the Internal Revenue Service, which ultimately did not dispute Scioto’s status as an insurance company, which status entitled it to more favorable taxation. Then the company was audited by the Illinois Department of Revenue and at trial, Scioto was found to not be an insurance company for state tax purposes and therefore not taxable as such. On appeal, however, the Illinois Appellate Court found that Scioto was a bona fide insurance company under Federal tax law and held that it should also be treated as an insurance company for Illinois state tax purposes.
Cohen was quoted as saying, “Unlike the prior attacks on Scioto by other state departments of revenue, the court in this case specifically addressed the question of whether Scioto meets the definition of an insurance company for Illinois state tax purposes.” Regarding how the court’s ruling might affect future state audits of captive insurance companies, Cohen was quoted as saying, “It remains to be seen the effect of this decision on the propensity of other states to make the ‘not an insurance company’ argument where the IRS has already completed its audit without pursuing a similar argument.”