Tax Insurance
Protect against unexpected tax liabilities and bring certainty to deal and business outcomes
Tax insurance is designed to protect you in the event that an investment or tax position fails to qualify for its intended tax treatment. This can cover losses including taxes payable, interest and penalties, and gross-up amounts for tax due on insurance proceeds. It can also cover contest costs tied to the defense of the insured position.
Similar in effect to a private letter ruling, tax insurance brings certainty to taxpayers regarding the treatment of their U.S. federal, state, local, and foreign tax positions. Tax insurance is an effective and economic means of protecting against an unexpected or significant impact on financial statements and earnings. Aon clients that have relied upon tax insurance include private equity sponsors and their portfolio companies, Fortune 500 companies, and other participants in global M&A and financial transactions.
With tax insurance, organizations can:
- Achieve certainty absent a private letter ruling from the IRS
- Efficiently allocate the economic risk of a tax loss
- Avoid or reverse the financial statement impact of FIN 48 reserves
- Mitigate counterparty credit risk in tax indemnity agreements
- Address the small probability of significant loss
- Replace or reduce escrow required by a seller
- Extend or add to the survival of the seller’s escrow and indemnity for a buyer’s benefit