tax opinion insurance
Tax opinion insurance refers to insurance policies designed to cover costs arising from a specific tax position taken by an insured that is successfully challenged by the Internal Revenue Service.
Additional Information
Such a challenge could involve additional tax payments, interest, penalties, and defense costs. A corporation might, for example, consider purchasing tax opinion insurance if its tax return included a substantial deduction for an item that, while legitimate, could be viewed as questionable and ultimately disallowed by the IRS. In this situation, tax opinion insurance would cover the costs associated with the corporation's tax position, except any additional tax due.
