Benjamin Silver (Ph.D. 2024, Chicago; J.D. 2021, Yale; Google Scholar), The Tax Insurance Trap, 2026 Wis. L. Rev. ___:

Conventional wisdom holds that tax uncertainty is an unavoidable consequence of our tax laws' complexity. On this view, tax insurance-a financial product allowing taxpayers to shift tax risk to an insurer for a fee-is merely a hedge against the IRS's potential disagreement with any given tax position. With this understanding in mind, some commentators have proposed imposing restrictions on tax insurance so that the IRS, not taxpayers, can harness its full potential. 

This Article offers a different account of tax uncertainty and tax insurance. It argues that persistent tax law uncertainty is not a brute fact, but a policy choice. In contrast to general principles of administrative law, the Anti-Injunction Act bars pre-enforcement judicial review for taxpayers, forcing them to transact first and litigate later. Thus, while substantive complexity might create tax uncertainty, that uncertainty persists because of procedure. Viewed in this light, tax insurance functions as a synthetic pre-enforcement challenge, enabling taxpayers to resolve tax risk reliably. 

This Article therefore urges caution before restricting the tax insurance market. Yet, as the industry grows, tax insurance might evolve in ways that no longer mimic pre-enforcement review. Accordingly, some policy changes are appropriate. Subject to certain conditions, this Article proposes clarifying the tax treatment of tax insurance itself, aligning it with the tax treatment of a would-be pre-enforcement challenge.

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