BenistarAbuses.com
Benistar
Benistar 419 Plan
Grist Mill Trust
Nova
Niche
Sea Nine Veba
SADI Trust
Beta 419
Millennium
Bisys
Creative Services Group
Sterling Benefit Plan
Compass 419
Niche 419
CRESP
American Benefits Trust
National Benefit Plan and Trust
ABT
Professional Benefits Trust
Old Mutual
Allmerica Financial
American Heritage Life
Commercial Union Life
National Life of Vermont
Old Line Life
Security Mutual Life
West Coast Life
ECI Pension Services
Pension Professionals of America
ABI
Hartford
AIG
Indy Life
Indianapolis Life
Advantage
Jacksom National
Jefferson-Pilot Life
Lincoln Benefit Life
Lincoln National Life
Manufacturers Life
Massachusetts Mutual
Metropolitan Life
Midland Life
Minnesota Mutual
Principal Life
Reliastar
Security Mutual
USG Annuity & Life
Western Reserve Life Assurance
Old Mutual
Allmerica Financial
American Heritage Life
Commercial Union Life
National Life of Vermont
Old Line Life
Security Mutual Life
West Coast Life
Benistar 419 Plan
Grist Mill Trust
Nova
Niche
Sea Nine Veba
SADI Trust
Beta 419
Millennium
Bisys
Creative Services Group
Sterling Benefit Plan
Compass 419
Niche 419
CRESP
American Benefits Trust
National Benefit Plan and Trust
ABT
Professional Benefits Trust
Old Mutual
Allmerica Financial
American Heritage Life
Commercial Union Life
National Life of Vermont
Old Line Life
Security Mutual Life
West Coast Life
ECI Pension Services
Pension Professionals of America
ABI
Hartford
AIG
Indy Life
Indianapolis Life
Advantage
Jacksom National
Jefferson-Pilot Life
Lincoln Benefit Life
Lincoln National Life
Manufacturers Life
Massachusetts Mutual
Metropolitan Life
Midland Life
Minnesota Mutual
Principal Life
Reliastar
Security Mutual
USG Annuity & Life
Western Reserve Life Assurance
Old Mutual
Allmerica Financial
American Heritage Life
Commercial Union Life
National Life of Vermont
Old Line Life
Security Mutual Life
West Coast Life
For Help With Any of These:
Call 516-938-5007
| Would you like to ...... Get All Your Money Back? Successfully Fight The Internal Revenue Service? Be Made Whole? Have Your Problem Resolved With The Least Amount of Aggravation? Sue the &#@!....s who got you into this mess?? You should NEVER try to handle an IRS audit by yourself. You certainly can't successfully sue without expert help. You will need expert assistance for Benistar abuses, audits, problems, lawsuits, or other issues and trouble. Call 516 938-5007 for a free consultation. |
 |  |  |  |
| Did Benistar or Another Promoter of Abusive 419 or Other Plans Cause You Harm or Get You Audited by the IRS? |
Late breaking news: Large 419 plan files for
Bankruptcy.
Recent court cases and other developments have highlighted serious problems in
plans, popularly know as Benistar, issued by Nova Benefit Plans of Simsbury,
Connecticut. Recently unsealed IRS criminal case information now raises concerns
with other plans as well. If you have any type plan issued by NOVA Benefit Plans, U.S.
Benefits Group, Benefit Plan Advisors, Grist Mill trusts, Rex Insurance Service or
Benistar, get help at once. You may be subject to an audit or in some cases, criminal
prosecution.
On November 17th, 59 pages of search warrant materials were unsealed in the Nova
Benefit Plans litigation currently pending in the U.S. District Court for the District of
Connecticut. According to these documents, the IRS believes that Nova is involved in
a significant criminal conspiracy involving the crimes of Conspiracy to Impede the IRS
and Assisting in the Preparation of False Income Tax Returns. Read more here
IRS Attacks Business Owners in 419, 412, Section 79 and Captive Insurance Plans
Under Section
6707A
By Lance Wallach
Taxpayers who previously adopted 419, 412i, captive
insurance or Section 79 plans are in big trouble.
In recent years, the IRS has identified many of these arrangements as abusive
devices to funnel tax deductible dollars to shareholders and classified these
arrangements as listed transactions." These plans were sold by insurance agents,
financial planners, accountants and attorneys seeking large life insurance
commissions. In general, taxpayers who engage in a “listed transaction” must report
such transaction to the IRS on Form 8886 every year that they “participate” in
the transaction, and you do not necessarily have to make a contribution or claim a tax
deduction to participate. Section 6707A of the Code imposes severe penalties
for failure to file Form 8886 with respect to a listed transaction. But you are also in
trouble if you file incorrectly. I have received numerous phone calls from
business owners who filed and still got fined. Not only do you have to file Form 8886,
but it also has to be prepared correctly. I only know of two people in the U.
S. who have filed these forms properly for clients. They tell me that was after
hundreds of hours of research and over 50 phones calls to various IRS personnel.
The filing instructions for Form 8886 presume a timely filling. Most people file late
and follow the directions for currently preparing the forms. Then the IRS fines
the business owner. The tax court does not have jurisdiction to abate or lower such
penalties imposed by the IRS. Read more here
Under Section
6707A
By Lance Wallach
Taxpayers who previously adopted 419, 412i, captive
insurance or Section 79 plans are in big trouble.
In recent years, the IRS has identified many of these arrangements as abusive
devices to funnel tax deductible dollars to shareholders and classified these
arrangements as listed transactions." These plans were sold by insurance agents,
financial planners, accountants and attorneys seeking large life insurance
commissions. In general, taxpayers who engage in a “listed transaction” must report
such transaction to the IRS on Form 8886 every year that they “participate” in
the transaction, and you do not necessarily have to make a contribution or claim a tax
deduction to participate. Section 6707A of the Code imposes severe penalties
for failure to file Form 8886 with respect to a listed transaction. But you are also in
trouble if you file incorrectly. I have received numerous phone calls from
business owners who filed and still got fined. Not only do you have to file Form 8886,
but it also has to be prepared correctly. I only know of two people in the U.
S. who have filed these forms properly for clients. They tell me that was after
hundreds of hours of research and over 50 phones calls to various IRS personnel.
The filing instructions for Form 8886 presume a timely filling. Most people file late
and follow the directions for currently preparing the forms. Then the IRS fines
the business owner. The tax court does not have jurisdiction to abate or lower such
penalties imposed by the IRS. Read more here
Breaking News: Don't Become A
Material Advisor
Accountants, insurance professionals and others need to be
careful that they don’t become what the IRS calls material
advisors. If they sell or give advice, or sign tax returns for
abusive, listed or similar plans; they risk a minimum $100,000
fine. Their client will then probably sue them after having dealt
with the IRS.
In 2010, the IRS raided the offices of Benistar in Simsbury, Conn.,
and seized the retirement benefit plan administration firm’s files
and records. In McGehee Family Clinic, the Tax Court ruled that a
clinic and shareholder’s investment in an employee benefit plan
marketed under the name “Benistar” was a listed transaction
because it was substantially similar to the transaction described
in Notice 95-34 (1995-1 C.B. 309). This is at least the second
case in which the court has ruled against the Benistar welfare
benefit plan, by denominating it a listed transaction.
The McGehee Family Clinic enrolled in the Benistar Plan in May
2001 and claimed deductions for contributions to it in 2002 and
2005. The returns did not include a Form 8886, Reportable
Transaction Disclosure Statement, or similar disclosure. The IRS
disallowed the latter deduction and adjusted the 2004 return of
shareholder Robert Prosser and his wife to include the $50,000
payment to the plan. Click here to read more.
Material Advisor
Accountants, insurance professionals and others need to be
careful that they don’t become what the IRS calls material
advisors. If they sell or give advice, or sign tax returns for
abusive, listed or similar plans; they risk a minimum $100,000
fine. Their client will then probably sue them after having dealt
with the IRS.
In 2010, the IRS raided the offices of Benistar in Simsbury, Conn.,
and seized the retirement benefit plan administration firm’s files
and records. In McGehee Family Clinic, the Tax Court ruled that a
clinic and shareholder’s investment in an employee benefit plan
marketed under the name “Benistar” was a listed transaction
because it was substantially similar to the transaction described
in Notice 95-34 (1995-1 C.B. 309). This is at least the second
case in which the court has ruled against the Benistar welfare
benefit plan, by denominating it a listed transaction.
The McGehee Family Clinic enrolled in the Benistar Plan in May
2001 and claimed deductions for contributions to it in 2002 and
2005. The returns did not include a Form 8886, Reportable
Transaction Disclosure Statement, or similar disclosure. The IRS
disallowed the latter deduction and adjusted the 2004 return of
shareholder Robert Prosser and his wife to include the $50,000
payment to the plan. Click here to read more.
Lance Wallach Newsletter July 2011
419, 412i, Captive Insurance and section 79 plans continue to
get large IRS fines.
By Lance Wallach
Life insurance agents recently have started pushing the newest variety of high
ticket items. After the IRS has almost put 419 plans out of business and severely
curtailed abusive 412i plans they needed another way to sell large commission
life insurance policies. Many of the promoters of the 419 and 412i plans are now
promoting section 79 and captive insurance plans. They claim that these plans
allow businesses to tax deduct life insurance. These promoters as in the past
claim, that most of the benefits would be for the business owners. I have been an
expert witness in many cases against these abusive plans and my side has
never lost a case.
Recently my office has been receiving over fifty calls per month from people that
are being threatened with large IRS fines. Most of these people (including CPAs)
do not understand why this is happening. These fines are primarily the result of
greed. Insurance company, insurance agent, plan promoter and even IRS greed.
Insurance companies are always looking for ways to sell large amounts of life
insurance. Taxpayers are constantly looking for larger tax deductions. Insurance
agents want to earn large life insurance commissions. The IRS has started
additional enforcement action against taxpayers and accountants. Read more
here
419, 412i, Captive Insurance and section 79 plans continue to
get large IRS fines.
By Lance Wallach
Life insurance agents recently have started pushing the newest variety of high
ticket items. After the IRS has almost put 419 plans out of business and severely
curtailed abusive 412i plans they needed another way to sell large commission
life insurance policies. Many of the promoters of the 419 and 412i plans are now
promoting section 79 and captive insurance plans. They claim that these plans
allow businesses to tax deduct life insurance. These promoters as in the past
claim, that most of the benefits would be for the business owners. I have been an
expert witness in many cases against these abusive plans and my side has
never lost a case.
Recently my office has been receiving over fifty calls per month from people that
are being threatened with large IRS fines. Most of these people (including CPAs)
do not understand why this is happening. These fines are primarily the result of
greed. Insurance company, insurance agent, plan promoter and even IRS greed.
Insurance companies are always looking for ways to sell large amounts of life
insurance. Taxpayers are constantly looking for larger tax deductions. Insurance
agents want to earn large life insurance commissions. The IRS has started
additional enforcement action against taxpayers and accountants. Read more
here
IRS Audits 419, 412i, Captive Insurance Plans With Life Insurance, and Section
79 Scams
By Lance Wallach June 2011
The IRS started auditing 419 plans in the ‘90s, and then continued going after 412i
and other plans that they considered abusive, listed, or reportable transactions, or
substantially similar to such transactions.
In a recent Tax Court Case, Curcio v. Commissioner (TC Memo 2010-115), the Tax
Court ruled that an investment in an employee welfare benefit plan marketed under
the name “Benistar” was a listed transaction in that the transaction in question was
substantially similar to the transaction described in IRS Notice 95-34. A subsequent
case, McGehee Family Clinic, largely followed Curcio, though it was technically
decided on other grounds. The parties stipulated to be bound by Curcio on the
issue of whether the amounts paid by McGehee in connection with the Benistar 419
Plan and Trust were deductible. Curcio did not appear to have been decided yet at
the time McGehee was argued. The McGehee opinion (Case No. 10-102) (United
States Tax Court, September 15, 2010) does contain an exhaustive analysis and
discussion of virtually all of the relevant issues.
Taxpayers and their representatives should be aware that the Service has
disallowed deductions for contributions to these arrangements. The IRS is cracking
down on small business owners who participate in tax reduction insurance plans
and the brokers who sold them. Some of these plans include defined benefit
retirement plans, IRAs, or even 401(k) plans with life insurance.
In order to fully grasp the severity of the situation, one must have an understanding
of Notice 95-34, which was issued in response to trust arrangements sold to
companies that were designed to provide deductible benefits such as life
insurance, disability and severance pay benefits. The promoters of these
arrangements claimed that all employer contributions were tax-deductible when
paid, by relying on the 10-or-more-employer exemption from the IRC § 419 limits. It
was claimed that permissible tax deductions were unlimited in amount.
In general, contributions to a welfare benefit fund are not fully deductible when paid.
Sections 419 and 419A impose strict limits on the amount of tax-deductible
prefunding permitted for contributions to a welfare benefit fund. Section 419A(F)(6)
provides an exemption from Section 419 and Section 419A for certain “10-or-more
employers” welfare benefit funds. In general, for this exemption to apply, the fund
must have more than one contributing employer, of which no single employer can
contribute more than 10% of the total contributions, and the plan must not be
experience-rated with respect to individual employers.
According to the Notice, these arrangements typically involve an investment in
variable life or universal life insurance contracts on the lives of the covered
employees. The problem is that the employer contributions are large relative to the
cost of the amount of term insurance that would be required to provide the death
benefits under the arrangement, and the trust administrator may obtain cash to pay
benefits other than death benefits, by such means as cashing in or withdrawing the
cash value of the insurance policies. The plans are also often designed so that a
particular employer’s contributions or its employees’ benefits may be determined in
a way that insulates the employer to a significant extent from the experience of other
subscribing employers. In general, the contributions and claimed tax deductions
tend to be disproportionate to the economic realities of the arrangements.
Benistar advertised that enrollees should expect to obtain the same type of tax
benefits as listed in the transaction described in Notice 95-34. The benefits of
enrollment listed in its advertising packet included:
· Virtually unlimited deductions for the employer;
· Contributions could vary from year to year;
· Benefits could be provided to one or more key executives on a selective basis;
· No need to provide benefits to rank-and-file employees;
· Contributions to the plan were not limited by qualified plan rules and would not
interfere with pension, profit sharing or 401(k) plans;
· Funds inside the plan would accumulate tax-free;
· Beneficiaries could receive death proceeds free of both income tax and estate
tax;
· The program could be arranged for tax-free distribution at a later date;
· Funds in the plan were secure from the hands of creditors.
The Court said that the Benistar Plan was factually similar to the plans described in
Notice 95-34 at all relevant times. In rendering its decision the court heavily cited
Curcio, in which the court also ruled in favor of the IRS. As noted in Curcio, the
insurance policies, overwhelmingly variable or universal life policies, required large
contributions relative to the cost of the amount of term insurance that would be
required to provide the death benefits under the arrangement. The Benistar Plan
owned the insurance contracts.
Following Curcio, as the Court has stipulated, the Court held that the contributions
to Benistar were not deductible under section 162(a) because participants could
receive the value reflected in the underlying insurance policies purchased by
Benistar—despite the payment of benefits by Benistar seeming to be contingent
upon an unanticipated event (the death of the insured while employed). As long as
plan participants were willing to abide by Benistar’s distribution policies, there was
no reason ever to forfeit a policy to the plan. In fact, in estimating life insurance
rates, the taxpayers’ expert in Curcio assumed that there would be no forfeitures,
even though he admitted that an insurance company would generally assume a
reasonable rate of policy lapses.
The McGehee Family Clinic had enrolled in the Benistar Plan in May 2001 and
claimed deductions for contributions to it in 2002 and 2005. The returns did not
include a Form 8886,Reportable Transaction Disclosure Statement, or similar
disclosure.
The IRS disallowed the latter deduction and adjusted the 2004 return of
shareholder Robert Prosser and his wife to include the $50,000 payment to the
plan. The IRS also assessed tax deficiencies and the enhanced 30% penalty
totaling almost $21,000 against the clinic and $21,000 against the Prossers. The
court ruled that the Prossers failed to prove a reasonable cause or good faith
exception.
More you should know:
· In recent years, some section 412(i) plans have been funded with life
insurance using face amounts in excess of the maximum death benefit a qualified
plan is permitted to pay. Ideally, the plan should limit the proceeds that can be paid
as a death benefit in the event of a participant’s death. Excess amounts would
revert to the plan. Effective February 13, 2004, the purchase of excessive life
insurance in any plan is considered a listed transaction if the face amount of the
insurance exceeds the amount that can be issued by $100,000 or more and the
employer has deducted the premiums for the insurance.
· A 412(i) plan in and of itself is not a listed transaction; however, the IRS has a
task force auditing 412i plans.
· An employer has not engaged in a listed transaction simply because it is a 412
(i) plan.
· Just because a 412(i) plan was audited and sanctioned for certain items, does
not necessarily mean the plan engaged in a listed transaction. Some 412(i) plans
have been audited and sanctioned for issues not related to listed transactions.
Companies should carefully evaluate proposed investments in plans such as the
Benistar Plan. The claimed deductions will not be available, and penalties will be
assessed for lack of disclosure if the investment is similar to the investments
described in Notice 95-34. In addition, under IRC 6707A, IRS fines participants a
large amount of money for not properly disclosing their participation in listed,
reportable or similar transactions; an issue that was not before the Tax Court in
either Curcio or McGehee. The disclosure needs to be made for every year the
participant is in a plan. The forms need to be properly filed even for years that no
contributions are made. I have received numerous calls from participants who did
disclose and still got fined because the forms were not filled in properly. A plan
administrator told me that he assisted hundreds of his participants file forms, and
they still all received very large IRS fines for not properly filling in the forms.
IRS has been attacking all 419 welfare benefit plans, many 412i retirement plans,
captive insurance plans with life insurance in them and Section 79 plans.
Lance Wallach, National Society of Accountants Speaker of the Year and member
of the AICPA faculty of teaching professionals, is a frequent speaker on retirement
plans, abusive tax shelters, financial, international tax, and estate planning. He
writes about 412(i), 419, Section79, FBAR, and captive insurance plans. He speaks
at more than ten conventions annually, writes for over fifty publications, is quoted
regularly in the press and has been featured on television and radio financial talk
shows including NBC, National Pubic Radio’s All Things Considered, and others.
Lance has written numerous books including Protecting Clients from Fraud,
Incompetence and Scams published by John Wiley and Sons, Bisk Education’s
CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as the
AICPA best-selling books, including Avoiding Circular 230 Malpractice Traps and
Common Abusive Small Business Hot Spots. He does expert witness testimony
and has never lost a case. Contact him at 516.938.5007, lawallach@aol.com or
visit www.vebaplan.com.
Lance Wallach
68 Keswick Lane
Plainview, NY 11803
Ph.: (516)938-5007
Fax: (516)938-6330 www.vebaplan.com
National Society of Accountants Speaker of The Year
The information provided herein is not intended as legal, accounting, financial or
any type of advice for any specific individual or other entity. You should contact an
appropriate professional for any such advice.
79 Scams
By Lance Wallach June 2011
The IRS started auditing 419 plans in the ‘90s, and then continued going after 412i
and other plans that they considered abusive, listed, or reportable transactions, or
substantially similar to such transactions.
In a recent Tax Court Case, Curcio v. Commissioner (TC Memo 2010-115), the Tax
Court ruled that an investment in an employee welfare benefit plan marketed under
the name “Benistar” was a listed transaction in that the transaction in question was
substantially similar to the transaction described in IRS Notice 95-34. A subsequent
case, McGehee Family Clinic, largely followed Curcio, though it was technically
decided on other grounds. The parties stipulated to be bound by Curcio on the
issue of whether the amounts paid by McGehee in connection with the Benistar 419
Plan and Trust were deductible. Curcio did not appear to have been decided yet at
the time McGehee was argued. The McGehee opinion (Case No. 10-102) (United
States Tax Court, September 15, 2010) does contain an exhaustive analysis and
discussion of virtually all of the relevant issues.
Taxpayers and their representatives should be aware that the Service has
disallowed deductions for contributions to these arrangements. The IRS is cracking
down on small business owners who participate in tax reduction insurance plans
and the brokers who sold them. Some of these plans include defined benefit
retirement plans, IRAs, or even 401(k) plans with life insurance.
In order to fully grasp the severity of the situation, one must have an understanding
of Notice 95-34, which was issued in response to trust arrangements sold to
companies that were designed to provide deductible benefits such as life
insurance, disability and severance pay benefits. The promoters of these
arrangements claimed that all employer contributions were tax-deductible when
paid, by relying on the 10-or-more-employer exemption from the IRC § 419 limits. It
was claimed that permissible tax deductions were unlimited in amount.
In general, contributions to a welfare benefit fund are not fully deductible when paid.
Sections 419 and 419A impose strict limits on the amount of tax-deductible
prefunding permitted for contributions to a welfare benefit fund. Section 419A(F)(6)
provides an exemption from Section 419 and Section 419A for certain “10-or-more
employers” welfare benefit funds. In general, for this exemption to apply, the fund
must have more than one contributing employer, of which no single employer can
contribute more than 10% of the total contributions, and the plan must not be
experience-rated with respect to individual employers.
According to the Notice, these arrangements typically involve an investment in
variable life or universal life insurance contracts on the lives of the covered
employees. The problem is that the employer contributions are large relative to the
cost of the amount of term insurance that would be required to provide the death
benefits under the arrangement, and the trust administrator may obtain cash to pay
benefits other than death benefits, by such means as cashing in or withdrawing the
cash value of the insurance policies. The plans are also often designed so that a
particular employer’s contributions or its employees’ benefits may be determined in
a way that insulates the employer to a significant extent from the experience of other
subscribing employers. In general, the contributions and claimed tax deductions
tend to be disproportionate to the economic realities of the arrangements.
Benistar advertised that enrollees should expect to obtain the same type of tax
benefits as listed in the transaction described in Notice 95-34. The benefits of
enrollment listed in its advertising packet included:
· Virtually unlimited deductions for the employer;
· Contributions could vary from year to year;
· Benefits could be provided to one or more key executives on a selective basis;
· No need to provide benefits to rank-and-file employees;
· Contributions to the plan were not limited by qualified plan rules and would not
interfere with pension, profit sharing or 401(k) plans;
· Funds inside the plan would accumulate tax-free;
· Beneficiaries could receive death proceeds free of both income tax and estate
tax;
· The program could be arranged for tax-free distribution at a later date;
· Funds in the plan were secure from the hands of creditors.
The Court said that the Benistar Plan was factually similar to the plans described in
Notice 95-34 at all relevant times. In rendering its decision the court heavily cited
Curcio, in which the court also ruled in favor of the IRS. As noted in Curcio, the
insurance policies, overwhelmingly variable or universal life policies, required large
contributions relative to the cost of the amount of term insurance that would be
required to provide the death benefits under the arrangement. The Benistar Plan
owned the insurance contracts.
Following Curcio, as the Court has stipulated, the Court held that the contributions
to Benistar were not deductible under section 162(a) because participants could
receive the value reflected in the underlying insurance policies purchased by
Benistar—despite the payment of benefits by Benistar seeming to be contingent
upon an unanticipated event (the death of the insured while employed). As long as
plan participants were willing to abide by Benistar’s distribution policies, there was
no reason ever to forfeit a policy to the plan. In fact, in estimating life insurance
rates, the taxpayers’ expert in Curcio assumed that there would be no forfeitures,
even though he admitted that an insurance company would generally assume a
reasonable rate of policy lapses.
The McGehee Family Clinic had enrolled in the Benistar Plan in May 2001 and
claimed deductions for contributions to it in 2002 and 2005. The returns did not
include a Form 8886,Reportable Transaction Disclosure Statement, or similar
disclosure.
The IRS disallowed the latter deduction and adjusted the 2004 return of
shareholder Robert Prosser and his wife to include the $50,000 payment to the
plan. The IRS also assessed tax deficiencies and the enhanced 30% penalty
totaling almost $21,000 against the clinic and $21,000 against the Prossers. The
court ruled that the Prossers failed to prove a reasonable cause or good faith
exception.
More you should know:
· In recent years, some section 412(i) plans have been funded with life
insurance using face amounts in excess of the maximum death benefit a qualified
plan is permitted to pay. Ideally, the plan should limit the proceeds that can be paid
as a death benefit in the event of a participant’s death. Excess amounts would
revert to the plan. Effective February 13, 2004, the purchase of excessive life
insurance in any plan is considered a listed transaction if the face amount of the
insurance exceeds the amount that can be issued by $100,000 or more and the
employer has deducted the premiums for the insurance.
· A 412(i) plan in and of itself is not a listed transaction; however, the IRS has a
task force auditing 412i plans.
· An employer has not engaged in a listed transaction simply because it is a 412
(i) plan.
· Just because a 412(i) plan was audited and sanctioned for certain items, does
not necessarily mean the plan engaged in a listed transaction. Some 412(i) plans
have been audited and sanctioned for issues not related to listed transactions.
Companies should carefully evaluate proposed investments in plans such as the
Benistar Plan. The claimed deductions will not be available, and penalties will be
assessed for lack of disclosure if the investment is similar to the investments
described in Notice 95-34. In addition, under IRC 6707A, IRS fines participants a
large amount of money for not properly disclosing their participation in listed,
reportable or similar transactions; an issue that was not before the Tax Court in
either Curcio or McGehee. The disclosure needs to be made for every year the
participant is in a plan. The forms need to be properly filed even for years that no
contributions are made. I have received numerous calls from participants who did
disclose and still got fined because the forms were not filled in properly. A plan
administrator told me that he assisted hundreds of his participants file forms, and
they still all received very large IRS fines for not properly filling in the forms.
IRS has been attacking all 419 welfare benefit plans, many 412i retirement plans,
captive insurance plans with life insurance in them and Section 79 plans.
Lance Wallach, National Society of Accountants Speaker of the Year and member
of the AICPA faculty of teaching professionals, is a frequent speaker on retirement
plans, abusive tax shelters, financial, international tax, and estate planning. He
writes about 412(i), 419, Section79, FBAR, and captive insurance plans. He speaks
at more than ten conventions annually, writes for over fifty publications, is quoted
regularly in the press and has been featured on television and radio financial talk
shows including NBC, National Pubic Radio’s All Things Considered, and others.
Lance has written numerous books including Protecting Clients from Fraud,
Incompetence and Scams published by John Wiley and Sons, Bisk Education’s
CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as the
AICPA best-selling books, including Avoiding Circular 230 Malpractice Traps and
Common Abusive Small Business Hot Spots. He does expert witness testimony
and has never lost a case. Contact him at 516.938.5007, lawallach@aol.com or
visit www.vebaplan.com.
Lance Wallach
68 Keswick Lane
Plainview, NY 11803
Ph.: (516)938-5007
Fax: (516)938-6330 www.vebaplan.com
National Society of Accountants Speaker of The Year
The information provided herein is not intended as legal, accounting, financial or
any type of advice for any specific individual or other entity. You should contact an
appropriate professional for any such advice.