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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.
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
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
Accounting Today July 2011
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.
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.
Business Meals and Entertainment Expenses
Excerpt from FCICA Presents Tax, Insurance, and Cost Reduction
Strategies for Small Business by Lance Wallach
The 1993 tax law changed the amount allowable as a deduction
for business meals and entertainment expenses incurred after. In
addition, some special rules were enacted into the tax law. The
limitation for deducting such expenses incurred after December
31, 1993 is 50%. Accordingly, after the general rules and
exceptions are applied to meals and entertainment expenses
incurred and the total dollar amount is determined, the 50% rule
must then be applied. Business people must keep current with
such rules or face the wrath of the IRS. The purpose of this
chapter is to explain the general rule, the exceptions, and the
special rules that are in effect for all business meals and
entertainment expenses. Read more here!
Excerpt from FCICA Presents Tax, Insurance, and Cost Reduction
Strategies for Small Business by Lance Wallach
The 1993 tax law changed the amount allowable as a deduction
for business meals and entertainment expenses incurred after. In
addition, some special rules were enacted into the tax law. The
limitation for deducting such expenses incurred after December
31, 1993 is 50%. Accordingly, after the general rules and
exceptions are applied to meals and entertainment expenses
incurred and the total dollar amount is determined, the 50% rule
must then be applied. Business people must keep current with
such rules or face the wrath of the IRS. The purpose of this
chapter is to explain the general rule, the exceptions, and the
special rules that are in effect for all business meals and
entertainment expenses. Read more here!
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
FBAR Offshore Bank Accounts and Foreign Income Attacked by IRS
Offshore International Today Aug 2011
You may want to think about participation in the IRS’ offshore tax amnesty program (called the
Offshore Voluntary Disclosure Initiative). Do you want to play audit roulette with the IRS? Some
clients think they are too small to be prosecuted. They are wrong.
To the average businessperson, only the guys with tens of millions secretly stashed in Swiss
bank accounts get prosecuted. Don't tell that to Michael Schiavo. He was just prosecuted for
hiding money in a Swiss account back in 2003. How much money does the IRS say he hid? A
whopping $90,000. That’s it.
But wait, there is more to the story. Schiavo attempted to do a quiet disclosure during the 2009
amnesty but instead of filling out the amnesty paperwork, he simply trusted that by coming
forward voluntarily he could avoid criminal prosecution. He was wrong on all counts. Nothing is
too small for the IRS, and nothing is too old.
“So, to save a whopping $40,624 in taxes, this guy risked a felony conviction and prison time, not
to mention steep penalties that could very easily eat up the entire $90,000, and also his criminal
and civil defense costs.
The smart taxpayers are the ones coming forward and not having to look over their shoulders for
the next 10 years.
Time is running out. The tax amnesty runs through August but it takes at least days to jump
through all the hoops. We will also fight hard to reduce the penalties down even more.
Remember, the IRS can go as low as 5%. Don’t want this to happen to you? Visit taxadvisorexpert.
com today!
Offshore International Today Aug 2011
You may want to think about participation in the IRS’ offshore tax amnesty program (called the
Offshore Voluntary Disclosure Initiative). Do you want to play audit roulette with the IRS? Some
clients think they are too small to be prosecuted. They are wrong.
To the average businessperson, only the guys with tens of millions secretly stashed in Swiss
bank accounts get prosecuted. Don't tell that to Michael Schiavo. He was just prosecuted for
hiding money in a Swiss account back in 2003. How much money does the IRS say he hid? A
whopping $90,000. That’s it.
But wait, there is more to the story. Schiavo attempted to do a quiet disclosure during the 2009
amnesty but instead of filling out the amnesty paperwork, he simply trusted that by coming
forward voluntarily he could avoid criminal prosecution. He was wrong on all counts. Nothing is
too small for the IRS, and nothing is too old.
“So, to save a whopping $40,624 in taxes, this guy risked a felony conviction and prison time, not
to mention steep penalties that could very easily eat up the entire $90,000, and also his criminal
and civil defense costs.
The smart taxpayers are the ones coming forward and not having to look over their shoulders for
the next 10 years.
Time is running out. The tax amnesty runs through August but it takes at least days to jump
through all the hoops. We will also fight hard to reduce the penalties down even more.
Remember, the IRS can go as low as 5%. Don’t want this to happen to you? Visit taxadvisorexpert.
com today!
CAUTION: IRS is attacking 419 plans, 419, 412i, 412(e)(3), Section 79, Captive Insurance, many other benefit plans, and plans having life insurance. |