Did you Participate in a 419 or 412i Benefit Plan?
Lance Wallach is the nation's foremost expert on 419 plans, 412i plans, listed transactions, reportable transactions, Section 79 plans, captive Insurance plans
Construction CPA - Orange County - San Diego - Los Angeles - Southern California
Construction CPA - Orange County - San Diego - Los Angeles - Southern California Glenn Carniello is a Construction CPA based in Southern California. Glenn is a Partner with SingerLewak LLP, a CPA firm specializing in serving contractors. Topics include surety, accounting/reporting and tax matters, legal, succession planning, information technology, etc. If you wish to ensure delivery of new content as it is posted, please complete the subscription link below (to the right) and click on the confirmation link sent via email once received.
Tuesday, January 10, 2012 Captive Insurance Programs Under Scrutiny Many of us have heard of captive insurance plans and have some level of familiarity with them. In a nutshell, captive insurance plans involve a business forming its own insurance company as a risk management technique. The basic premise which must be in place is that legitimate risks are being insured and the associated premiums are reasonably priced relative to those risks. If bogus, aggressive risk pools are created and/or overpriced premiums are being charged, then the captive and all those associated with its formation may be at risk. I have had conversations with a number of professionals in the business community over the past several months suggesting the IRS and other agencies will be significantly cracking down on abusive plans.
A business contact sent me this concise, one page article last week from the January issue of California Broker magazine.
The author, Lance Wallach, puts forth some troubling news/information for those who have established a captive insurance plan which may be considered abusive as well as those who helped structure those plans (including the plan architects, insurance brokers, CPAs, etc.) Mr. Wallach states in the article "...my office has been receiving over 50 calls per month from people that are being threatened with large IRS fines...Not all 412i, captive insurance and Section 79 plans are abusive, listed or reportable transactions, but almost all the Section 79 and captive insurance plans that I have recently seen are abusive...I have had phone calls from taxpayers that contributed less than $100,000 to a listed or reportable transaction and were fined over $500,000." There is an IRS form, 6707A, which is used "to help detect, deter, and shut down abusive tax shelter activities...The IRS has fined hundreds of taxpayers who did file under 6707A. They said that they did not fill out the forms properly, or did not file correctly." Given Mr. Wallach's observations and experiences, if you (or a contractor you work with) are involved with a captive insurance program it may make sense to review the plan with professionals who are expert in this area to ensure you don't get penalized given the
Construction CPA - Orange County - San Diego - Los Angeles - Southern California
ReplyDeleteGlenn Carniello is a Construction CPA based in Southern California. Glenn is a Partner with SingerLewak LLP, a CPA firm specializing in serving contractors. Topics include surety, accounting/reporting and tax matters, legal, succession planning, information technology, etc. If you wish to ensure delivery of new content as it is posted, please complete the subscription link below (to the right) and click on the confirmation link sent via email once received.
Tuesday, January 10, 2012
Captive Insurance Programs Under Scrutiny
Many of us have heard of captive insurance plans and have some level of familiarity with them. In a nutshell, captive insurance plans involve a business forming its own insurance company as a risk management technique. The basic premise which must be in place is that legitimate risks are being insured and the associated premiums are reasonably priced relative to those risks. If bogus, aggressive risk pools are created and/or overpriced premiums are being charged, then the captive and all those associated with its formation may be at risk. I have had conversations with a number of professionals in the business community over the past several months suggesting the IRS and other agencies will be significantly cracking down on abusive plans.
A business contact sent me this concise, one page article last week from the January issue of California Broker magazine.
The author, Lance Wallach, puts forth some troubling news/information for those who have established a captive insurance plan which may be considered abusive as well as those who helped structure those plans (including the plan architects, insurance brokers, CPAs, etc.) Mr. Wallach states in the article "...my office has been receiving over 50 calls per month from people that are being threatened with large IRS fines...Not all 412i, captive insurance and Section 79 plans are abusive, listed or reportable transactions, but almost all the Section 79 and captive insurance plans that I have recently seen are abusive...I have had phone calls from taxpayers that contributed less than $100,000 to a listed or reportable transaction and were fined over $500,000." There is an IRS form, 6707A, which is used "to help detect, deter, and shut down abusive tax shelter activities...The IRS has fined hundreds of taxpayers who did file under 6707A. They said that they did not fill out the forms properly, or did not file correctly." Given Mr. Wallach's observations and experiences, if you (or a contractor you work with) are involved with a captive insurance program it may make sense to review the plan with professionals who are expert in this area to ensure you don't get penalized given the