Abusive Insurance and Retirement Plans
Abusive Insurance and Retirement Plans: EXECUTIVE SUMMARY Some of the listed transactions CPA tax practitioners are most likely to encounter are employee benefit insurance plans that the IRS has deemed abusive. Many of these plans have been sold by promoters in conjunction with life insurance companies. As long ago as 1984, with the addition of
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VEBA audits
ReplyDeletePublished on Published onFebruary 26, 2018
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Lance Wallach
Lance Wallach
Abusive tax shelters, 419, section 79, 412i micro captive insurance, VEBA, expert witness, author, speaker
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VEBAs are ordinarily used to provide employee benefits such as healthcare and life insurance. However, our lawsuits allege that the American General and its agents marketed tax deductions for any contributions that the small businesses made to the VEBAs, along with tax-free access to the funds years down the road.
The lawsuits further allege that American General knew that the promised tax benefits to the small businesses were illusory, and that the IRS would likely perceive the VEBAs as an illegal deferred-compensation scheme. According to the complaint, the VEBAs’ plan documents were identical to those that the IRS had deemed non-compliant in 2000.
Indeed, the lawsuits say that in 2004, American General received a legal opinion stating that the plans were likely illegal, but did not disclose this to the plaintiffs. According to the complaint, even after receiving this legal opinion, American General and its agents agents continued to market the illegal VEBAs and sell American General policies for at least four more years.
San Nine VEBA Participants Audited by the IRS
The lawsuits state that many victims were audited by the IRS and forced to pay back taxes and penalties. The lawsuits further allege that whether audited or not, Sea Nine VEBA participants do not have access to the funds they originally placed in the VEBAs and must wait to exercise a court-approved exit strategy before they can possess those any portion of those funds again.
The lawsuits allege VEBA participants have suffered significant financial losses as a result of putting money into this VEBA scheme instead of an alternative investment.