HAVE YOU BEEN THE VICTIM OF THE SALE OF ABUSIVE LIFE INSURANCE AND ANNUITY PRODUCTS SOLD AS PART OF A PENSION PLAN OR RETIREMENT PLAN?

Abusive Tax Shelters, Insurance and Annuity Product Fraud Lawsuit

RECOVER YOUR LOSSES FROM LIFE INSURANCE 412 (i) AND ANNUITY PRODUCTS SOLD AS PART OF A PENSION PLAN OR RETIREMENT PLAN

Insurance and Annuity Product Fraud Lawsuit

Life Insurance Companies and their Agents have been selling abusive life insurance and annuity products.  Many pension plans have been promoted as legitimate retirement plans which contain various life insurance products and annuities.  Unfortunately the Internal Revenue Service (“IRS”) has now attacked many of these pension and retirement plans and is conducting audits to demand payment for taxes, penalties and interest and attempting to disqualify many plans.

If you are an accountant, business owner, corporate officer, dentist, doctor, professional athlete, professional or corporation of high net worth, you were unscrupulously targeted by life insurance companies and their agents to purchase a 412i defined benefit pension plan. You were chosen to purchase a 412i plan because you have the net worth to pay for it.

Our investigation has disclosed that many life insurance companies, promoters, attorneys,

and accountants promoted and sold these plans, including but not limited to the following:

•  American General Life Insurance Company
•  Guardian Life Insurance Company
•  Hartford Life and Annuity Insurance Company
•  Indianapolis Life Insurance Company
•  Pacific Life Insurance Company
•  Pension Services, LLC
•  Many Other Life Insurance Companies and Agents

The individuals and groups above devised a scheme to sell abusive tax shelters under the auspices of Section 412(i) of the tax code. A 412(i) is a defined benefit pension plan. It provides specific retirement benefits to participants once they reach retirement and must contain assets sufficient to pay those benefits. A 412(i) plan differs from other defined benefit pension plans in that it must be funded exclusively by the purchase of individual life insurance products. To create a 412(i) plan, there must

be a trust to hold the assets. The employer funds the plan by making cash contributions to the trust, and the Code allows the employer to take a tax deduction in the amount of the contributions, i.e. the entire amount.

The trust uses the contributed funds to purchase some combination of life insurance products (insurance or annuities) for the plan. As the plan participants retire, the trust will usually sell the policies for their present cash value and purchase annuities with the proceeds. The revenue stream from the annuities pays the specified retirement benefit to plan participants.

These defendants (with the aid and knowledge of the insurance companies) used the traditional structure and sold life insurance policies with excessively high premiums. The trust then uses the large cash contributions to pay high insurance premiums and the employer takes a deduction for the sum of those large contributions. As you might expect, these policies were designed with excessively high fees or “loads” which provided exorbitant commissions to the insurance companies and the agents who sold the products.

The policies that were sold were termed Springing Cash Value Policies. They had little or no cash value for the first 5-7 years, after which they had significant cash value. Under this scheme, after 5-7 years, and just before the cash value sprung, the participant typically purchases the policy from the trust for the policy’s surrender value. In theory, you have a tax free transaction.

The IRS does not recognize the tax benefit of such a plan and has repeatedly issued announcements indicating that such plans are contrary to federal tax laws and regulations.

Have you received a letter from the IRS either (1) informing you of an upcoming audit of your plan or (2) demanding payment for substantial tax “penalties and interest”? The “tax free” benefit pension plan you purchased might be a scam, a fraud.  Please allow us to speak with you and review your documentation to help you to determine your best course of action.  Your communications will be treated with the strictest attorney-client confidence.

If you were a victim of such a sale of a 412i or 419 plan, we encourage you to contact us immediately .  You may also receive a free initial consultation by telephone at 516 9357346  If you desire a free initial phone consultation please leave a specific time or time period within which to contact you.

Since you have already expanded a substantial amount of money in your pension plan and believed it was a legitimate retirement plan, you are obviously shocked to now learn that major life insurance companies and their agents may have sold you improper retirement plans simply to generate enormous commissions on life insurance and annuities. www.taxaudit419 and www.vebaplan.com have more information.

We also help with abusive tax shelters like 419 welfare benefit plans. In 2002 Lance Wallach wrote to Hartford and other insurance companies telling them that IRS will be increasing 419 audits and law firms would be suing them. What did Hartford do? They sent out some emails to others including their compliance department and continued to sell 419 plans. Give us a call if you want a copy of this.

CJA.TAX

CJA.TAX

(1) small captive audits, u need help, 3877 views, 25 likes | LinkedIn

(1) small captive audits, u need help, 3877 views, 25 likes | LinkedIn

Lance Wallach Expert Witness, Section 79, IRS

Lance Wallach Expert Witness, Section 79, IRS: Lance Wallach, Expert Witness, Section 79 plans, Section 79 Problems, Section 79, IRS, Tax, Lance Wallach Expert Witness, Audits, 419 412i

Amazon.com: Lance Wallach: Books, Biography, Blog, Audiobooks, Kindle

Amazon.com: Lance Wallach: Books, Biography, Blog, Audiobooks, Kindle

Tax Audit Experts - Don't Write That Big IRS Check Yet!

Tax Audit Experts - Don't Write That Big IRS Check Yet!

Reduce Your Tax and Insurance Expense

Reduce Your Tax and Insurance Expense

Tax Resolution Sevices - Attorneys-USA.org Lance Wallach

Tax Resolution Sevices - Attorneys-USA.org Lance Wallach

Taxlibrary

Taxlibrary

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International Tax Disputes

The Internal Revenue Service has committed to renewed efforts to pursue international violations of the tax laws by individuals and businesses. In order to address what it considers to be an area rife with abusive tax avoidance behavior, the IRS is aggressively pursuing international tax violations through use of both civil audits and criminal investigations and prosecutions.

The IRS has announced specific plans to focus on combating international tax fraud and tax evasion by expanding its programs of information sharing and cooperation with nations around the world. The IRS’s most recent efforts in this area have been against U.S. taxpayers who maintain unreported foreign bank accounts. The IRS’s and DOJ’s public campaign to identify U.S. taxpayers with accounts in UBS and other foreign banks has been extensively chronicled by the media.

The IRS has also announced that it will focus its efforts on increasing audits of U.S. persons and businesses that make payments to foreign individuals and businesses to ensure the U.S. taxpayers are properly reporting and withholding taxes from those payments. The IRS also plans to increase audits and investigations of U.S. individual and business taxpayers with foreign sourced income, foreign bank accounts and foreign trusts. To accomplish these goals, the IRS announced it plans to hire as many as 800 new employees to focus solely on international tax compliance issues.

At Marini & Associates PA, we specialize in representing the following taxpayers with international tax issues:

         U.S. citizens living and working abroad

         U.S. citizens with foreign-sourced income

         U.S. taxpayers with international trusts

         Non-U.S. taxpayers with U.S.-sourced income

         U.S. businesses with operations in other countries

         International businesses with U.S. tax 

Did you Participate in a 419 or 412i Benefit Plan?: 419 Welfare Benefit Plans

Did you Participate in a 419 or 412i Benefit Plan?: 419 Welfare Benefit Plans: A view from a former IRS Agent, CPA, College Professor - Sam Susser - Welfare Benefit Plans (WBP), also known as Welfare Benefit Trusts and...

As an expert witness Lance Wallach side has never lost a case

TUESDAY, DECEMBER 31, 2013

Expert Witness_ Lance Wallach

 Expert Witness, Consulting, and Advisory Services for §419A(f)(6) and §419(e) Welfare Benefit Plan Matters and VEBA Plan Mattersaddress technical and complex issues involving: 

• §419(e) and §419A(f)(6) Welfare Benefit Plans 
• VEBA Plans
• Insurance Policies Held by the Plan
• Tax Issues:  IRS and State Taxing Authority Audits; Tax Return and Tax Form Filings; Reportable Transactions; Listed Transactions; §6707A Penalties; Excise Tax
• Statute of Limitations:  IRS Audit, State Taxing Authority Audit, and Tax Collection Issues
• Regulations and Compliance:  Internal Revenue Code, State Revenue Code, ERISA
• Suitability, Non-Discrimination Rules, Fiduciary Duties
• Plan Administration
• Plan Contributions, Distributions, and Termination
• Liability Analysis
• Damage Analysis and Calculations

Taxlibrary

Taxlibrary

Lance Wallach Life Insurance: Captive Insurance Buyer Beware

Is a captive insurance cell the way to go? - Accounting Today - Captive Insurance: Achieve large tax and cost reductions by renting a “CAPTIVE”. Most accountants and small business owners are unfamiliar with a great way to reduce taxes and expenses. By either creating or sharing “a captive insurance company”, substantial tax and cost savings will benefit the small business owner.



To read the entire article, click here

IRS Attacks Business Owners in 419, 412, Section 79 and Captive Insurance Plans Under Section 6707A

Massachusetts Society of Certified Public Accountants, Inc.
Winter 2010

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.

"Many taxpayers who are no longer taking current tax deductions for these plans continue to enjoy the benefit of previous tax deductions by continuing the deferral of income from contributions and deductions taken in prior years."

Many business owners adopted 412i, 419, captive insurance and Section 79 plans based upon representations provided by insurance professionals that the plans were legitimate plans and were not informed that they were engaging in a listed transaction. Upon audit, these taxpayers were shocked when the IRS asserted penalties under Section 6707A of the Code in the hundreds of thousands of dollars. Numerous complaints from these taxpayers caused Congress to impose a moratorium on assessment of Section 6707A penalties.

The moratorium on IRS fines expired on June 1, 2010. The IRS immediately started sending out notices proposing the imposition of Section 6707A penalties along with requests for lengthy extensions of the Statute of Limitations for the purpose of assessing tax. Many of these taxpayers stopped taking deductions for contributions to these plans years ago, and are confused and upset by the IRS’s inquiry, especially when the taxpayer had previously reached a monetary settlement with the IRS regarding its deductions. Logic and common sense dictate that a penalty should not apply if the taxpayer no longer benefits from the arrangement. Treas. Reg. Sec. 1.6011-4(c)(3)(i) provides that a taxpayer has participated in a listed transaction if the taxpayer’s tax return reflects tax consequences or a tax strategy described in the published guidance identifying the transaction as a listed transaction or a transaction that is the same or substantially similar to a listed transaction.

Clearly, the primary benefit in the participation of these plans is the large tax deduction generated by such participation. Many taxpayers who are no longer taking current tax deductions for these plans continue to enjoy the benefit of previous tax deductions by continuing the deferral of income from contributions and deductions taken in prior years. While the regulations do not expand on what constitutes “reflecting the tax consequences of the strategy,” it could be argued that continued benefit from a tax deferral for a previous tax deduction is within the contemplation of a “tax consequence” of the plan strategy. Also, many taxpayers who no longer make contributions or claim tax deductions continue to pay administrative fees. Sometimes, money is taken from the plan to pay premiums to keep life insurance policies in force. In these ways, it could be argued that these taxpayers are still “contributing,” and thus still must file Form 8886.

It is clear that the extent to which a taxpayer benefits from the transaction depends on the purpose of a particular transaction as described in the published guidance that caused such transaction to be a listed transaction. Revenue Ruling 2004-20, which classifies 419(e) transactions, appears to be concerned with the employer’s contribution/deduction amount rather than the continued deferral of the income in previous years. Another important issue is that the IRS has called CPAs material advisors if they signed tax returns containing the plan, and got paid a certain amount of money for tax advice on the plan. The fine is $100,000 for the CPA, or $200,000 if the CPA is incorporated. To avoid the fine, the CPA has to properly file Form 8918.

Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals, Wallach is a frequent speaker on retirement plans, financial and estate planning, and abusive tax shelters. He is also a featured writer and has been interviewed on television and financial talk shows including NBC, National Pubic Radio’s All Things Considered and others. Lance authored 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 AICPA best-selling books including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots.

Contact him at:
516.938.5007,
wallachinc@gmail.com , or
www.taxadvisorexperts.org, or
www.taxlibrary.us.

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.