412i, 419e plans litigation and IRS Audit Experts for abusive insurance reportable or listed transactions by the IRS,Section 79, Section 79 Lawsuits,412i
412i, 419e plans litigation and IRS Audit Experts for abusive insurance reportable or listed transactions by the IRS,Section 79, Section 79 Lawsuits,412i
Section 79 Plans Part II: Lying to Employees to Implement Plans
ReplyDeletegoogle lance wallach for more or www.lancewallach.com or 516 9357346
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IRS Audits Focus on Captive Insurance Plans - Lance Wallach
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As an expert witness, Lance Wallach has never lost a case. Lance Wallach has also written "CPA's guide to life insurance".
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Section 79 Plans Part II: Lying to Employees to Implement Plans
ReplyDeleteBefore getting into this week’s newsletter, I wanted to reiterate my comments on implementing plans with fewer than 10 employees.
Group underwriting for businesses of 10 employees or less
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Lance WallachNovember 27, 2013 at 4:06 AM
for help with abusive tax shelters www.taxaudit419.com for help with IRS audits of section 79
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Lance WallachNovember 27, 2013 at 4:10 AM
sect 79 plan help with audits www.taxaudit419.com
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ReplyDeleteThis paper reviews Section 79 and the potential
challenges facing employers regarding the structure
of their employee benefit plans. Without a properly
structured plan, employees may be responsible
for paying federal taxes on imputed income, and
employers may be faced with substantial additional
administrative work and costs in calculating imputed
income.
IRS regulations require that imputed income be
reported as it is incurred through the year. Therefore,
it must be incorporated in payroll during the course of
the year. Imputed income may not simply be included
in the year-end W-2. Imputed income is also subject to
regular payroll taxes including FICA.
Many large employers offer a group life insurance
plan to employees that include basic and voluntary life
insurance on employees and voluntary life insurance
on dependents. It is common knowledge that ‘imputed
income’ under Section 79 of the Internal Revenue
Code must be calculated on employer-paid basic life
insurance in excess of $50,000.1
However, employers
may not know that under certain circumstances,
imputed income calculations must also consider
voluntary life insurance on employees. Employers
also may not realize that under certain circumstances
imputed income must be calculated for voluntary
life insurance on dependents. For the reasons
outlined previously, most employers do not wish to
calculate imputed income on voluntary life insurance
on employees or dependents and careful forward
planning is therefore essential.
Captive Insurance & 419 Plans Litigation
ReplyDelete412i, 419e plans litigation and IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions,412i, 419e plans litigation and IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions,Captive Insurance,Captive Insurance Lawsuits,412i Lawsuits,419 lawsuits,412i Help,419 Help, IRS Audits,412i Problems,412i problems, Expert Witness Lance Wallach,412i Help,419 Help, Benistar Lawsuits, 412i lawsuits,419 lawsuits,
WEDNESDAY, JANUARY 8, 2014
Captive Insurance
Choosing a domicile.
■ Regulatory environment. Some jurisdictions are friendlier than others, or their
statutes may permit different used and forms of captives.
■ Minimum capitalization requirements – varies between jurisdictions from
$150,000 to $750,000. Separate series of a group captive requires risk-based
amount of capital, typically
■ Start-up costs and annual maintenance – typical start-up costs range from
$50,000 to $80,000 for pure captive (plus required capital) and from $20,000
to $25,000 for cell (or series) of group captive.
■ Underwriting risk classification
• Traditional coverage or non-traditional coverage, such as loss of license.
■ Tax implications.
• Small insurance company with premiums less than $1,200,000. See
Section 831(b) of the Internal Revenue Code. Applies to US tax-law
compliant companies.
• Excise taxes on premiums paid for non-US captives.
Section 79 Plans
ReplyDelete412i, 419e plans litigation and IRS Audit Experts for abusive insurance reportable or listed transactions by the IRS,Section 79, Section 79 Lawsuits,412i, 419e plans litigation and IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions by the IRS.Benistar,412i Lawsuits,419 lawsuits,412i Help,419 Help, IRS Audits,412i Problems,412i problems, Expert Witness Lance Wallach,412i Help,419 Help, Benistar Lawsuits, 412i lawsuits,419 lawsuits,
Friday, June 21, 2013
Follow the plan and get audited.
Follow the plan and get audited.
What is a Section 79 Plan?Protection, Retirement, Innovation. A permanent benefit life insurance plan (using IRS codes) that can add substantial retirement income via sheltered cash accumulation and protection to the business owner(s) as well as the employees at a minimal cost and in a tax-advantaged way.
Why Would A Company (and a Business Owner) Want to Implement a Section 79 Plan*?
1. Additional Permanent Life Insurance Protection
2. No Limits on Funding
3. Tax-Deferred Growth of Funds
4. Employee Benefit with Minimal Costs
5. Tax Deductabilty of Plan
6. Income-Tax Free Survivor Benefit
7. Distances Assets from Company Creditors
8. Program Supported by Specific IRS Tax Code and Regulations
Structure:
FOR THE BUSINESS OWNER AND KEY EMPLOYEES
Business Pays Tax Deductible Premium on Corporate
Sponsored Group Life Insurance Policy (permanent
life) on behalf of the business owner or key employee
Life Insurance Company Issues Insurance Policy
Insuring Key Employee's Life
Premium is only Partially Taxable to Owner-Employee
or Key Employee
Employee Owns Policy and All Rights Associated with the Policy
Income Tax-Free Death Benefit is Paid to Key
Employee's Beneficiary
ce arrangements, or disqualified benefits pursuant to Section 4976. Taxpayers participating in these listed transactions should have, in most cases, already disclosed such participation to the Service. Those who have not should do so at the earliest possible moment. Failure to disclose can result in severe penalties – up to $100,000 for
ReplyDeleteindividuals and $200,000 for corporations.
Finally, Revenue Ruling 2007-65 focused on situations where cash value life insurance is
purchased on owner employees and other key employees, while only term insurance is offered to the rank and file. These are sold as 419(e), 419A (f)(6), and 419 plans. Life insurance premiums are not inherently tax deductible and authority must be found in Section 79 to justify such a deduction. Section 264(a), in fact, specifically disallows tax deductions for life insurance, at least in some cases. And moreover, the Service declared, interposition of a trust does not change the nature of the transaction.
The information provided herein is not intended as legal, accounting, financial or any other type of advice for any specific individual or other entity. You should contact an appropriate professional for any such advice.
Lance Wallach, CLU, ChFC, CIMC, speaks and writes extensively about financial planning, retirement plans, and tax reduction strategies. He speaks at more than 70 national conventions annually and writes for more than 50 national publications. For more information and additional articles on these subjects, visit www.taxadvisorexperts.org or call 516-938-5007.
Posted in Abusive Tax Shelter Plans | Tagged 4121i, 412i Benefit Plan, 419, Form 8886, IRS, IRS Audits, Lance Wallach, Lance Wallach Expert Witness, Listed Transactions, Section 79 | Leave a reply
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RECENT POSTS
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Business Owners in 419, 412i, Section 79 and Captive Insurance Plans Will Probably Be Fined by the IRS Under Section 6707A
Understand how a Section 79 Plan works
The Section 79 Plan is a tax mitigation
TESTIMONIALS
"Mr. Wallach, thanks so much for taking the time to talk to me today about VEBAs. Any information you can send me would be helpful. Hopefully, we can work together in the future as interest in VEBAs increase." Corman G. Franklin Office of the Assistant Secretary for Policy U.S. Department of Labor
"Welfare Benefit Plan" tax schemes are gaining popularity among sole proprietors about like crack cocaine, and they promise to be much more harmful to their health.
ReplyDeleteAs we all know, businesses that provide benefits to their employees, such as health care and insurance, write the costs of those welfare benefit programs off on their taxes. Welfare Benefit Plan tax schemes are promoted as a way for sole proprietors to do the same thing, providing their favorite employee (themselves) with cleverly crafted welfare benefits, writing the costs of those benefits off as tax deductions. So, as the scheme goes, you pump massive amounts of income into a cash value life insurance policy, deducting those premiums as a tax deduction, while building a cash value that you can later cash out, or borrow against, "tax free." The promoters of these schemes generally explain (with a wink and a nod) that when you begin to cash out, you have an obligation to report that money as income, because insurance policy proceeds are not generally taxable, and these withdrawals are not reportable by the issuer of the policy.
In other words, these Welfare Benefit Plans are promoted to be like some special IRA that you can put all the money in you want, write the contributions off your taxes, and pull the money out later without any notification to the IRS . . . unless you tell them.
Internal Revenue Code Sections 419, and 419A, define the rules allowing employers to make tax deductible contributions to Welfare Benefit Plans, in order to provide their employees with medical and life insurance benefits. There is nothing inherently wrong with these plans; the IRS acknowledges that businesses often maintain welfare benefit funds that fully comply with the intent of Sections 419 and 419A and, in fact, provide meaningful medical and life insurance benefits to their employees, making substantial contributions to those funds that the IRS accepts as fully deductible.
On the other hand, the IRS does take issue with the Welfare Benefit Plans that are being promoted to sole proprietors and small businesses as a way to avoid federal income taxes via schemes th
Revenue Ruling 2007-65 Impacts Marketing of IRC Section 419(e) Single Employer Plans
ReplyDeleteIRS recently issued Revenue Ruling 2007-65 along with IRS Notices 2007-83 and 2007-84. This guidance is intended to warn taxpayers that certain IRC Section 419(e) “single employer welfare benefit plans” that use cash value life insurance to fund plan benefits may not provide the income tax deductions advocated by plan sponsors and promoters. Revenue Ruling 2007-65 provides the rationale for non-deductibility based on an interpretation of IRC Section 264(a). Notice 2007-83 speaks about welfare benefit trusts that use cash value life insurance to fund pre-retirement benefits for active employees and Notice 2007-84 addresses arrangements that provide post-retirement medical and life insurance benefits. In addition, the notices state that these arrangements are now considered to be “listed transactions” for purposes of the tax shelter rules. This will burden taxpayers with reporting and disclosure responsibilities and additional penalties for non-compliance. Promoters may need to register their plans as tax shelter transactions.
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