The IRS Raids Plan Promoter Benistar - Large IRS Fines For Participation in 419, 412i, Captive Insurance and Section 79



By Lance Wallach

Recently IRS raided Benistar and its successor, the Grist Mill Trust, the promoter and operator of one of the better known and more heavily scrutinized of the Section 419 life insurance plans. IRS attacked the Benistar 419 plan, and one of its tactics was to demand the names of all the clients Benistar worked with — so they could be audited by the IRS, Benistar refused to give the names and actually appealed the decision to turn over the names. The appeal was unsuccessful, but Benistar officials still refused to give up the names. Recently, the IRS raided the Benistar office and took hundreds of boxes of information, which included information on clients who were in their 419 plan. In documents filed by Benistar itself, they stated that 35 to 50 armed IRS agents descended upon their office to seize documents.
IRS has visited, and is still visiting most of the other plans and obtaining names of participants, selling insurance agents, accountants, etc. They have a whole task force devoted to auditing 419, 412i and other abusive plans.
It's important to understand what could happen to unsuspecting business owners if they get involved in plans that are not above board. Their names could be turned over to the IRS, where audits could ensue, and where the outcome could be the payment of back taxes and significant penalties. Then they would be fined another time under Section 6707A for not properly reporting on themselves.
Most 419 life insurance and 412i defined benefit pension plans were sold to successful business owners as plans with large tax deductions where money would grow tax free until needed in retirement. I would speak at national accounting and other conventions talking about the problems with most of these plans. I would be attacked by some attendees who where making large insurance commissions selling the plans. I would try to warn insurance company home office executives, but they too had their heads in the sand because of all the money these plans brought in. Then the IRS got tough and started fining the unsuspecting business owners hundreds of thousands a year for not reporting on themselves for being in the plan. The agents and insurance companies advise against filing. "This is a good plan. We have approval." Not only were the business owners fined under IRS Code 6707A, but the insurance agents were also fined $100,000 for not reporting on themselves. Accountants who signed tax returns are even being fined 100,000 by IRS. Then the business owners sue the accountants, insurance agents, etc. I have been following these scenarios for a long time. In fact, I have been an expert witness in many of these cases, and my side has never lost.
Most promoters of 419 plans told clients that their plans complied with the laws and, therefore, were not listed tax transactions. Unfortunately, the IRS doesn't care what a promoter of a tax-avoidance plan says; it makes its own determination and punishes those who don't comply.

The McGehee Family Clinic, P.A. was recently hit with back taxes and a penalty under Code Sec. 666A in conjunction with a deduction to the Benistar 419 plan
Dr. McGehee's clinic took a deduction for a 419 plan (the Benistar plan) back in 2005. Eventually, the McGhee Family Clinic was audited. After the audit, the doctor was told that the deduction would be disallowed and that back taxes were due. Additionally, Dr. McGehee was hit with a 20 percent accuracy-related penalty under Code Sec. 6662A. Finally, the tax court sustained the IRS's determination that McGehee was subject to the increased 30 percent penalty, because its return did not include a disclosure statement indicating its participation in the Benistar Trust. I think that in addition to the aforementioned fines, IRS will now fine him, both on a corporate and personal level, another $200,000 or more, under IRC 6707A, for not properly disclosing his participation in a listed transaction. There was a moratorium on those fines until June 2010, pending new legislation to reduce them. The fines had been $200,000 per year on the corporate level and $100,000 per year on the personal level. You got the fine even if you made no contributions for the year. All you had to do was to be in the plan. So Dr. McGehee's fine would be a total of $300,000 per year for every year that he and his corporation were in the plan.
IRS also says the fine is not appealable. His fine would be in the million-dollar range and it would be in addition to the back taxes, interest, and penalties already discussed earlier in this paragraph.
Legislation just passed slightly reducing those fines, but you still have to properly file to start the Statute of Limitations running to avoid the fines. IRS is fining people who report on themselves, but make a mistake on the forms.  Now that the moratorium on the fines has passed, and so has the new legislation, IRS has aggressively moved to fine unsuspecting business owners hundreds of thousands. This is usually after they get audited, and sometimes reach agreement with IRS. Then another division or department of the IRS imposes a fine under 6707A. I am receiving a lot of phone calls from business owners who this is happening to. Unfortunately, some of these people already had called me. I warned them to properly file under 6707A. Either they did not believe me - it is unbelievable -  or their accountant or tax attorney filed incorrectly. Then they called again after being fined.
If you were involved with one of these abusive plans, there are steps that you can take to minimize IRS problems. With respect to filing under Section 6707A, I know the two best people in the country at filing after the fact, which is what you would be doing at this point, and still somehow avoiding the fine. It is an art that both learned through countless hours of research and numerous conversations with IRS personnel. Both have filed dozens of times for clients, after the fact, without the clients being fined. Either may well still be able to help you.
And the right accountant, one with the proper knowledge, experience, and Service contacts, can help with the other IRS problems as well. I recall a case where a CPA I knew and recommended was able to get $300,000 or so in liabilities reduced to three thousand dollars and change. Do not count on a result like this, but help is available.
Stay away from 419 and similar plans like Section 79 plans. Be very careful with 412i plans. Avoid most captive insurance plans. It's not worth it!
It's getting closer to the end of the year. This is when every scammer known to man/woman comes out of the woodwork to sell some fly-by-night tax-deductible plan to clients. Sometimes they come in the form of an accountant, insurance agent-financial planner, or even an attorney. I see this in all of my expert witness cases and when I speak at conventions. I have seen this since the 1990s. I wanted to remind readers that, if it sounds too good to be true, it probably is.
Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals, is a frequent speaker on retirement plans, financial and estate planning, and abusive tax shelters.  He writes about 412(i), 419, and captive insurance plans. He speaks at more than ten conventions annually, writes for over fifty publications, is quoted regularly in the press and has been featured on television and radio financial talk shows including NBC, National Public Radio's All Things Considered, and others. Lance has written numerous books including 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. He does expert witness testimony and has never lost a case. Contact him at 516.938.5007, wallachinc@gmail.com or visit www.taxaudit419.com.

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 advise.




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    IRS Audits Focus on Captive Insurance Plans
    April 2011 Edition

    By Lance Wallach

    The IRS started auditing § 419 plans in the 1990s, and then continued going
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    Employee Retirement Plans

    By Lance Wallach

    412i, 419, Captive Insurance and Section
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    The IRS has been attacking all 419 welfare benefit plans, many
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    Daniel E. Carpenter (Simsbury, CT), attorney and businessman, was scheduled to report to a federal prison on Friday, June 20. His saga involves cases over more than a decade in federal district courts, circuit courts of appeal, and the Supreme Court. Among the federal agencies involved in the cases are the Department of Justice, the Department of Labor, the Department of the Treasury, and the Internal Revenue Service (IRS). Several cases are ongoing despite Carpenter's incarceration.

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  8. Joseph M. Belth
    BlogBioThe Insurance Forum
    Monday, June 23, 2014
    No. 54: Daniel Carpenter and a Host of Criminal Allegations
    Daniel E. Carpenter (Simsbury, CT), attorney and businessman, was scheduled to report to a federal prison on Friday, June 20. His saga involves cases over more than a decade in federal district courts, circuit courts of appeal, and the Supreme Court. Among the federal agencies involved in the cases are the Department of Justice, the Department of Labor, the Department of the Treasury, and the Internal Revenue Service (IRS). Several cases are ongoing despite Carpenter's incarceration.

    The Section 1031 Fraud Allegations
    Carpenter owned and operated Benistar, Ltd. and its subsidiaries. One Benistar function was to act as an intermediary in Section 1031 property exchanges. That section of the Internal Revenue Code allows the

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    The dangers of being "listed"
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    IRSform8886.com
    Blog

    United States District Court,
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    IANTOSCA LLC v. STEP
    PLAN SERVICES INC 419 LLC

    Prejudgement Summary

    Court Cases on the Rise

    Judicial Review (McGehee)
    Court Case Research

    EMAIL US HERE

    accountingTODAY

    The dangers of being "listed"
    A warning for 419, 412i, Sec.79 and captive insurance

    Accounting Today: October

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  13. 419.Tax
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    WHAT IS A 419 PLAN? ABUSIVE TAX SHELTERS EXPERT WITNEBursey, Guy Neumann, Kathy Kehoe, Joe Castagno and others) •Niche Marketing •Millenium Plans •CJA & Associates (run by Raymond Ankner •Sea Nine VEBA •Compass Welfare Benefit Plan
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    December 28, 2015
    Tax Court Drops The Hammer On Employee Welfare Plan
    December 21, 2015
    Court Hammers Taxpayers in 419 Ruling
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    ReplyDelete
  14. 419.Tax
    Search SKIP TO CONTENT
    WHAT IS A 419 PLAN? ABUSIVE TAX SHELTERS EXPERT WITNEBursey, Guy Neumann, Kathy Kehoe, Joe Castagno and others) •Niche Marketing •Millenium Plans •CJA & Associates (run by Raymond Ankner •Sea Nine VEBA •Compass Welfare Benefit Plan
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    419 and 412 Plan Fraud
    July 23, 2015
    412i, 419, Lawsuits, IRS Audits
    July 23, 2015
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    June 19, 2015

    ReplyDelete
  15. LSW Suspends Section 79 Plan Sales
    First it was Pac Life, now Life of the Southwest (LSW) is suspending all sales of Section 79 Plans effective immediately.
    I’ve been warning about Section 79 Plans for several years. From a pure financial standpoint, I do not believe these plans are worth implementing. In fact, I was so disgusted with how these plans are sold that I created a consumer protection web-site (see www.section79plans.net which discusses in detail why I don’t like these plans).
    Too much greed–even though I’ve been warning about these plans for years, hundreds of agents continue to sell them. Why? Greed. Section 79 Plans pay some of the biggest commissions in the industry. Now I imagine that these greedy/ignorant agents may regret selling these plans.
    The following is the text from an email LSW sent yesterday.
    Suspension of Section 79 Sales
    National Life Group has recently become aware that the IRS is conducting a number of audits of employee benefit plans established under Section 79 of the Internal Revenue Code that utilize the products of another carrier. We understand that these audits are focused on the implementation and structure of the plans, including review of whether the plans are discriminatory under IRS interpretation of relevant regulations.
    Due to the uncertainty resulting from the IRS audits, we believe it is appropriate to suspend the sale of National Life Group products in Section 79 plans pending our further review of the issues involved. Please note that this suspension will take effect immediately. We will continue to monitor this situation, evaluate the arguments being made by the IRS and issue communications as we learn more going forward.
    We recognize that this may disrupt plans that have been recently submitted and we will be communicating directly with producers who have pending cases received in the home office on or before June 23, 2015. In particular, we have developed procedures for advising applicants of the situation so that they may seek additional tax and legal advice as appropriate.
    National Life Group will continue to offer its products to those Section 79 plans already in existence at the time of this notice to fulfill the requirements of the plans.
    Thank you for your continued support of National Life Group.

    ReplyDelete
  16. LSW Suspends Section 79 Plan Sales
    First it was Pac Life, now Life of the Southwest (LSW) is suspending all sales of Section 79 Plans effective immediately.
    I’ve been warning about Section 79 Plans for several years. From a pure financial standpoint, I do not believe these plans are worth implementing. In fact, I was so disgusted with how these plans are sold that I created a consumer protection web-site (see www.section79plans.net which discusses in detail why I don’t like these plans).
    Too much greed–even though I’ve been warning about these plans for years, hundreds of agents continue to sell them. Why? Greed. Section 79 Plans pay some of the biggest commissions in the industry. Now I imagine that these greedy/ignorant agents may regret selling these plans.
    The following is the text from an email LSW sent yesterday.
    Suspension of Section 79 Sales
    National Life Group has recently become aware that the IRS is conducting a number of audits of employee benefit plans established under Section 79 of the Internal Revenue Code that utilize the products of another carrier. We understand that these audits are focused on the implementation and structure of the plans, including review of whether the plans are discriminatory under IRS interpretation of relevant regulations.
    Due to the uncertainty resulting from the IRS audits, we believe it is appropriate to suspend the sale of National Life Group products in Section 79 plans pending our further review of the issues involved. Please note that this suspension will take effect immediately. We will continue to monitor this situation, evaluate the arguments being made by the IRS and issue communications as we learn more going forward.
    We recognize that this may disrupt plans that have been recently submitted and we will be communicating directly with producers who have pending cases received in the home office on or before June 23, 2015. In particular, we have developed procedures for advising applicants of the situation so that they may seek additional tax and legal advice as appropriate.
    National Life Group will continue to offer its products to those Section 79 plans already in existence at the time of this notice to fulfill the requirements of the plans.
    Thank you for your continued support of National Life Group.

    ReplyDelete
  17. 516-935-7346
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    Recent Posts

    Uniform CPA Examination may be changed as a result of feedback June 29, 2015
    Using Captive Insurance Companies for Savings May 20, 2015
    What is a VEBA? May 20, 2015
    What to do if you have a 419 Plan May 20, 2015
    You Can Beat the IRS May 20, 2015
    There Is No Place to Hide from IRS Scrutiny May 13, 2015
    The dangers of being “listed” A warning for 419, 412i, Sec.79 and captive insurance May 13, 2015
    This Can Happen to You April 29, 2015
    Accountants being fined $100,000 by IRS and sued by clients April 29, 2015

    ReplyDelete
  18. 516-935-7346
    Lance Wallach
    Featured Experts
    Expert Witness
    Tax Compliance Act
    Retirement
    Already in Trouble?
    419, 412i, Section 79
    Life Insurance Litigation
    Contact Us

    Type your search
    Lance Wallach has NEVER lost a case!

    This consultation could save you $200,000 or more in "IRS penalties"!
    Expertise

    • SADI Trust • Professional Benefits Trust PBI • Sea Nine Veba • Bisys • The Beta Plan • The "Millennium • Niche • The Ridge Plan • The Grist Mill Trust • The Compass Welfare Benefit Plan • Section 79 Plans • Captive Insurance • 412(i) retirement plans • 419 welfare benefit plans
    Recent Posts

    Uniform CPA Examination may be changed as a result of feedback June 29, 2015
    Using Captive Insurance Companies for Savings May 20, 2015
    What is a VEBA? May 20, 2015
    What to do if you have a 419 Plan May 20, 2015
    You Can Beat the IRS May 20, 2015
    There Is No Place to Hide from IRS Scrutiny May 13, 2015
    The dangers of being “listed” A warning for 419, 412i, Sec.79 and captive insurance May 13, 2015
    This Can Happen to You April 29, 2015
    Accountants being fined $100,000 by IRS and sued by clients April 29, 2015

    ReplyDelete
  19. "The search (more like an armed assault), which involved between 35 and 50 IRS Criminal Investigation Division agents wearing black Kevlar bullet-proof vests and fully armed with automatic weapons, who herded the employees of the various companies then at the office located at 100 Grist Mill Road into a conference room and illegally searched and interrogated them, was completely over-the-top, unnecessary, and more akin to something that would happen in the movies or the TV show "24" rather than in the small town of Simsbury...", said lawyers for the welfare benefit plan promoters. And so began the battle by Benistar

    ReplyDelete
  20. "The search (more like an armed assault), which involved between 35 and 50 IRS Criminal Investigation Division agents wearing black Kevlar bullet-proof vests and fully armed with automatic weapons, who herded the employees of the various companies then at the office located at 100 Grist Mill Road into a conference room and illegally searched and interrogated them, was completely over-the-top, unnecessary, and more akin to something that would happen in the movies or the TV show "24" rather than in the small town of Simsbury...", said lawyers for the welfare benefit plan promoters. And so began the battle by Benistar

    ReplyDelete

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    Niche 419
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    American Benefits Trust
    National Benefit Plan and Trust
    ABT
    Professional Benefits Trust
    Old Mutual
    Allmerica Financial
    American Heritage Life
    Commercial Union Life
    National Life of Vermont
    Old Line Life
    Security Mutual Life
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    ECI Pension Services
    Pension Professionals of America
    ABI
    Hartford
    AIG
    Indy Life
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    Massachusetts Mutual
    Metropolitan Life
    Midland Life
    Minnesota Mutual
    Principal Life
    Reliastar
    Security Mutual
    USG Annuity & Life
    Western Reserve Life Assurance
    Old Mutual
    Allmerica Financial
    American Heritage Life
    Commercial Union Life
    National Life of Vermont
    Old Line Life
    Security Mutual Life
    West Coast Life

    ReplyDelete

  22. Benistar419Audits.com
    Benistar
    Benistar 419 Plan
    Grist Mill Trust
    Nova
    Niche
    Sea Nine Veba
    SADI Trust
    Beta 419
    Millennium
    Bisys
    Creative Services Group
    Sterling Benefit Plan
    Compass 419
    Niche 419
    CRESP
    American Benefits Trust
    National Benefit Plan and Trust
    ABT
    Professional Benefits Trust
    Old Mutual
    Allmerica Financial
    American Heritage Life
    Commercial Union Life
    National Life of Vermont
    Old Line Life
    Security Mutual Life
    West Coast Life
    ECI Pension Services
    Pension Professionals of America
    ABI
    Hartford
    AIG
    Indy Life
    Indianapolis Life
    Advantage
    Jacksom National
    Jefferson-Pilot Life
    Lincoln Benefit Life
    Lincoln National Life
    Manufacturers Life
    Massachusetts Mutual
    Metropolitan Life
    Midland Life
    Minnesota Mutual
    Principal Life
    Reliastar
    Security Mutual
    USG Annuity & Life
    Western Reserve Life Assurance
    Old Mutual
    Allmerica Financial
    American Heritage Life
    Commercial Union Life
    National Life of Vermont
    Old Line Life
    Security Mutual Life
    West Coast Life

    ReplyDelete
  23. For more than a decade, numerous promoters have touted Section 419 plans as a legitimate way to reduce taxes at the corporate level. These plans have been sold as “welfare benefit trusts” or “death benefit only trusts” for the

    ReplyDelete
  24. For more than a decade, numerous promoters have touted Section 419 plans as a legitimate way to reduce taxes at the corporate level. These plans have been sold as “welfare benefit trusts” or “death benefit only trusts” for the

    ReplyDelete
  25. Lance Wallach helps with 419 problems. 412i 419 abusive tax shelters IRS audits, lawsuits, Lance Wallach will help www.vebaplan.com
    419, 412i, IRS audits, Lance Wallach, Google him helps, The following had something to do with this.
    Dennis Cunning Steve Toth Randall Smith Paul Kaplan Herb Green Casey Hermansen
    Larry Bell Scott Ridge Judy Carsrud Jeffrey Glasberg Herb McDowel
    Greg Roper Joseph Donnelly
    Norm Bevan Michael Sonnenberg
    r Anthony Fakouri
    Steve Burgess
    Robin Weingast
    IRS audits 419 412i captive insurance and section 79 plans. Lance Wallach will help you.

    ReplyDelete
  26. Lance Wallach helps with 419 problems. 412i 419 abusive tax shelters IRS audits, lawsuits, Lance Wallach will help www.vebaplan.com
    419, 412i, IRS audits, Lance Wallach, Google him helps, The following had something to do with this.
    Dennis Cunning Steve Toth Randall Smith Paul Kaplan Herb Green Casey Hermansen
    Larry Bell Scott Ridge Judy Carsrud Jeffrey Glasberg Herb McDowel
    Greg Roper Joseph Donnelly
    Norm Bevan Michael Sonnenberg
    r Anthony Fakouri
    Steve Burgess
    Robin Weingast
    IRS audits 419 412i captive insurance and section 79 plans. Lance Wallach will help you.

    ReplyDelete

  27. Benistar.expert
    Benistar Court Case

    No. 54: Daniel Carpenter and a Host of Criminal AllegationsDaniel E. Carpenter (Simsbury, CT), attorney and businessman, was scheduled to report to a federal prison on Friday, June 20. His saga involves cases over more than a decade in federal district courts, circuit courts of appeal, and the Supreme Court. Among the federal agencies involved in the cases are the Department of Justice, the Department of Labor, the Department of the Treasury, and the Internal Revenue Service (IRS). Several cases are ongoing despite Carpenter's incarceration.

    The Section 1031 Fraud Allegations
    Carpenter owned and operated Benistar, Ltd. and its subsidiaries. One Benistar function was to act as an intermediary in Section 1031 property exchanges. That section of the Internal Revenue Code allows the owner of investment property to defer capital gains taxes on the sale of the property by rolling the proceeds of the sale into the purchase of replacement property. However, the tax deferral is lost if the owner (the "exchangor") takes possession of the sale proceeds. Therefore, companies such as Benistar offer to act as an intermediary by holding the proceeds in escrow until the exchangor is ready to close on the replacement property.
    Carpenter promoted the services of Benistar by offering to hold the funds safely, pay a small amount of interest, and provide the funds when needed. However, without the knowledge or consent of the exchangors, Carpenter embarked on a highly speculative program of options trading in the hope of generating large gains for himself.
    ntervener in the sanctions proceedings.

    ReplyDelete

  28. Benistar.expert
    Benistar Court Case

    No. 54: Daniel Carpenter and a Host of Criminal AllegationsDaniel E. Carpenter (Simsbury, CT), attorney and businessman, was scheduled to report to a federal prison on Friday, June 20. His saga involves cases over more than a decade in federal district courts, circuit courts of appeal, and the Supreme Court. Among the federal agencies involved in the cases are the Department of Justice, the Department of Labor, the Department of the Treasury, and the Internal Revenue Service (IRS). Several cases are ongoing despite Carpenter's incarceration.

    The Section 1031 Fraud Allegations
    Carpenter owned and operated Benistar, Ltd. and its subsidiaries. One Benistar function was to act as an intermediary in Section 1031 property exchanges. That section of the Internal Revenue Code allows the owner of investment property to defer capital gains taxes on the sale of the property by rolling the proceeds of the sale into the purchase of replacement property. However, the tax deferral is lost if the owner (the "exchangor") takes possession of the sale proceeds. Therefore, companies such as Benistar offer to act as an intermediary by holding the proceeds in escrow until the exchangor is ready to close on the replacement property.
    Carpenter promoted the services of Benistar by offering to hold the funds safely, pay a small amount of interest, and provide the funds when needed. However, without the knowledge or consent of the exchangors, Carpenter embarked on a highly speculative program of options trading in the hope of generating large gains for himself.
    ntervener in the sanctions proceedings.

    ReplyDelete

  29. TAX PREPARATION
    ESTATE PLANNING
    ARTICLES
    MORE YOU SHOULD KNOW
    CALL US
    for a free Consultation
    [516-938-5007]
    Benistar loses another tax court case.

    HOME
    ABOUT
    ARTICLES
    CONTACT
    MORE YOU SHOULD KNOW
    benistar audits
    BELTH
    General Observations
    The one Massachusetts case and the three Connecticut cases described in this post are not all the ongoing cases relating to Carpenter. For example, documents in those cases refer to cases involving Carpenter in New York and Wisconsin. However, the cases described here provide insight into the scope of the alleged criminal activities in which Carpenter has been engaged for more than a decade.
    No. 54: Daniel Carpenter and a Host of Criminal AllegationsDaniel E. Carpenter (Simsbury, CT), attorney and businessman, was scheduled to report to a federal prison on Friday, June 20. His saga involves cases over more than a decade in federal district courts, circuit courts of appeal, and the Supreme Court. Among the federal agencies involved in the cases are the Department of Justice, the Department of Labor, the Department of the Treasury, and the Internal Revenue Service (IRS). Several cases are ongoing despite Carpenter's incarceration.

    The Section 1031 Fraud Allegations
    Carpenter owned and operated Benistar, Ltd. and its subsidiaries. One Benistar function was to act as an intermediary in Section 1031 property exchanges. That section of the Internal Revenue Code allows the owner of investment property to defer capital gains taxes on the sale of the property by rolling the proceeds of the sale into the purchase of replacement property. However, the tax deferral is lost if the owner (the "exchangor") takes possession of the sale proceeds. Therefore, companies such as Benistar offer to act as an intermediary by holding the proceeds in escrow until the exchangor is ready to close on the replacement property.
    IS THE IRS COMING TO GET YOU
    Benistar The Trusted Leader.
    A federal judge in Boston sentenced a Simsbury man on Wednesday to three years in prison for a fraud involving

    Daniel E. Carpenter, 59, had offered services to clients in Massachusetts called "exchangors," which prosecutors describe as "clients who engaged in tax-deferred real estate exchange transactions" -- further explanation of that is below.

    Carpenter's business held money for these clients in escrow accounts but made risky investments with it while emphasizing how safe the accounts were in communications with the clients. Since the clients' rate of return was capped, he would have walked away with high profits. Instead, he lost more than $9 million of his clients' money.
    Read More Here

    ReplyDelete

  30. TAX PREPARATION
    ESTATE PLANNING
    ARTICLES
    MORE YOU SHOULD KNOW
    CALL US
    for a free Consultation
    [516-938-5007]
    Benistar loses another tax court case.

    HOME
    ABOUT
    ARTICLES
    CONTACT
    MORE YOU SHOULD KNOW
    benistar audits
    BELTH
    General Observations
    The one Massachusetts case and the three Connecticut cases described in this post are not all the ongoing cases relating to Carpenter. For example, documents in those cases refer to cases involving Carpenter in New York and Wisconsin. However, the cases described here provide insight into the scope of the alleged criminal activities in which Carpenter has been engaged for more than a decade.
    No. 54: Daniel Carpenter and a Host of Criminal AllegationsDaniel E. Carpenter (Simsbury, CT), attorney and businessman, was scheduled to report to a federal prison on Friday, June 20. His saga involves cases over more than a decade in federal district courts, circuit courts of appeal, and the Supreme Court. Among the federal agencies involved in the cases are the Department of Justice, the Department of Labor, the Department of the Treasury, and the Internal Revenue Service (IRS). Several cases are ongoing despite Carpenter's incarceration.

    The Section 1031 Fraud Allegations
    Carpenter owned and operated Benistar, Ltd. and its subsidiaries. One Benistar function was to act as an intermediary in Section 1031 property exchanges. That section of the Internal Revenue Code allows the owner of investment property to defer capital gains taxes on the sale of the property by rolling the proceeds of the sale into the purchase of replacement property. However, the tax deferral is lost if the owner (the "exchangor") takes possession of the sale proceeds. Therefore, companies such as Benistar offer to act as an intermediary by holding the proceeds in escrow until the exchangor is ready to close on the replacement property.
    IS THE IRS COMING TO GET YOU
    Benistar The Trusted Leader.
    A federal judge in Boston sentenced a Simsbury man on Wednesday to three years in prison for a fraud involving

    Daniel E. Carpenter, 59, had offered services to clients in Massachusetts called "exchangors," which prosecutors describe as "clients who engaged in tax-deferred real estate exchange transactions" -- further explanation of that is below.

    Carpenter's business held money for these clients in escrow accounts but made risky investments with it while emphasizing how safe the accounts were in communications with the clients. Since the clients' rate of return was capped, he would have walked away with high profits. Instead, he lost more than $9 million of his clients' money.
    Read More Here

    ReplyDelete
  31. n 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 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.

    Notice 95-34 was issued in response to trust arrangements sold to companies that were designed to provide deductible benefits such as life insurance, disability and severance pay benefits. The promoters of these arrangements claimed that all employer contributions were tax-deductible when paid, by relying on the 10-or-more-employer exemption from the IRC § 419 limits.

    In general, contributions to a welfare benefit fund are not fully deductible when paid. Sections 419 and 419A impose strict limits on the amount of tax-deductible prefunding permitted for contributions to a welfare benefit fund. Section 419A(f)(6) provides an exemption from section 419 and section 419A for certain “10-or-more employers” welfare benefit funds. In general, for this exemption to apply, the fund must have more than one contributing employer, of which no single employer can contribute more than 10% of the total contributions, and the plan must not be experience- rated with respect to individual employers (that is, one that allows contributions to increase or decrease based on benefits or overall experience).

    As discussed in Notice 95-34, these arrangements typically involve an investment in variable life or universal life insurance contracts on the lives of the covered employees. The problem is that the employer contributions are large relative to the cost of the amount of term insurance that would be required to provide the death benefits under the arrangement, and the trust administrator may obtain cash to pay benefits other than death benefits, by such means as cashing in or withdrawing the cash value of the insurance policies. The plans are also often designed so that a particular employer’s contributions or its employees’ benefits may be determined in a way that insulates the employer to a significant extent from the experience of other subscribing employers.

    Benistar advertised that enrollees should expect to obtain the same type
    - See more at: http://www.journalofaccountancy.com/issues/2011/jan/benistar.html#sthash.CsgiU6QW.dpuf

    ReplyDelete
  32. n 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 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.

    Notice 95-34 was issued in response to trust arrangements sold to companies that were designed to provide deductible benefits such as life insurance, disability and severance pay benefits. The promoters of these arrangements claimed that all employer contributions were tax-deductible when paid, by relying on the 10-or-more-employer exemption from the IRC § 419 limits.

    In general, contributions to a welfare benefit fund are not fully deductible when paid. Sections 419 and 419A impose strict limits on the amount of tax-deductible prefunding permitted for contributions to a welfare benefit fund. Section 419A(f)(6) provides an exemption from section 419 and section 419A for certain “10-or-more employers” welfare benefit funds. In general, for this exemption to apply, the fund must have more than one contributing employer, of which no single employer can contribute more than 10% of the total contributions, and the plan must not be experience- rated with respect to individual employers (that is, one that allows contributions to increase or decrease based on benefits or overall experience).

    As discussed in Notice 95-34, these arrangements typically involve an investment in variable life or universal life insurance contracts on the lives of the covered employees. The problem is that the employer contributions are large relative to the cost of the amount of term insurance that would be required to provide the death benefits under the arrangement, and the trust administrator may obtain cash to pay benefits other than death benefits, by such means as cashing in or withdrawing the cash value of the insurance policies. The plans are also often designed so that a particular employer’s contributions or its employees’ benefits may be determined in a way that insulates the employer to a significant extent from the experience of other subscribing employers.

    Benistar advertised that enrollees should expect to obtain the same type
    - See more at: http://www.journalofaccountancy.com/issues/2011/jan/benistar.html#sthash.CsgiU6QW.dpuf

    ReplyDelete
  33. SERVICES
    419
    CRESP
    American Benefits Trust National Benefit Plan
    Trust ABT Professional Benefits Trust Old Mutual Allmerica Financial American Heritage Life Commercial Union Life National Life of Vermont Old Line Life Security Mutual Life West Coast
    Life ECI Pension ServicesPension Professionals of AmericaABIHartfordAIGIndy LifeIndianapolis LifeAdvantageJacksom NationalJefferson-Pilot LifeLincoln Benefit LifeLincoln National LifeManufacturers LifeMassachusetts MutualMetropolitan LifeMidland LifeMinnesota MutualPrincipal LifeReliastarSecurity MutualUSG Annuity
    LifeWestern Reserve Life AssuranceOld MutualAllmerica FinancialAmerican Heritage LifeCommercial Union LifeNational Life of VermontOld Line LifeSecurity Mutual LifeWest Coast Life

    ReplyDelete
  34. 412i, 419e plans litigation and IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions by the IRS

    Monday, July 11, 2016
    Advisers Staring at a New 'Slew' of Litigation From Small-Business Clients
    Advisers Staring at a New 'Slew' of Litigation From Small-Business Clients
    Posted by Lance Wallach at 12:16 PM No comments:
    Labels: 412(i), 419 Plans, abusive tax shelters, arbitration, Benistar Plan
    Friday, February 5, 2016
    Robin Weingast - NOVA, Grist Mill Trust, Benistar Review 277882 Jun 19, New York, New York, Beta Plan @ Pissed Consumer
    Robin Weingast - NOVA, Grist Mill Trust, Benistar Review 277882 Jun 19, New York, New York, Beta Plan @ Pissed Consumer
    Posted by Lance Wallach at 12:15 PM 1 comment:
    Labels: 419E, Abusive Retirement Plans, abusive tax shelters, Benistar Plan
    Monday, September 28, 2015
    IRS audits captive insurance, section 79, 412i | Stacey Arenas | LinkedIn
    IRS audits captive insurance, section 79, 412i | Stacey Arenas | LinkedIn
    Posted by Lance Wallach at 7:45 AM 2 comments:
    Labels: abusive tax shelters, Benistar Plan
    Wednesday, September 23, 2015
    IRS SCRUTINY CAPTIVE INSURANCE AGREEMENTS Alerts August 6, 2014 In the past…
    IRS SCRUTINY CAPTIVE INSURANCE AGREEMENTS Alerts August 6, 2014 In the past…
    Posted by Lance Wallach at 10:05 AM No comments:
    Labels: 419 Plan, 419 Plans, Benistar Plan
    Audits of section 79, captive insurance, 412i and 419 scams | 419.Tax
    Audits of section 79, captive insurance, 412i and 419 scams | 419.Tax
    Posted by Lance Wallach at 10:02 AM No comments:
    Labels: 419 Plan, abusive insurance, Benistar group retiree, Benistar Plan
    Captive In

    ReplyDelete
  35. 412i, 419e plans litigation and IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions by the IRS

    Monday, July 11, 2016
    Advisers Staring at a New 'Slew' of Litigation From Small-Business Clients
    Advisers Staring at a New 'Slew' of Litigation From Small-Business Clients
    Posted by Lance Wallach at 12:16 PM No comments:
    Labels: 412(i), 419 Plans, abusive tax shelters, arbitration, Benistar Plan
    Friday, February 5, 2016
    Robin Weingast - NOVA, Grist Mill Trust, Benistar Review 277882 Jun 19, New York, New York, Beta Plan @ Pissed Consumer
    Robin Weingast - NOVA, Grist Mill Trust, Benistar Review 277882 Jun 19, New York, New York, Beta Plan @ Pissed Consumer
    Posted by Lance Wallach at 12:15 PM 1 comment:
    Labels: 419E, Abusive Retirement Plans, abusive tax shelters, Benistar Plan
    Monday, September 28, 2015
    IRS audits captive insurance, section 79, 412i | Stacey Arenas | LinkedIn
    IRS audits captive insurance, section 79, 412i | Stacey Arenas | LinkedIn
    Posted by Lance Wallach at 7:45 AM 2 comments:
    Labels: abusive tax shelters, Benistar Plan
    Wednesday, September 23, 2015
    IRS SCRUTINY CAPTIVE INSURANCE AGREEMENTS Alerts August 6, 2014 In the past…
    IRS SCRUTINY CAPTIVE INSURANCE AGREEMENTS Alerts August 6, 2014 In the past…
    Posted by Lance Wallach at 10:05 AM No comments:
    Labels: 419 Plan, 419 Plans, Benistar Plan
    Audits of section 79, captive insurance, 412i and 419 scams | 419.Tax
    Audits of section 79, captive insurance, 412i and 419 scams | 419.Tax
    Posted by Lance Wallach at 10:02 AM No comments:
    Labels: 419 Plan, abusive insurance, Benistar group retiree, Benistar Plan
    Captive In

    ReplyDelete

  36. TAX PREPARATION
    ESTATE PLANNING
    ARTICLES
    MORE YOU SHOULD KNOW
    CALL US
    for a free Consultation
    [516-938-5007]
    Benistar loses another tax court case.

    HOME
    ABOUT
    ARTICLES
    CONTACT
    MORE YOU SHOULD KNOW
    benistar audits
    BELTH
    General Observations
    The one Massachusetts case and the three Connecticut cases described in this post are not all the ongoing cases relating to Carpenter. For example, documents in those cases refer to cases involving Carpenter in New York and Wisconsin. However, the cases described here provide insight into the scope of the alleged criminal activities in which Carpenter has been engaged for more than a decade.
    No. 54: Daniel Carpenter and a Host of Criminal AllegationsDaniel E. Carpenter (Simsbury, CT), attorney and businessman, was scheduled to report to a federal prison on Friday, June 20. His saga involves cases over more than a decade in federal district courts, circuit courts of appeal, and the Supreme Court. Among the federal agencies involved in the cases are the Department of Justice, the Department of Labor, the Department of the Treasury, and the Internal Revenue Service (IRS). Several cases are ongoing despite Carpenter's incarceration.

    The Section 1031 Fraud Allegations
    Carpenter owned and operated Benistar, Ltd. and its subsidiaries. One Benistar function was to act as an intermediary in Section 1031 property exchanges. That section of the Internal Revenue Code allows the owner of investment property to defer capital gains taxes on the sale of the property by rolling the proceeds of the sale into the purchase of replacement property. However, the tax deferral is lost if the owner (the "exchangor") takes possession of the sale proceeds. Therefore, companies such as Benistar offer to act as an intermediary by holding the proceeds in escrow until the exchangor is ready to close on the replacement property.
    IS THE IRS COMING TO GET YOU
    Benistar The Trusted Leader.
    A federal judge in Boston sentenced a Simsbury man on Wednesday to three years in prison for a fraud involving

    Daniel E. Carpenter, 59, had offered services to clients in Massachusetts called "exchangors," which prosecutors describe as "clients who engaged in tax-deferred real estate exchange transactions" -- further explanation of that is below.

    Carpenter's business held money for these clients in escrow accounts but made risky investments with it while emphasizing how safe the accounts were in communications with the clients. Since the clients' rate of return was capped, he would have walked away with high profits. Instead, he lost more than $9 million of his clients' money.
    Read More Here

    ReplyDelete

  37. Get New Clients
    412i, 419e plans Litigation and IRS Audit Experts for Abusive Insurance based plans deemed reportable or listed transactions by the IRS, IRS Audits, 412i Problems, Expert Witness Lance Wallach

    VideoBar
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    The sides that used this Expert Witness never lost!
    The sides that used this Expert Witness never lost!
    Posted by Lance Wallach at 6/02/2017 02:44:00 PM
    Email This
    BlogThis!
    Share to Twitter
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    Labels: 419 & 412 plan defense, 419 Litigation, 419 Plans Litigation, 419e plans litigation and IRS Audit Experts for abusive insurance, Captive Insurance
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    Post a Comment

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    About Me
    My photo
    Lance Wallach

    Lance Wallach, was a leading registered representative, insurance and annuity adviser for Mutual Benefit Life and later for New England Life. He advised thousands of high income clients on annuities, life insurance, and health insurance. Lance also counseled famous Wall Street luminaries such as Hugh Downs and Louis Rukeyser (host of long-running television programs Wall Street Week with Louis Rukeyser and Louis Rukeyser’s Wall Street). Government officials have also sought Lance’s advice, including; Corman G. Franklin of the Office of Assistant Secretary for Policy US Department of Labor and Jon S. Havicon, an Internal Revenue Service Agent.

    Mr. Wallach is a member of the AICPA faculty of teaching professionals & a renowned national expert in many court cases. He is the author of many best-selling financial & financial law books.
    AWARDS AND RECOGNITION
    ● National Society of Accountants Speaker of the Year
    ● Million Dollar Round Table
    ● Mutual Benefit Top Sales Club
    ● New England Life Top Sales Club
    ● Who’s Who in Finance and Industry

    ReplyDelete

  38. Get New Clients
    412i, 419e plans Litigation and IRS Audit Experts for Abusive Insurance based plans deemed reportable or listed transactions by the IRS, IRS Audits, 412i Problems, Expert Witness Lance Wallach

    VideoBar
    This content is not yet available over encrypted connections.
    The sides that used this Expert Witness never lost!
    The sides that used this Expert Witness never lost!
    Posted by Lance Wallach at 6/02/2017 02:44:00 PM
    Email This
    BlogThis!
    Share to Twitter
    Share to Facebook
    Share to Pinterest

    Labels: 419 & 412 plan defense, 419 Litigation, 419 Plans Litigation, 419e plans litigation and IRS Audit Experts for abusive insurance, Captive Insurance
    No comments:
    Post a Comment

    Newer Post Older Post Home
    Subscribe to: Post Comments (Atom)
    About Me
    My photo
    Lance Wallach

    Lance Wallach, was a leading registered representative, insurance and annuity adviser for Mutual Benefit Life and later for New England Life. He advised thousands of high income clients on annuities, life insurance, and health insurance. Lance also counseled famous Wall Street luminaries such as Hugh Downs and Louis Rukeyser (host of long-running television programs Wall Street Week with Louis Rukeyser and Louis Rukeyser’s Wall Street). Government officials have also sought Lance’s advice, including; Corman G. Franklin of the Office of Assistant Secretary for Policy US Department of Labor and Jon S. Havicon, an Internal Revenue Service Agent.

    Mr. Wallach is a member of the AICPA faculty of teaching professionals & a renowned national expert in many court cases. He is the author of many best-selling financial & financial law books.
    AWARDS AND RECOGNITION
    ● National Society of Accountants Speaker of the Year
    ● Million Dollar Round Table
    ● Mutual Benefit Top Sales Club
    ● New England Life Top Sales Club
    ● Who’s Who in Finance and Industry

    ReplyDelete