Lance Wallach Life Insurance: December 2014

Lance Wallach Life Insurance: December 2014

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  1. Monthly Archives: February 2014
    ABUSIVE TAX SHELTER PLANS
    SOME 419 INSURANCE WELFARE BENEFIT PLANS CONTINUE TO GET ACCOUNTANTS INTO TROUBLE
    FEBRUARY 21, 2014 LEAVE A COMMENT
    by Lance Wallach

    Published in: The Finance Toolbox

    Popular so-called “419 Insurance Welfare Benefit Plans,” sold by most insurance professionals, are getting accountants and their clients into more and more trouble. A CPA who is approached by a client about one of the abusive arrangements and/or situations to be described and discussed in this article must exercise the utmost degree of caution, not only on behalf of the client, but for his/her own good as well. The penalties noted in this article can also be applied to practitioners who prepare and/or sign returns that fail to properly disclose listed transactions, including those discussed herein.

    On October 17, 2007, the IRS issued Notice 2007-83, Notice 2007-84, and Revenue Ruling 2007-65. Notice 2007-83 essentially lists the characteristics of welfare benefit plans that the Service regards as listed transactions. Put simply, to be a listed transaction, a plan cannot rely on the union exception set forth in IRC Section 419A(f)(5), there must be cash value life insurance within the plan and excessive tax deductions for life insurance, in excess of what may

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