Material Advisors and 419 Plans Litigation -
IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions by the IRS
Lance Wallach Life insurance Policy Lance Wallach Expert WitnessBy:Lance Wallach Lance Wallach Expert Witness Expert Witness ServicesThe IRS Started Auditing 419 plans in the 1990s, and then continues going after 412(i) and other plans that they considered abusive, listed, or reportable transactions, or substantially similar to such transactions. If an IRS Audit disallows the 419 plan or the 412(i) plan, not only does the taxpayer lose the deduction and pay interest and penalties, but then the IRS comes back under IRC 6707A and imposes large Fines for not properly filing. Insurance agents, financial planners and even accountants sold many of these plans. The main motivations for buying into one were large tax deductions. The motivation for the sellers of the plans was the very large life insurance premiums generated. These plans, which were vetted by the insurance companies, put lots of insurance on the books. Some of these plans continue to be sold, even after IRS disallowances and lawsuits against insurance agents, plan promoters, and insurance companies. To read more, click here. Lance Wallach benistar abuses life insurance policy Accounting Today: October 25, 2010By: Lance WallachTaxpayers 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 to tax deduction to participate. Section 6707A of the code imposes severe penalties($200,00 for a business and $100,00 for an individual) for failure to file Form 8886 with respect to a listed transaction. To read more, click here.