Material Advisors and 419 Plans Litigation -
IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions by the IRS
Internal Revenue Service United States Department of the TreasuryInternal Revenue Bulletin: 2007-45 November 5, 2007 Notice 2007-83Abusive Trust Arrangements Utilizing Cash Value Life Insurance Policies Purportedly to Provide Welfare BenefitsTable of ContentsBACKGROUND1. Promoted Arrangements2. Intent to Challenge TransactionsLISTED TRANSACTIONS1. Transactions Identified As Listed Transactions2. Participation in the Listed Transactions3. Disclosure, List Maintenance, and Registration Requirements; Penalties; Other ConsiderationsDRAFTING INFORMATIONThe Internal Revenue Service (IRS) and Treasury Department are aware of certain trust arrangements claiming to be welfare benefit funds and involving cash value life insurance policies that are being promoted to and used by taxpayers to improperly claim federal income and employment tax benefits. This notice informs taxpayers and their representatives that the tax benefits claimed for these arrangements are not allowable for federal tax purposes. This notice also alerts taxpayers and their representatives that these transactions are tax avoidance transactions and identifies certain transactions using trust arrangements involving cash value life insurance policies, and substantially similar transactions, as listed transactions for purposes of § 1.6011-4(b)(2) of the Income Tax Regulations and §§ 6111 and 6112 of the Internal Revenue Code. This notice further alerts persons involved with these transactions of certain responsibilities that may arise from their involvement with these transactions.Concurrently with this notice, the IRS is publishing Rev. Rul. 2007-65 (concluding that for purposes of deductions allowable to an employer under § 419, a welfare benefit fund’s qualified direct cost does not include premium amounts for cash value life insurance policies paid by the fund, whenever the fund is directly or indirectly a beneficiary under the policy within the meaning of § 264(a)), and Notice 2007-84 (describing trust arrangements involving purported welfare be
Audit & Accounting Financial Planning Tax Practice Accounting Technology Firm & ProfessionVideos Slideshows Newsletters Current Issue Web Seminars Reports & Rankings Resources Tax Alpha Related ArticlesCongressional CPAs Object to ‘Two-GAAP’ Environment in Letter to SEC ChairFirm News: July 18, 2014FASB Votes to Finalize Variable Interest Entity StandardAccountants' Confidence in the Economy SplitsFASB Proposes to Simplify Inventory MeasurementOther areas of interestBe Careful of Abusive 419(e) Welfare Benefit Plans Print Email ReprintsinShare OCTOBER 22, 2007 BY LANCE WALLACH AND RONALD H. SNYDERLife insurance agents and companies have always tried to find ways of making costs paid by business owners tax deductible. The situation became ridiculous a few years ago with outrageous claims about how Sections 419A(f)(5) and (6) of the Internal Revenue Code exempted employers from any tax-deduction limitations. Finally, the Internal Revenue Service put a stop to such egregious misrepresentations in 2002 by issuing regulations and naming such plans as "potentially abusive tax shelters" (or "listed transactions") that needed to be registered and disclosed to the IRS.