How to Avoid IRS Fines for You and Your Clients | LifeHealthPro

Beware: The IRS is cracking down on small-business owners who participate in tax-reduction insurance plans sold by insurance agents, including defined benefit retirement plans, IRAs, and even 401(k) plans with life insurance. In these cases, the business owner is motivated by a large tax deduction; the insurance agent is motivated by a substantial commission.

A few years ago, I testified as an expert witness in a case in which a physician was in an abusive 401(k) plan with life insurance. It had a so-called "springing cash value policy" in it. The IRS calls plans with these types of policies "listed transactions." The judge called the insurance agent "a crook."

To read the rest, click here

Why own Variable Annuities? Frequently you see the word “guarantee” associated with Variable Annuities (VA). What does that mean?

The typical VA acts as a tax deferred tax shelter, like an IRA. Unlike an IRA, anyone can open any sized (e.g.: $1,000 or $1 million) Variable Annuity, independent of his or her income, age or employment status. This is quite attractive for someone looking to shelter income from taxation, particularly for those that cannot achieve their goal with an IRA.

Traditional IRAs can only be established by those under the age of 70 ½ and those (or the spouse of those, if married filing jointly) who receive income or alimony. An IRA has contributions limits, which limit the tax sheltering benefits.


In almost all cases a variable annuity (VA) is a form of life insurance. The traditional insurance salesperson markets the variable annuity as a way to safely invest in the financial markets, without risking your principal. We all know there is no such thing as a free lunch inside or outside the world of finance. The insurance salesperson will often tell you, you cannot earn less than 6% or 7% on the investment.


Inherent in most VA policies are two components, an investment component and an insurance component. The investment component offers a choice of investments similar to mutual funds, called sub-accounts. It is the insurance component that is hard to understand.


The insurance component of a VA includes a death benefit. The death benefit “guarantees” the beneficiary will receive the greater of the: value of the VA at death, or the total of all contributions.
Here is an example of an investor, whose portfolio was 100% invested in a stock sub-account of a variable annuity. Assuming the investor invested $5,000 each year for 20 years, contributions would total $100,000. If the average net return per year were 7%, the Variable Annuity would be worth approximately $205,000 at the end of 20 years.

One evening this same Variable Annuity (VA) buyer learns the stock market has declined 50% in that day. This buyer realizes his VA is worth $102,500, has a stroke and dies. His beneficiary would receive the greater of $102,500 or $100,000. In this case the beneficiary would receive $102,500.
So, where was the death benefit? There was NO death benefit. The only time the beneficiary receives a death benefit is when the policy value falls below the total value of contributions made AND the investor dies.

Well, at least the investor did not have to pay any expenses for a death benefit they did not receive, right? Wrong. In most Variable Annuities the policies are mortality and expense charges, called M&E charges. The “E”, or expense charge, represents the administrative component of the M&E. The “M”, or mortality charge, represents the life insurance component of M&E.

The industry average annual annuity charge for non-group open variable annuity contracts was 1.37%. In addition to M&E charges, most VA policies have surrender costs. These are penalties assessed on the policy if the investor moves the policy before the surrender period ends. Some insurance companies offer annuities with 10-12 surrender periods and 12%-15% surrender charges – something has to pay for the “Insurance Agents” commission. Of course, this is in addition to all underlying costs of the sub-accounts (similar to expense ratios inside all mutual funds).

A few companies offer no-load, low cost, no surrender penalty VA policies. An investor can transfer from one annuity to another annuity without tax consequences, like an IRA transfer, but it must be handled with care.


Like an IRA transfer, the transfer of a VA policy, should be conducted on a custodian-to-custodian basis. The transfer qualifies as a tax-free transfer if conducted using Internal Revenue Code 1035. A “1035 Exchange”, as it is commonly referred to as, is the transfer of one insurance policy into another insurance policy. Handled incorrectly, and the investor could have a taxable distribution and hefty tax bill to boot.


Guarantee? Insurance companies have been very quick to highlight the “guarantee” in their VA policies. A word of caution on that “guarantee”: it is not a guarantee by the U.S. Federal Government. Unlike FDIC, the guarantee provided by an insurance company is a promise by an insurance company that it will pay. Some investors who buy their variable annuities from bank are like-wise fooled. The bank does not guarantee the annuity. If the insurance company goes out of business, you cannot rely on the bank or the FDIC to pay you. This applies to all annuities. My Mother recently called me from a bank. By the way, my Mother belongs to Phi Beta Kappa and is intelligent. She was telling me how the bank manager was (helping her) get out of her CDs, where she pays taxes on the interest. She was being switched to FIXED Annuities. I asked her to ask the bank manager what were the guaranteed in the Fixed Annuities, what were the surrender charges if she wanted to cancel, what taxes would she have to pay if when she cashed the annuities in. A few minutes later my mother got back on the phone that the bank manager not only could not answer the questions, but now the manager was too busy to help her. In case you are wondering, had my Mother make the mistake of buying an annuity from the bank, there would have been substantial sales charges, substantial surrender charges and substantial taxes due when my Mother finally cashed the annuity. What should my Mother do? That is like asking me to prescribe without knowing the symptoms. That is a topic for another article. You may want to look at www.taxlibrary.us to read some very informative articles on point.


Buyer Beware! By the way, your typical Insurance Agent gets paid by commission therefore you have to be very careful. If you do the exchange wrong tax consequences will result.


-----------------------------
Lance Wallach, CLU, ChFC, the National Society of Accountants Speaker of the Year, speaks and writes extensively about retirement plans, Circular 230 problems and tax reduction strategies. He speaks at more than 40 conventions annually, writes for over 50 publications, is quoted regularly in the press, and has written numerous best-selling AICPA books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Business Hot Spots. He does extensive expert witness work and has never lost a case.

Contact Lance Wallach at 516.938.5007 or visit www.taxlibrary.us or http://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 advice.

Investment News - Lance Wallach - 412i and 419 plan litigatation

 Investment News
Five-year-old change in tax has left some small businesses and certain benefit plans subject to IRS fines; the advisors who sold these plans may pay the price.

Financial advisors who have sold certain types of retirement and other benefit plans to small businesses might soon be facing a wave of lawsuits — unless Congress decides to take action soon.

For years, advisors and insurance brokers have sold the 412(i) plan, a type of defined-benefit pension plan, and the 419 plan, a health and welfare plan, to small businesses as a way of providing such benefits to their employees, while also receiving a tax break.

However, in 2004, Congress changed the law to require that companies file with the Internal Revenue Service if they had these plans in place. The law change was intended to address tax shelters, particularly those set up by large companies.

Many companies and financial advisors didn't realize that this was a cause for concern, however, and now employers are receiving a great deal of scrutiny from the federal government, according to experts.

The IRS has been aggressive in auditing these plans. The fines for failing to notify the agency about them are $200,000 per business per year the plan has been in place and $100,000 per individual.

So advisors who sold these plans to small businesses are now slowly starting to become the target of litigation from employers who are subject to these fines.

“There is a slew of litigation already against advisors that sold these plans,” said Lance Wallach, an expert on 412(i) and 419 plans. “I get calls from lawyers every week asking me to be an expert witness on these cases.”  

Mr. Wallach declined to cite any specific suits. But one advisor who has been selling 412(i) plans for years said his firm is already facing six lawsuits over the sale of such plans and has another two pending. “My legal and accounting bills last year were $864,000,” said the advisor, who asked not to be identified. “And if this doesn't get fixed, everyone and their uncle will sue us.”

Currently, the IRS has instituted a moratorium on collecting these fines until the end of the year in the hope that Congress will address the issue.

In a Sept. 24 letter to Sens. Max Baucus, D-Mont., Charles Boustany Jr., R-La., and Charles Grassley, R-Iowa, IRS Commissioner Douglas H. Shulman wrote: “I understand that Congress is still considering this issue and that a bipartisan, bicameral bill may be in the works … To give Congress time to address the issue, I am writing to extend the suspension of collection enforcement action through Dec. 31.”

But with so much of Congress' attention on health care reform at the moment, experts are worried that the issue may go unresolved indefinitely.

If Congress doesn't amend the statute, and clients find themselves having to pay these fines, they will absolutely go after the advisors that sold these plans to them.

Investment News - Lance Wallach - 412i and 419 plan litigatation

Establishing a Buy-Sell Agreement | LifeHealthPro

Working with an attorney, you can help a company establish a buy-sell agreement that sets down in writing what happens to the company's ownership structure in the event a member of the ownership group or a major shareholder dies or becomes disabled.

Without such an agreement in place, a company can be thrown into disarray if one of its owners or key shareholders dies, since the deceased's stake will likely revert to their estate. In that case, the surviving owners' attempts to redeem stock from the estate of the deceased can be a complicated, prolonged, and sometimes contentious process, particularly when it comes to valuing that stock.

To read the rest, click here

Dont Give the IRS Every Last Drop

By Lance Wallach

Have you seen the commercials where certain companies advertise that they can settle an IRS debt for “pennies on the dollar”? Usually the offer is too good to be true. Besides, you never want to have the problem in the first place.

The chances of an individual being audited have approximately doubled since 2000. So you need to be careful with your tax return.

IRS officials say research has shown that tax “noncompliance” typically is highest among people who work for themselves, who deal in large amounts of cash, who don’t have taxes withheld from their pay and whose income isn’t reported separately to the IRS, such as by their employer.

Dont Give the IRS Every Last Drop

Using VEBAs For Employer-Owners | LifeHealthPro

Imagine a program that allows large, flexible, tax-deductible contributions to accumulate and compound on a tax-deferred basis. Distributions are received at any age without penalties, regardless of the amount. Assets are protected from creditors' claims. There are income and estate tax-free survivor benefits. The program is fully insured and, by a favorable Letter of Determination, the Internal Revenue Service has granted a tax exemption to the Section 501(c)(9) trust.

The program also can acquire tax-deductible life insurance, provide funds to pay estate taxes and provide tax-deductible educational benefits for children.

These are some of the benefits of a Voluntary Employees' Beneficiary Association (VEBA). VEBAs are tax-exempt trusts (or nonprofit corporations) that are described in Section 501(c)(9) of the Internal Revenue Code of 1986. They require a letter of determination from the IRS granting tax exempt trust status. If the statutory requirements are met and the IRS issues a favorable Letter Of Determination, then, in general, the qualified cost of contributions by an employer to the VEBA that are ordinary and necessary expenses, are deductible for federal income tax purposes.

Click here to read the rest

FBAR Offshore Bank Accounts and Foreign Income Attacked by IRS

You may want to think about participation in the IRS' offshore tax amnestyprogram (called the Offshore Voluntary Disclosure Initiative). Do you want to play audit roulette with the IRS?  Some clients think they are too small to be prosecuted. They are wrong.

To the average businessperson, only the guys with tens of millions secretly stashed in Swiss bank accounts get prosecuted. Don't tell that to Michael Schiavo. He was just prosecuted for hiding money in a Swiss account back in 2003. How much money does the IRS say he hid? A whopping $90,000. That's it.

But wait, there is more to the story. Schiavo attempted to do a quiet disclosure during the 2009 amnesty but instead of filling out the amnesty paperwork, he simply trusted that by coming forward voluntarily he could avoid criminal prosecution. He was wrong on all counts. Nothing is too small for the IRS, and nothing is too old.

To continue reading, click here

Will Your Municipal Bond or Your Life Insurance Company Still Have Value Next Year?

Investor protection with municipal bonds is so spotty that there is potential for much mischief. 



Disclosure, that bedrock of fair securities markets, is the heart of the problem facing municipal investors. Municipal issuers often don't file the most basic reports outlining their operating results or material changes in their financial conditions. 



Even though hospitals, cities and states that borrow money are required by their bond covenants to make such filings, nondisclosure among the nearly 60,000 issuers is common. 

To keep reading, click here

More Problems for 419 Plans

For years, life insurance companies and agents have tried to find ways of making life insurance premiums paid by business owners tax deductible. This would allow them to sell policies at a "discount."

The problem became acute a few years ago with outlandish claims about how §§419A(f)(5) and (6) of the Internal Revenue Code (IRC) exempted employers from any tax deduction limitations. Other inaccurate assertions were made as well, until the Internal Revenue Service (IRS) finally 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.

This appeared to put an end to the scourge of scurrilous promoters, as many such plans disappeared from the landscape.

And what happened to the providers that were peddling §§419A(f)(5) and (6) life insurance plans a few years ago? We recently found the answer: Most of them found a new life as promoters of so-called "419(e)" welfare benefit plans.


READ THE REST HERE

Lance Wallach and his associates provide Expert Witness Services |

Lance Wallach and his associates provide Expert Witness Services |

Lance Wallach on 419, 412i, and more

412i 419e IRS audits, 6707a penalties, form 8886 listed transactions

Section 79 Plans: Section 79, Captive Insurance, IRS Audits and Lawsuits on 419 and 412i Plans

Section 79 Plans: Section 79, Captive Insurance, IRS Audits and Lawsuits on 419 and 412i Plans (click the link to go to the page)

Hg Experts 

          Legal Experts Directory

     By Lance Wallach, CLU, CHFC Abusive Tax Shelter, Listed Transaction, Reportable Transaction     Expert Witness

---

IRS Attacks Business Owners in 419, 412, Section 79 and Captive Insurance Plans Under Section 6707A - By Lance Wallach - Taxpayers 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 a tax deduction to participate. Section 6707A of the Code imposes severe penalties for failure to file Form 8886 with respect to a listed transaction. But you are also in trouble if you file incorrectly. I have received numerous phone calls from business owners who filed and still got fined. Not only do you have to file Form 8886, but it also has to be prepared correctly. I only know of two people in the U.S. who have filed these forms properly for clients. They tell me that was after hundreds of hours of research and over 50 phones calls to various IRS personnel. The filing instructions for Form 8886 presume a timely filling. Most people file late and follow the directions for currently preparing the forms. Then the IRS fines the business owner. The tax court does not have jurisdiction to abate or lower such penalties imposed by the IRS.



"Many taxpayers who are no longer taking current tax deductions for these plans continue to enjoy the benefit of previous tax deductions by continuing the deferral of income from contributions and deductions taken in prior years."



Many business owners adopted 412i, 419, captive insurance and Section 79 plans based upon representations provided by insurance professionals that the plans were legitimate plans and were not informed that they were engaging in a listed transaction. Upon audit, these taxpayers were shocked when the IRS asserted penalties under Section 6707A of the Code in the hundreds of thousands of dollars. Numerous complaints from these taxpayers caused Congress to impose a moratorium on assessment of Section 6707A penalties.



The moratorium on IRS fines expired on June 1, 2010. The IRS immediately started sending out notices proposing the imposition of Section 6707A penalties along with requests for lengthy extensions of the Statute of Limitations for the purpose of assessing tax. Many of these taxpayers stopped taking deductions for contributions to these plans years ago, and are confused and upset by the IRS’s inquiry, especially when the taxpayer had previously reached a monetary settlement with the IRS regarding its deductions. Logic and common sense dictate that a penalty should not apply if the taxpayer no longer benefits from the arrangement. Treas. Reg. Sec. 1.6011-4(c)(3)(i) provides that a taxpayer has participated in a listed transaction if the taxpayer’s tax return reflects tax consequences or a tax strategy described in the published guidance identifying the transaction as a listed transaction or a transaction that is the same or substantially similar to a listed transaction.



Clearly, the primary benefit in the participation of these plans is the large tax deduction generated by such participation. Many taxpayers who are no longer taking current tax deductions for these plans continue to enjoy the benefit of previous tax deductions by continuing the deferral of income from contributions and deductions taken in prior years. While the regulations do not expand on what constitutes “reflecting the tax consequences of the strategy,” it could be argued that continued benefit from a tax deferral for a previous tax deduction is within the contemplation of a “tax consequence” of the plan strategy. Also, many taxpayers who no longer make contributions or claim tax deductions continue to pay administrative fees. Sometimes, money is taken from the plan to pay premiums to keep life insurance policies in force. In these ways, it could be argued that these taxpayers are still “contributing,” and thus still must file Form 8886.



It is clear that the extent to which a taxpayer benefits from the transaction depends on the purpose of a particular transaction as described in the published guidance that caused such transaction to be a listed transaction. Revenue Ruling 2004-20, which classifies 419(e) transactions, appears to be concerned with the employer’s contribution/deduction amount rather than the continued deferral of the income in previous years. Another important issue is that the IRS has called CPAs material advisors if they signed tax returns containing the plan, and got paid a certain amount of money for tax advice on the plan. The fine is $100,000 for the CPA, or $200,000 if the CPA is incorporated. To avoid the fine, the CPA has to properly file Form 8918.



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, abusive tax shelters, financial, international tax, and estate planning.  He writes about 412(i), 419, Section79, FBAR and captive insurance plans. He speaks at more than ten conventions annually, writes for more than 50 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 the 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.taxadvisorexpert.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 advice.

While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

Insurance Agents: Help for those who sold 419 and 412i plans.

Insurance Agents: Help for those who sold 419 and 412i plans.



Our team of experienced consulting "tax attorneys", CPAs, and "insurance experts" specializing in 412i" and "419 "IRS 
audits" that resulted from plans you sold to your clients, mainly "419 plans", "412i plans", "captive insurance" plans 
and "Section 79" plans as well as other similar "employee benefit plans" or "welfare benefit plans" that the IRS is 
targeting as "abusive tax shelters".

Our firm has been successful in "defending life insurance agents" and "material advisors" who have participated in 
the sale of these "benefit plans".

Instructions for Form 8918

www.irs.gov/pub/irs-pdf/i8918.pdf

The link will take you to Instructions for Form 8918, or in other words, a Material Advisor Disclosure Statement.

Lance Wallach - www.taxaudit419.com

Before you buy you should know section 79 Plan history

Section 79 Scams and Captive Insurance HistoryWhen trying to understand how a product becomes a target of government scrutiny it helps to know its history. 
In the case of plans that fall under Internal Revenue Code Section 79, that history is complex.

Insurance companies, agents, financial planners, and others have pushed abusive 419 and 412i plans for 
years. They claimed business owners could obtain large tax deductions. Insurance companies, agents and 
others earned very large life insurance commissions in the process. Eventually, the IRS cracked down on the 
unsuspecting business owners. Not only did they lose the tax deductions, but they were also fined, in addition 
to being charged penalties and interest. A skilled CPA with extensive IRS experience could usually eliminate 
the penalties and reduce the fines. Most accountants, tax attorneys and others have been unsuccessful in 
accomplishing this.

After the business owner was assessed the fines and lost his tax deduction, he had another huge, unforeseen 
problem. The IRS then came back and fined him a huge amount of money for not telling on himself under IRC 
6707A. If you participate in a listed or reportable transaction, you must alert the IRS or face a large fine.  In 
essence, you must  alert the IRS if you were in a transaction that has the possibility of tax avoidance or 
evasion. Not only must you file Form 8886 telling on yourself, but the form needs to be filed properly, and 
done every year that you are in the plan in any way at all, even if you are no longer making contributions. 
According to IRC 6707A Expert Lance Wallach, "I have received hundreds of phone calls from business 
owners who filed Form 8886, usually with the help of their accountants or the plan promoter. They got the fine 
for either improperly filing, or for making mistakes on the form."

"The IRS directions about preparing the form are vague, especially if the form is filed late. They presume a 
timely filing. In addition, many states also require forms to be filed. For example, if you work in New York State 
and manage to properly fill out the Federal form, but do not file the State form, you may still get fined," says 
Wallach, adding that he only knows of two people that know how to properly prepare and file the forms, 
especially forms being filed late. As an expert witness in such cases, Lance Wallach’s side has never lost.

The result of the all of the above was many lawsuits against insurance companies, including Hartford, Pacific 
Life, Indianapolis Life, AIG, and Penn Mutual, to name just a few. Agents, accountants, and attorneys were 
also successfully sued.



Read the whole thing here

The Irrevocable Trust Cash Release Program - HG.org

The Irrevocable Trust Cash Release Program

---

     By Lance Wallach, CLU, CHFC 

Through a special program, created by Money Watch Consultants Inc., called The Irrevocable Trust Cash Release Program, funds from the insured’s irrevocable trust can be released and made available to pay for long term care, in a facility or at home. And this care can even be provided by a family member.

The amounts of funds that can be made available are typically a vast multiple of the funds currently in the trust. Despite the leveraging, due to the unique structuring of the program, the funds in excess of the initial deposits, and prior to the death of the insured, are received by the trust, and paid out of the trust, on a tax free basis.



This program has recently attracted much attention because Congress has just extended estate tax exemptions to 5 million dollars for individuals and 10 million dollars for married couples. Thus many people who have set up and funded various irrevocable trusts in order to pay their estate taxes, feel that they are no longer needed.



This program gives them the ability to dramatically leverage these funds to pay for health care that they anticipate may eventually be required, without worrying about liquidating assets or making withdrawals on retirement accounts.



The latest development in irrevocable trust management can solve the insured’s desire to get, tax free cash out of the underused insurance policy when most needed, and prior to dying.



Through a special legal loophole, needed funds from the insured’s irrevocable trust can be released and made available to whoever you want, including yourself. Lance Wallach, who wrote the CPA's guide to trusts and estates, and other continuing education books read by CPA's attorneys and financial planners and associate William Kaufman have spent years studying the problem... Most life insurance trusts are underperforming, often requiring [Bill Kaufman] much greater premiums than anticipated. If they were properly designed, no more premiums would be due. Many policies in trusts are rapidly using up their insurance cash values, dramatically underperforming, and are at risk of failing altogether. There are many other problems with almost all of the trusts examined. If you advised your client on these matters, or serve as trustee for him/her, you may have a contingent liability suit on these matters, should the life insurance fail.



Now cash can be released to be used when really needed. Most attorneys, CPA’S, planners etc. that have heard me speak at thousands of national conventions don’t have a clue about the problems. Most of them even created some of these problems for their clients, who are also not aware. As an expert witness Lance Wallach has never lost a case. This does not necessate a lawsuit, just a simple fix. Make sure if you advisor tries it, he has successfully helped others with the program. If done wrong the IRS will come calling, Google Lance Wallach for articles on point. Despite the leveraging, due to the unique structuring of the program, the funds in excess of the initial deposits, and prior to the death of the insured, are received by the trust, and paid out of the trust, on a tax free basis.



If you have an insurance or similar trust you probably have lots of money in it. You may also have lots of problems that will not be discovered until you die. We have been consulted by many beneficiaries with these problems, usually after being charged thousands of dollars by their law firms to tell them about the problems, but not fix them. The way most of the trusts that we have studied, usually set up by law firms, are structured; the big beneficiaries at death will be the law firms. Worse, insurance in the trusts easily falls apart before death, unless you die young. Get an experienced person to review your trust, either to free up lots of money, or to review for problems before it is too late. [Bill Kaufman] If you don‘t [Bill Kaufman] believe me, than Google Lance Wallach and then Google your advisor and see who is more credible. You have worked hard for your money. Don‘t let poor planning, lawyers greed, insurance agents with big commissions disrupt what you thought was sound planning.



ABOUT THE AUTHOR: Lance Wallach, Bill Kaufman

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, abusive tax shelters, financial, international tax, and estate planning. He writes about 412(i), 419, Section79, FBAR, and captive insurance plans. He speaks at more than ten conventions annually, writes for over fifty publications, is quoted regularly in the press. He does expert witness testimony and has never lost a case.



Copyright Lance Wallach, CLU, CHFC

More information about Lance Wallach, CLU, CHFC

Fatca, Fbar, Offshore Amnesty Large Fines Coming - HG.org

Overseas banks are warning current and former U.S. clients that their names and information soon will be disclosed and that such disclosure will disallow the taxpayer’s entry into the IRSs amnesty program for undeclared offshore accounts.

Taxpayers allowed to enter the IRS amnesty program for confessors own taxes, interest and penalties usually amounting to up to half of the account balance, but they are protected from criminal prosecution.



More than 39,000 taxpayers have entered the amnesty program for undeclared offshore accounts.



Many U.S. taxpayers and advisers have been criminally charged in connection with offshore accounts. 

Read more here!

Section 79 Scams and Captive Insurance History - HG.org

When trying to understand how a product becomes a target of government scrutiny it helps to know its history. In the case of plans that fall under Internal Revenue Code Section 79, that history is complex.

Insurance companies, agents, financial planners, and others have pushed abusive 419 and 412i plans for

years. They claimed business owners could obtain large tax deductions. Insurance companies, agents and others earned very large life insurance commissions in the process. Eventually, the IRS cracked down on the unsuspecting business owners. Not only did they lose the tax deductions, but they were also fined, in addition to being charged penalties and interest. A skilled CPA with extensive IRS experience could usually eliminate the penalties and reduce the fines. Most accountants, tax attorneys and others have been unsuccessful in accomplishing this.



After the business owner was assessed the fines and lost his tax deduction, he had another huge, unforeseen problem. The IRS then came back and fined him a huge amount of money for not telling on himself under IRC 6707A. If you participate in a listed or reportable transaction, you must alert the IRS or face a large fine. In essence, you must alert the IRS if you were in a transaction that has the possibility of tax avoidance or evasion. Not only must you file Form 8886 telling on yourself, but the form needs to be filed properly, and done every year that you are in the plan in any way at all, even if you are no longer making contributions. 

Read the rest here