Section 79
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
Contact Lance Wallach and get out of this tax problem before it's too late
516-236-8440
Wallachinc@gmail.com
Section 79
The IRS started auditing 419 plans in the ‘90s, and then continued going after 412i and other plans that they considered abusive, listed, or reportable transactions, or substantially similar to such transactions.
Taxpayers and their representatives should be aware that the Service has disallowed deductions for contributions to these arrangements. The IRS is cracking down on small business owners who participate in tax reduction insurance plans and the brokers who sold them. Some of these plans include defined benefit retirement plans, IRAs, or even 401(k) plans with life insurance.In order to fully grasp the severity of the situation, one must have an understanding of Notice 95-34, which 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. It was claimed that permissible tax deductions were unlimited in amount.
Captive and YouTube Captive
Examinations impacting micro-captive insurance transactions of several thousand taxpayers will be opened by these teams in the coming months. Potential civil outcomes can include full disallowance of claimed captive insurance deductions, inclusion of income by the captive entity and imposition of all applicable penalties.
The IRS reminds taxpayers and advisors that disclosure of participation in micro-captive insurance transactions is required with the IRS Office of Tax Shelter Analysis under Notice 2016-66. Failure to properly disclose can result in significant civil penalties. Taxpayers involved in these abusive transactions should immediately consult with independent, competent tax advisors on the proper treatment for past and future tax years to consider best available options.
Google Lance Wallach and whoever advises you, WHO do YOU Believe?
IRS IS AFTER CAPTIVE INSURANCE AND CONSERVATION EASEMENTS
The IRS has put out yet another news release, IR-2020-226, to warn taxpayers who have engaged in abusive risk-pooled 831(b) captive insurance transactions (a/k/a "microcaptives") to consult with independent tax counsel before making any tax filings regarding the transaction. The IRS is also warns that its previous settlement terms offered to taxpayers are probably not going to be available to them in the future, and that any settlement with the IRS "will require additional concessions by the taxpayer."
What additional concessions? The IRS then explains:
For those taxpayers that do not exit the transaction and continue taking such deductions, the IRS will disallow tax benefits from transactions that are determined to be abusive and may also require domestic captives to include premium payments in income and assert a withholding liability for foreign captives. The IRS will also assert penalties, as appropriate, including the strict liability penalty that applies to transactions that lack economic substance.
EASEMENT AUDITS
A class-action claiming that the promoters of syndicated conservation easements knew from the outset that their deals violated tax laws is a new legal avenue for aggrieved investors as the Internal Revenue Service and the Justice Department grind through their own crackdowns.
Lance Wallach receives hundreds of calls annually from people who are trying to get out of these scams. Google Lance Wallach and your advisor. Who do you trust? 516-236-8440 Wallachinc@gmail.com
Subscribe to:
Posts (Atom)