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The Offices of Lance Wallach
"America's leading tax representation firm"(TM)

Advisers staring at a new ‘slew' of
litigation from small-business clients
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.

Get Sued!
The IRS is cracking down on what it considers to be
abusivetax shelters. Many of them are being marketed to small business
owners byinsurance professionals, financial planners and
even accountants and attorneys.
Plans can lead to severe penalties for Accountants

IRS Small Business and
Self-Employed Division Will Emphasize
Enforcement Activities over the Next Year
    What follows is a story about Bruce Hink
    and how the IRS fined him $200,000 a year for
    being in what they called “a listed transaction”.  
A Rose By Any Other Name, or
Whatever Happened to all those 419A(f)(6)Providers?
The IRS finally put a stop to such assertions by issuing
regulations and naming such plans as “potentially abusive tax shelters”
(or “listed transactions”) that needed to be disclosed and registered.
How to Get Fined $100,000 by the IRS
and Lose Your License
benefit retirement plans and all 419 welfare benefit plans.
IRS Attacks Accountants & Business Owners
Senator seeks support to scale back the IRS’s assault on
nondisclosure of alleged tax shelters due to constitutional concerns.
Regaining The Lost Confidentiality of Off-Shore Trusts
Today, in jurisdiction after jurisdiction, the custodial  bank
is required to know who the beneficial owner of the trust is.
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Business Owners, Accountants, and Others
Fined $200,000 by IRS and Don’t Know Why

Abusive 419 Welfare benefit plan -Trust Arrangements

The 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. To Read Complete Article Click Below:

   1990s Life Insurance 419A(f)(6) plans

In the 1990's, Life insurance agents, financial planners accountants, attorneys and life insurance companies
started selling 419A(f)(6) plans as a way for a business owner to obtain large tax deductions. The Internal
Revenue Service (IRS) looked into this and issued IRS notice 95-34 putting all on notice that they were going
to come after these types of plans.
The IRS won a large victory in Neonatology Associates, P.A. v. Commissioner, 115 T.C. 43, 99 (2000), affd.
299 F.3d 221 (3d Cir. 2002, and many people knew that this was the end of these types of plans. The Tax
Court in Neonatology, at 92, makes it clear that deductions to a purported welfare benefit fund are not
deductible when that fund operates "as a tax free savings device for the" participants. The issue of whether an
expenditure by a closely-held corporation is ordinary and necessary under section 162 or a constructive
distribution is not novel.

To Read More Click Here:http://taxaudit419.com/1990sLifeInsurance.html

Lance Wallach, CLU, ChFC
Courses: 2015

How to Get Fined by IRS

National Society of Accountants Speaker of the Year


Baruch College (CUNY), Baruch College Graduate School
The American College – Chartered Financial Consultant (ChFC)
The American College – Chartered Life Underwriter (CLU)
The Institute for Investment Management Consultants – Certified Investment Management Consultant
Guest Lecturer For

Baruch College (Taxes on Tuesdays); Long Island University, C.W. Post Graduate School of Accountancy.
Speaker at more than 20 conventions yearly, including the annual national conventions of the American
Association of Attorney - Certified Public Accountants, National Society of Accountants, National Network of
Estate Planning Attorneys, National Association of Tax Practitioners, National Association of Enrolled
Agents, National Association of Health Underwriters, American Society of Pension Actuaries, Employee
Benefits Expo, Health Insurance Underwriters, NAPFA, NAIFA, FPA, NABA, ALPFA, various state CPA
societies, Tax Institutes, as well as medical and insurance conventions, before CLU Societies, CPA/Law
Forums throughout the United States, and Estate Planning seminars.
Lance Wallach, a member of the AICPA faculty of teaching professionals and an AICPA course developer,
is a frequent and popular speaker on retirement plans, financial and estate planning, reducing health
insurance costs, and tax-oriented strategies at accounting and financial planning conventions. He has
authored numerous books including The Team Approach to Tax, Financial and Estate Planning, Avoiding
Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots, and Sid Kess’
Alternatives to Commonly Misused Tax Strategies: Ensuring Your Client’s Future, all published by the
AICPA, and Wealth Preservation Planning by the National Society of Accountants. His newest books CPAs’
Guide to Life Insurance and CPAs’ Guide to Federal and Estate Gift Taxation will be published this spring
by Bisk CPEasy.

Mr. Wallach has written for numerous publications including the AIPCA Journal of Accountancy, AICPA
Planner, Accounting Today, CPA Journal, Enrolled Agents Journal, Financial Planning, Registered
Representative, Tax Practitioners Journal, CPA/Law Forum, Employee Benefit News, Health Underwriter,
Advisor and the American Medical Association News. Mr. Wallach is listed in Who’s Who in Finance and
Industry and has been featured on television and radio financial talk shows, including National Public
Radio’s "All Things Considered" and NBC television, etc.

To Read More:
C:\Documents and Settings\lance\Desktop\Dathonie\2015 How to Get Fined by IRS.pdf
Tax Court Again Takes Dim View of Benistar Plan

In McGehee Family Clinic the Tax Court ruled that a clinic and shareholder’s investment in an employee
benefit plan marketed under the name “Benistar” was a listed transaction substantially similar to the
transaction described in Notice 95-34 (1995-1 C.B. 309). This is at least the second case in which the
court has ruled against the Benistar welfare benefit plan.

To Read More:

T.C. Memo. 2010-83
Docket No. 27480-07.             Filed April 20, 2010.
Robert & Linda Whitmarsh, pro sese.
Kevin W. Coy, for respondent.

To Read More:
Abusive Insurance and Retirement Plans

December 4, 2012     By Lance Wallach, CLU, CHFC
Firm's Profile   

Single-employer section 419 welfare benefit plans are the latest incarnation in
insurance deductions the IRS deems abusive.

Parts of this article are from the AICPA CPE self-study course Avoiding Circular
230 Malpractice Traps and Common Abusive Small Business Hot Spots, by Sid
Kess, authored by Lance Wallach.
Many of the listed transactions that can get your clients into trouble with the IRS
are exotic shelters that relatively few practitioners ever encounter. When was
the last time you saw someone file a return as a Guamanian trust (Notice
2000-61)? On the other hand, a few listed transactions concern relatively
common employee benefit plans the IRS has deemed tax-avoidance schemes or
otherwise abusive. Perhaps some of the most likely to crop up, especially in
small business returns, are arrangements purporting to allow deductibility of
premiums paid for life insurance under a welfare benefit plan.

IRS attacks 412i scams

I spoke at the American Society of Pension Actuaries national convention in Washington in Oct, 2002
about plans, as did the IRS chief actuary. People were warned of IRS attention to these abusive plans.
After I spoke I was invited to the IRS headquarters where I addressed IRS senior officials. Treasury dept
officials were also listening on speakerphones. We discussed problems, and the IRS future action
against abusive plans. Within a few years IRS developed task forces that started to audit abusive plans.

Below is an article published in 2003 that I did not author about the 2003 ASPA convention.

Pending Guidance on 412(i) Plans Discussed at ASPA Convention - November 3, 2003
The IRS discussed pending guidance on fully insured defined benefit pension plans under §412(i) at its
"Aggressive Practices" session last week at the annual American Society of Pension Actuaries (ASPA)
conference in Washington, D.C.  

To Read More: