412i, 419e, Captive Insurance and Section 79 Plans
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Lance Wallach
By Lance Wallach, California Broker Mag
The IRS has been attacking all 419 welfare benefit plans, many 412i retirement plans, captive insurance plans with life insurance in them, and Section 79 plans. The IRS is aggressively auditing various plans and calling them 'listed transactions' 'abusive tax shelters,' or 'reportable transactions,'participation in any of which must be disclosed to the Service.  The result has been IRS audits, disallowances, and huge fines for not properly reporting under IRC 6707A. 
In a recent tax court case, Curico v. Commissioner (TC Memo 2010-115), the Tax Court ruled that an investment in an employee welfare benefit plan marketed under the name 'Benistar' was a listed transaction. 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.  For help with these issues visit www.taxaudit419.com
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