412i, 419e plans litigation and IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions by the IRS
412i, 419e plans litigation and IRS Audit Experts for abusive insurance based plans deemed reportable or listed transactions by the IRS
Lance WallachFebruary 5, 2014 at 2:46 PM
ReplyDeleteBENISTAR PLAN ABUSES
412I, 419E PLANS LITIGATION AND IRS AUDIT EXPERTS FOR ABUSIVE INSURANCE BASED PLANS DEEMED REPORTABLE OR LISTED TRANSACTIONS BY THE IRS.
MONDAY, DECEMBER 2, 2013
IRS Audits 419 Plans, IRS Raids Benistar, Nova, Grist Mill Trust. Lance Wallach, expert witness.
IRS raided Nova, Benistar, Grist Mill Trust taking records etc. IRS is now auditing this 419 plan. As a result lawsuits against insurance agents, insurance cos. etc are resulting. - 419 Life Insurance Plans and Other Scams – Large IRS Fines – The IRS Raids Plan Promoter Benistar, and What Does All This Mean To You? October 13
Recently IRS raided Benistar, which is also known as the Grist Mill Trust, the promoter and operator of one of the better known and more heavily scrutinized of the Section 419 life insurance plans. IRS attacked the Benistar 419 plan, and one of its tactics was to demand the names of all the clients Benistar worked with — so they could be audited by the IRS, Benistar refused to give the names and actually appealed the decision to turn over the names. The appeal was unsuccessful, but Benistar officials still refused to give up the names. Recently, the IRS raided the Benistar office and took hundreds of boxes of information, which included information on clients who were in their 419 plan. In documents filed by Benistar itself, they stated that 35 to 50 armed IRS agents descended upon their office to seize documents.
IRS has visited, and is still visiting most of the other plans and obtaining names of participants, selling insurance agents, accountants, etc. They have a whole task force devoted to auditing 419, 412i and other abusive plans.
It’s important to understand what could happen to unsuspecting business owners if they get involved in plans that are not above board. Their names could be turned over to the IRS, where audits could ensue, and where the outcome could be the payment of back taxes and significant penalties. Then they would be fined another time under Section 6707A for not properly reporting on themselves.
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California Enrolled Agent
Defendants.
DENNIS M. CAVANAUGH, U.S.D.J.
This matter comes before the Court upon motions by Defendants Robin S. Weingast
&
Associates, Inc. and Robin S. Weingast (collectively the “Weingast Defendants”)
(ECF No. 24),
Defendant Designs for Finance, Inc. (“Designs”)(ECF No. 27), Defendant
Pointe Benefit
Consultants, LLC (“Pointe Benefit”)(ECF No. 29), and Defendant Capital One, N.A.
(“Capitol
One”)(ECF No. 31) to dismiss Plaintiffs Jeffrey Rapaport M.D., P.A. (“JRMDPA”),
Jeffrey
Rapaport (“Rapaport”), and Amanda Rapaport’s (collectively “Plaintiffs”) Complaint in
this action
pursuant to FED. R. CIV. P. 12(b)(6). Pursuant to FED. R. CIV. P. 78, no oral
argument was heard.
After considering the submissions of the parties, it is the decision of this Court for the
reasons herein
expressed that the motions to dismisssubmitted by Defendants Designs, Pointe
Benefit, and Capital
One are granted and the motion to dismiss by the Weingast Defendants is denied.
To Read More:
http://baritzcolman.com/p
Caution Flags
ReplyDeleteThe 412(i) plan is getting heavy promotion as a valuable tool for older
business-owner clients. But does it live up to its advance billing?
October 1, 2003
Financial Planning (www.financial-planning.com)
First it was charitable split dollar, then IRC Section 419A(f)6 welfare benefit plans. Soon
it could be the 412(i) defined benefit plan. These are hot-button planning issues that are
under scrutiny from the IRS for abusive practices. Because 412(i) plans are being
aggressively marketed to agents and brokers, and in turn their clients, advisers should be
careful. They need to be aware of the proper use of a 412(i) plan and what to watch out
for when being pitched by their promoters.
A 412(i) plan is a special type of defined benefit pension plan that is funded entirely
through annuity or life insurance contracts. It must follow the same qualification rules as
traditional pension plans, including the limits on retirement and death benefits.
But unlike a traditional defined benefit plan, which may be based on 5% to 6% annual
investment returns, the 412(i) plan buys annuities from insurance companies that offer
guarantees of 2% or 3%. With a 2% or 3% return floor, the 4l2(i) plan allows employers
to make significantly higher annual tax-deductible contributions for employees. For
example, a company can contribute $100,000 or more to a 412(i) plan for a 50-year-old
employee making more than $170,000 a year.
Who are good candidates to use 412(i) plans? Most often, professionals or business
owners who want their companies to make large tax-deductible contributions (more than
the current $40,000 limit for 401(k) or profit-sharing plans). The businesses get a tax
deduction, and the business owners reduce their salary and taxable income to pay for the
deduction. A 412(i) can be especially attractive to clients older than 50 who have saved
little or no money in a qualified plan or IRA. Often, these clients are divorced and have
big large chunks of earlier retirement plans to former spouses. Or they have taken most of
their income home every year instead of funding their pension plans. The 412(i) also
appeals to clients who are interested in big de