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412I PLAN 419 PLAN CAPTIVE INSURANCE INSURANCE EXPERT WITNESS SECTION 79 OUR SERVICES MEET LANCE EZINE ARTICLES HG ARTICLES SECTION 79 search the truthMost people have never heard of a Section 79 plan because it is a wealth building tool pitched by insurance agents who really do not understand the math calculations behind the plan. Section 79 plans can cause people huge problems.
Lance Wallach knows how to fix them.
Section 79 plans, listed transactions, reportable transactions, 419e, 412i, and captive insurance plans are all targets of IRS Auditors.
What is a Section 79 plan?
It is a tax plan where small-business owners are told that they’re allowed to take a tax deduction through their businesses in order to purchase life insurance. That sounds pretty good, doesn’t it? When you break down the math and the sales pitch, however, it just doesn’t make sense. Agents try to sell Section 79 plans for two simple reasons:
Many small business clients will buy any plan that is “deductible” because they hate paying income taxes.
Insurance advisers want to sell life insurance.
This brings up an interesting issue: If the plan is marginal from a wealth-building standpoint, then why are agents selling it? Again, there are tworeasons:
Most advisers have not broken down the math so they can come to a correct conclusion, which is that the plans are not worth implementing from a pure financial standpoint.
Some advisers know the plan is marginal from a financial standpoint and don’t care because they know they can still sell it to business owners who are looking for deductions. The IRS considers them abusive, and will audit them.
Lance Wallach
How to avoid the fines
In order to avoid substantial IRS fines, business owners and material advisers involved in the sale of any of the above type plans must properly file under Section 6707A.
Yet filing often isn’t enough; many times, the IRS assesses fines on clients whose accountants did file the form yet made a mistake – an error that usually results in the client being fined more quickly than if the form were not filed at all.
Everyone in a Section 79 should file protectively under Section 6707A – and anyone who has not filed protectively in a 419 or 412(i) had better get some good advice from someone who knows what is going on, and has extensive experience filing protectively.
The IRS still has task forces auditing these plans, and will soon move on to Section 79 scams, including many of the illegal captives pushed by the insurance companies and agents
IRS
Why You Should Stay Away from Section 79 Life Insurance Plans
1. You have to lie to employees to implement them.
2. The life illustrations given by ignorant or crooked insurance agents are not realistic. Most use today’s historically low lending rates with 2 percent to 3 percent loan spreads on variable loans on EIUL policies
3. You have to be a C-corporation to use them. Many agents don’t inform their clients of this.
4. The life policies sold in these plans are so bad that the companies don’t want them sold unless they are in Section 79 plans. (The policies are designed to have poor performance so the deduction is increased.)
5. When you run the real numbers, the client would be better off not funding the plan, taking his/her money home after taxes, and funding a good no load EIUL policy.
7. The IRS audits many of them and unless you properly file under IRS 6707A the fines are very large.
NATIONAL OFFICES OF LANCE WALLACH
516-938-5007
516-935-7346
MANY LARGE INSURANCE COMPANIES AND AGENTS HAVE BEEN SCAMMING SMALL BUSINESS OWNERS AND THEIR ACCOUNTANTS
-by selling them Section 79 plans that the IRS considers abusive. The owners and their accountants have been receiving IRS penalties sometimes totaling over $500,000. If you have been sold such a plan contact our office for immediate assistance.
412I PLAN
ReplyDelete419 PLAN
CAPTIVE INSURANCE
INSURANCE EXPERT WITNESS
SECTION 79
OUR SERVICES
MEET LANCE
EZINE ARTICLES
HG ARTICLES
SECTION 79
search the truthMost people have never heard of a Section 79 plan because it is a wealth building tool pitched by insurance agents who really do not understand the math calculations behind the plan. Section 79 plans can cause people huge problems.
Lance Wallach knows how to fix them.
Section 79 plans, listed transactions, reportable transactions, 419e, 412i, and captive insurance plans are all targets of IRS Auditors.
What is a Section 79 plan?
It is a tax plan where small-business owners are told that they’re allowed to take a tax deduction through their businesses in order to purchase life insurance. That sounds pretty good, doesn’t it? When you break down the math and the sales pitch, however, it just doesn’t make sense. Agents try to sell Section 79 plans for two simple reasons:
Many small business clients will buy any plan that is “deductible” because they hate paying income taxes.
Insurance advisers want to sell life insurance.
This brings up an interesting issue: If the plan is marginal from a wealth-building standpoint, then why are agents selling it? Again, there are tworeasons:
Most advisers have not broken down the math so they can come to a correct conclusion, which is that the plans are not worth implementing from a pure financial standpoint.
Some advisers know the plan is marginal from a financial standpoint and don’t care because they know they can still sell it to business owners who are looking for deductions. The IRS considers them abusive, and will audit them.
Lance Wallach
How to avoid the fines
In order to avoid substantial IRS fines, business owners and material advisers involved in the sale of any of the above type plans must properly file under Section 6707A.
Yet filing often isn’t enough; many times, the IRS assesses fines on clients whose accountants did file the form yet made a mistake – an error that usually results in the client being fined more quickly than if the form were not filed at all.
Everyone in a Section 79 should file protectively under Section 6707A – and anyone who has not filed protectively in a 419 or 412(i) had better get some good advice from someone who knows what is going on, and has extensive experience filing protectively.
The IRS still has task forces auditing these plans, and will soon move on to Section 79 scams, including many of the illegal captives pushed by the insurance companies and agents
IRS
Why You Should Stay Away from Section 79 Life Insurance Plans
1. You have to lie to employees to implement them.
2. The life illustrations given by ignorant or crooked insurance agents are not realistic. Most use today’s historically low lending rates with 2 percent to 3 percent loan spreads on variable loans on EIUL policies
3. You have to be a C-corporation to use them. Many agents don’t inform their clients of this.
4. The life policies sold in these plans are so bad that the companies don’t want them sold unless they are in Section 79 plans. (The policies are designed to have poor performance so the deduction is increased.)
5. When you run the real numbers, the client would be better off not funding the plan, taking his/her money home after taxes, and funding a good no load EIUL policy.
7. The IRS audits many of them and unless you properly file under IRS 6707A the fines are very large.
NATIONAL OFFICES OF LANCE WALLACH
516-938-5007
516-935-7346
MANY LARGE INSURANCE COMPANIES AND AGENTS HAVE BEEN SCAMMING SMALL BUSINESS OWNERS AND THEIR ACCOUNTANTS
-by selling them Section 79 plans that the IRS considers abusive. The owners and their accountants have been receiving IRS penalties sometimes totaling over $500,000. If you have been sold such a plan contact our office for immediate assistance.