Showing posts with label Lance Wallach. Show all posts
Showing posts with label Lance Wallach. Show all posts
Friday, May 3, 2024
Help! My Captive Insurance Company is Under IRS Audit.
If you are a taxpayer who has come under audit by the IRS
with respect to a captive insurance company, here are some things you should
know.
- Type
of Audit. For this purpose, we can divide the IRS audits into two types.
The first is a random audit on an individual or business, and the second
is a targeted audit. A random audit normally involves a local IRS Agent
and considers on some level the totality of a return filed. In a targeted
audit, the IRS obtained a customer list from the captive Promoter and is
auditing you because you are one of the customers. In a random audit, the
Agent has a checklist to review various items of your return and may spend
little or no time scrutinizing the captive. In a targeted audit, the Agent
is normally well trained in the captive area. Further, in a targeted
audit, the Agent may already have been directed on an IRS position for all
of the captives that relate to that Promoter. Accordingly, the method of
dealing with the Agent is very different in random audits than in targeted
audits.
- Your
Representation. You need to be represented in an IRS audit. The very first
thing you should do upon receiving notification of an audit is to engage
tax counsel. You should not speak to the IRS, answer questions or
participate in an interview without tax counsel.
- Choosing
Tax Counsel. There is no right or wrong choice, but the options normally
include the following:
- Local
CPA. The local CPA is often a good choice because he or she knows your
business and circumstances best. Hopefully, they also were very much
involved in your decision to create a captive and can address questions
with personal knowledge regarding the intent of the captive. The downside
is that some CPAs do not have a lot of experience with IRS audits, and
especially with targeted audits of captives. The CPA will normally be
very frank in their assessment if they believe they are in over their
head. We recommend that even in such cases, that the CPA stay on the
power of attorney and work with other hired counsel.
- Promoter’s
Counsel. Often, the Promoter will provide or refer Counsel to represent
you in audit. The benefits of this are that the Promoter’s Counsel will
most likely be extremely knowledgeable about captives in general and have
inside knowledge of the IRS position with respect to the Promoter’s
captive. Also, the Promoter’s Counsel is sometimes paid by the Promoter.
The down side is that the Promoter’s Counsel may be conflicted and
provide a conflicts waiver for you to sign prior to an engagement.
Basically, the issue is whether the Promoter is representing your
interests or the interests of the Counsel. You may feel that those
interests are the same, and sometimes they are, but sometimes they are
not.
- Outside
IRS Counsel. We are often called upon to represent clients under audit
and have represented more than 500 taxpayers in Promoter transactions in
the last 8 years. We often work with the local CPAs, but also will coordinate
efforts with the Promoter’s Counsel.
- Internal
Audit. It is important at the very outset to review the issues involving
the formation of the Captive and consider whether there are any red flags
The information provided herein is not intended as legal, accounting, financial or any type of advice for any specific individual or other entity. You should contact an appropriate professional for any such advice.
Using Captive Insurance Companies for Savings
Small companies have been copying a method to control insurance costs and reduce taxes that used to be the domain of large businesses: setting up their own insurance companies to provide coverage when they think that outside insurers are charging too much.
Read the rest here
Read the rest here
Tuesday, April 30, 2024
How to Beat the IRS: Using Captive Insurance Companies for Savings
How to Beat the IRS: Using Captive Insurance Companies for Savings: Small companies have been copying a method to control insurance costs and reduce taxes that used to be the domain of large businesses: sett...
Lance Wallach Life Insurance: Captive Insurance Buyer Beware
Is a captive insurance cell the way to go? - Accounting Today - Captive Insurance: Achieve large tax and cost reductions by renting a “CAPTIVE”. Most accountants and small business owners are unfamiliar with a great way to reduce taxes and expenses. By either creating or sharing “a captive insurance company”, substantial tax and cost savings will benefit the small business owner.
To read the entire article, click here
To read the entire article, click here
Probs IRS: IRS Audits 419, 412i, Captive Insurance Plans With...
Probs IRS: IRS Audits 419, 412i, Captive Insurance Plans With...: IRS Audits 419, 412i, Captive Insurance Plans With Life Insurance, and Section 79 Scams
IRS: Disclose Offshore Accounts or Go to Jail
IRS: Disclose Offshore Accounts or Go to Jail
Brian
That's pretty much the headline from a CNBC article on Friday. And it's true.In 2009, 15,000 Americans came forward and admitted having foreign bank accounts. Unfortunately, Uncle Sam estimates there are some 500,000 more people hiding money offshore. Opening a bank account in another country isn't illegal. There are a whole host of reasons why people may wish to send money offshore. It only becomes illegal when you send money to a foreign country in the hopes of cheating Uncle Sam.
U.S. law makes it a felony if you fail to declare the income from foreign investments on your U.S. tax return and makes it illegal to not disclose the existence of the foreign account.
So what is a person to do? Taxpayers can do nothing and hope they don't lose the "audit lottery" (there are no winners with the IRS). Or taxpayers can come into compliance, report the account and pay the government ¼ of the highest dollar amount that was in the account. That's right, if you had an account with $200,000 in it, get out the checkbook and write a check to the IRS for $50,000.
Taxpayers wanting to take advantage of the current amnesty program (called the Offshore Voluntary Disclosure Initiative) must move quickly, however. Unlike the 2009 program, which simply said you had to apply be the deadline, the current amnesty requires that all missing forms ("FBAR's"), amended returns and payment must be made by the deadline. There is a great deal of paperwork involved with the new program, waiting until the last minute is a recipe for disaster.
Those that don't comply face prison and loss of 50% of their highest account value.
So what is the risk of getting caught? We think it is quite high.
Transparency within the international banking community is at an all time high. And the developed countries are exchanging information. That means if Germany obtains information about accounts in a Bermuda bank it will likely share that information with other countries.
The U.S. has been issuing "John Doe" subpoenas to foreign banks fishing for the names of American account holders. Countries like Germany have been bribing foreign bank officials to simply steal the information and turn it over.
Still not convinced? The IRS paid its first award under the new whistleblower program - $4.5 million to an accountant who reported his employer! If anyone, anywhere knows you have a foreign account; they may report you and keep a large percentage of what you pay.
The world suddenly got much smaller.
This is interesting article but I do not believe everything in it is correct. I have received numerous phone calls from participants in these plans and the IRS is auditing. For the most accurate information contact: Lance Wallach at lancewallach.com or call 516-935-7346
How Hartford Life and Other Insurance Companies Tricked their Agents and Got People in Trouble with the IRS - HG.org
How Hartford Life and Other Insurance Companies Tricked their Agents and Got People in Trouble with the IRS - HG.org
Agents from Hartford and other insurance companies were shown ways to sell large life insurance policies. This “Welfare Benefit Trust 419 plan or 412i plan should be shown to their profitable small business owners as a cure for paying too much taxes.
A Welfare Benefit Trust 419 plan essentially works like this:
• The business provides a fringe benefit for their employees, such as health insurance and life insurance.
• The benefit is established in the name of a trust and funded with a cash value life insurance policy
• Here is the gravy: the entire amount deposited into the trust (insurance policy) is tax deductible to the company,and
• The owners of the company can withdraw the cash value from the policy in later years tax-free.
• The business provides a fringe benefit for their employees, such as health insurance and life insurance.
• The benefit is established in the name of a trust and funded with a cash value life insurance policy
• Here is the gravy: the entire amount deposited into the trust (insurance policy) is tax deductible to the company,and
• The owners of the company can withdraw the cash value from the policy in later years tax-free.
Read more by clicking the link above!
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