Section 79 Plans
Your Section 79 Experts
516-938-5007
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Nationwide
Assistance!
Phone:
516-938-5007
Email:
section79expert
Assistance!
Phone:
516-938-5007
Email:
section79expert
Section 79 Plans
516-935-7346
Did You Buy a Section 79 Plan? Do You Know How To Avoid Being Fined By The IRS?
Nationwide
Assistance!
Phone:
516-935-7346
Email:
Assistance!
Phone:
516-935-7346
Email:
What is a Section 79 plan and How Do You Avoid Fines?
So 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 advisors 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 two reasons:
- Most advisors 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 advisors 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.
How to avoid the fines
In order to avoid substantial IRS fines, business owners and material advisors 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 (though not all captives are illegal).
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Retirement Today
Sept 2011
Participate in a 419 or 412i Plan or Other Abusive Tax Shelter You could be fined a large
amount of Money
Lance Wallach
Did you get a letter from the IRS threatening to impose this fine? If you haven’t already, you still may.
Consider yourself lucky if you have not because this means that you have more time to straighten this
situation out. Do not wait for this letter to come from the IRS before you call an expert to help you. Even if
you have been audited already, you could still get the letter and/or fine. One has nothing to do with the
other, and once the fine has been imposed, it is not able to be appealed.
Many businesses that participated in a 412i retirement plan or the IRS is auditing a 419-welfare benefit
plan. Many of these plans were not in compliance with the law and are considered abusive tax shelters.
Many business owners are not even aware that the welfare benefit plan or retirement plan that they are
participating in may be an abusive tax shelter and that they are in serious jeopardy of huge IRS penalties
for each year that they have been in this type of plan.
Insurance companies, CPAs, sellers of these 419 welfare benefit plans or 412i retirement plans, as well as
anyone that gave tax advice or recommended participation in one or more of these plans, also known as a
material advisor, is in danger of being sued, fined by the IRS, or both.
There is help available if you think you may be involved with one of these 419 welfare benefit plans, 412i
retirement plans, or any abusive tax shelter. IRS penalty abatement is an option if you act now. Feel free to
contact me for more information. www.lancewallach.com
Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of
teaching professionals, is a frequent speaker on retirement plans, abusive tax shelters, financial,
international tax, and estate planning. He writes about 412(i), 419, Section79, FBAR, and captive
insurance plans. He speaks at more than ten conventions annually, writes for over fifty publications, is
quoted regularly in the press and has been featured on television and radio financial talk shows including
NBC, National Pubic Radio’s All Things Considered, and others. Lance has written numerous books
including Protecting Clients from Fraud, Incompetence and Scams published by John Wiley and Sons, Bisk
Education’s CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as the AICPA best-
selling books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot
Spots. He does expert witness testimony and has never lost a case. Contact him at 516.938.5007,
wallachinc@gmail.com or visit www.taxadvisorexpert.com.
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.
Sept 2011
Participate in a 419 or 412i Plan or Other Abusive Tax Shelter You could be fined a large
amount of Money
Lance Wallach
Did you get a letter from the IRS threatening to impose this fine? If you haven’t already, you still may.
Consider yourself lucky if you have not because this means that you have more time to straighten this
situation out. Do not wait for this letter to come from the IRS before you call an expert to help you. Even if
you have been audited already, you could still get the letter and/or fine. One has nothing to do with the
other, and once the fine has been imposed, it is not able to be appealed.
Many businesses that participated in a 412i retirement plan or the IRS is auditing a 419-welfare benefit
plan. Many of these plans were not in compliance with the law and are considered abusive tax shelters.
Many business owners are not even aware that the welfare benefit plan or retirement plan that they are
participating in may be an abusive tax shelter and that they are in serious jeopardy of huge IRS penalties
for each year that they have been in this type of plan.
Insurance companies, CPAs, sellers of these 419 welfare benefit plans or 412i retirement plans, as well as
anyone that gave tax advice or recommended participation in one or more of these plans, also known as a
material advisor, is in danger of being sued, fined by the IRS, or both.
There is help available if you think you may be involved with one of these 419 welfare benefit plans, 412i
retirement plans, or any abusive tax shelter. IRS penalty abatement is an option if you act now. Feel free to
contact me for more information. www.lancewallach.com
Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of
teaching professionals, is a frequent speaker on retirement plans, abusive tax shelters, financial,
international tax, and estate planning. He writes about 412(i), 419, Section79, FBAR, and captive
insurance plans. He speaks at more than ten conventions annually, writes for over fifty publications, is
quoted regularly in the press and has been featured on television and radio financial talk shows including
NBC, National Pubic Radio’s All Things Considered, and others. Lance has written numerous books
including Protecting Clients from Fraud, Incompetence and Scams published by John Wiley and Sons, Bisk
Education’s CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as the AICPA best-
selling books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot
Spots. He does expert witness testimony and has never lost a case. Contact him at 516.938.5007,
wallachinc@gmail.com or visit www.taxadvisorexpert.com.
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.