|You Don't Have To Just Take OUR Word For It.
Read What Our Clients Have To Say!
The IRS says:
|Natural persons who fail
to disclose a reportable
transaction to the IRS
are subject to a $10,000
are subject to a $50,000
The penalties are
increased to $100,000
respectively, for natural
persons and other
taxpayers who fail to
disclose a reportable
transaction that is a
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“Lance is an industry leader
His research and insights have proved right on the money!”
“Lance is extraordinarily intelligent. He has few peers, if any, in his area of expertise.
I unhesitatingly recommend Lance.”
Gary Lesser, Owner, GSL Galactic Consulting
“Excellent results, Google him”
“Lance is a true expert on VEBA Plans. Five years ago, he took the call of a total stranger,
and in doing so, he spent an hour helping me solve my client's problem. During the past five
years Lance consistently proven to be a valuable resource for me and my practice. He is a
warm open person who is willing to invest in others success.”
Don Atherton, CEBS, CFP, CLU, Owner, Integrated Benefits Solutions, Inc.
“Lance is a wonderful resource not just in regards to VEBAs, 412's, abusive plans and IRS
codes, but also who and what he knows about certain broker-dealers. I called him about recent
changes to 412, and got on the subject of broker-dealers, and he lent so much of his time to
inform me about making the right choice. He is a really great, personable colleague to people
working in the financial services business.”
Robert Thomas, Resident Insurance Producer, Independent Consulting
“Lance has been recognized by many organizations for his expertise as a speaker
and writer on employee benefit plans and other tax topics. You can't go wrong hiring him as a
speaker or, if you want to learn how you can participate in one of Lance's frequent book
projects, he offers an easy way to get yourself published for the first time so you can get a
book in front of prospective clients and/or professional colleagues.”
David Drucker, Principal, Virtual Office News LLC
“I have relied on Lance's valuable expertise on several occasions in assisting my
clients with Veba's (419 plans). Lance is definitely the person to help properly structure 412i
and 419 plans and fix plans that were improperly set-up.”
Sherry Oskey-Hall, Owner, Wealth Creation Strategies
“Since first calling Lance, he has taught me more about all aspects of insurance, income
tax nuances, and relatively unknown welfare benefit plans than I had learned in the years spent
with other well-regarded experts who had been in the same field for over 30 years.
As a result, when Lance becomes a consultant to any company or individual they not only get
the benefit of his immense knowledge, but they receive the knowledge of experts in any area of
finance that will benefit the client. Lance will never say, "I don't know too much about that."
Instead he will say, "Let me put you in touch with an expert who is knows more about that than
anyone in the country." And he means it.
I have yet to hear of anyone that has been disappointed for calling upon Lance Wallach for
advice or assistance. He is truly at the top of his field.
Michael N. Kessler, M.D., M.A.
President, K & L Agency, LLC
Michael Kessler, Owner, K & L Agency, LLC
“Lance is perhaps the country's foremost expert at establishing various kinds of
employee benefit programs for companies and individuals and also highly knowledgeable
about the programs that do not meet the legal requirements of the Internal Revenue Service.
He is a well known author, has spoken at numerous meetings attended by financial services
practitioners and is the professional you want on your side when the IRS comes calling.”
“Lance is a pleasure to work with, very knowledgeable.”
Paul Rosen, President, Paul J Rosen Financial Services Inc.
“Lance is an expert in little known tax reduction techniques for profitable business
Matthew Tuttle, Owner, Tuttle Wealth Mgmt, LLC
Officials Learn From
"Mr. Wallach, thanks so
much for taking the time
to talk to me today
about VEBAs. Any
information you can send
me would be helpful.
Hopefully, we can work
together in the future as
interest in VEBAs
Corman G. Franklin
Office of the
Date: Wed, Jan 12, 2011
Happy New Year Mr.
Wallach and thanks for
Ronald R. Itzkowitz
National EP Customer
Internal Revenue Service
- Employee Plans
Letter to Lance Wallach from
Ford Motor benefits
Fri, 11 Jan 2008
Dear Mr. Wallach,
It as a pleasure speaking with you this
afternoon. I appreciate the time you spent
listening and the giving of your advice.
Next week, we, a small splinter union
(IAM) within a large Ford Motor facility, at
Cleveland Casting Plant will be
negotiating our contract. This site is mostly
represented by the UAW who have already
consummated their contract with Ford
Motor Company, and has accepted the
VEBA option for their retirees. Their VEBA
will be run by the UAW and whoever they
decide to confide in to execute the health
care benefit and the investments with the
millions that Ford Motor will hand over to
them, and then Ford will wash their hands
of any more health care responsibilities.
Our IAM negotiations start Jan. 14th. The
small group of individuals that will be
across the table from the experts
representing Ford Motor, are comprised of
a few elected people that are Pattern
Maker/Machinist by trade. We have no one
of any particular expertise in finance,
healthcare, or investment. We are
expected to come to terms with
little, to no knowledge or leverage of the
task set before us. We have 1300 people's
lives that will be affected by these
negotiations. It is a shame that the larger
unions will not step up to the plate and
help with the terms that we are faced with.
Ford Motor will use this to their advantage
to squeeze a few more dollars out of our
Thank you again for your generous
contribution of foresight and knowledge to
the concerns facing the American workers
in this globalistic battle for the bottom line.
Mark A. Gwynn
IAM Benefits Rep.
Cleveland Casting Plant
IRS Attacks Business Owners in 419, 412, Section 79 and Captive Insurance
Plans Under Section 6707A
By Lance Wallach
Taxpayers who previously adopted 419, 412i, captive
insurance or Section 79 plans are in big trouble.
In recent years, the IRS has identified many of these arrangements as abusive devices to funnel tax deductible dollars to
shareholders and classified these arrangements as listed transactions." These plans were sold by insurance agents, financial
planners, accountants and attorneys seeking large life insurance commissions. In general, taxpayers who engage in a “listed
transaction” must report such transaction to the IRS on Form 8886 every year that they “participate” in the transaction, and you
do not necessarily have to make a contribution or claim a tax deduction to participate. Section 6707A of the Code imposes
severe penalties for failure to file Form 8886 with respect to a listed transaction. But you are also in trouble if you file incorrectly. I
have received numerous phone calls from business owners who filed and still got fined. Not only do you have to file Form 8886,
but it also has to be prepared correctly. I only know of two people in the U.S. who have filed these forms properly for clients. They
tell me that was after hundreds of hours of research and over 50 phones calls to various IRS personnel. The filing instructions for
Form 8886 presume a timely filling. Most people file late and follow the directions for currently preparing the forms. Then the IRS
fines the business owner. The tax court does not have jurisdiction to abate or lower such penalties imposed by the IRS.
"Many taxpayers who are no longer taking current tax deductions for these plans continue to enjoy the benefit of previous tax
deductions by continuing the deferral of income from contributions and deductions taken in prior years."
Many business owners adopted 412i, 419, captive insurance and Section 79 plans based upon representations provided by
insurance professionals that the plans were legitimate plans and were not informed that they were engaging in a listed
transaction. Upon audit, these taxpayers were shocked when the IRS asserted penalties under Section 6707A of the Code in the
hundreds of thousands of dollars. Numerous complaints from these taxpayers caused Congress to impose a moratorium on
assessment of Section 6707A penalties.
The moratorium on IRS fines expired on June 1, 2010. The IRS immediately started sending out notices proposing the imposition
of Section 6707A penalties along with requests for lengthy extensions of the Statute of Limitations for the purpose of assessing
tax. Many of these taxpayers stopped taking deductions for contributions to these plans years ago, and are confused and upset
by the IRS’s inquiry, especially when the taxpayer had previously reached a monetary settlement with the IRS regarding its
deductions. Logic and common sense dictate that a penalty should not apply if the taxpayer no longer benefits from the
arrangement. Treas. Reg. Sec. 1.6011-4(c)(3)(i) provides that a taxpayer has participated in a listed transaction if the taxpayer’s
tax return reflects tax consequences or a tax strategy described in the published guidance identifying the transaction as a listed
transaction or a transaction that is the same or substantially similar to a listed transaction.
Clearly, the primary benefit in the participation of these plans is the large tax deduction generated by such participation. Many
taxpayers who are no longer taking current tax deductions for these plans continue to enjoy the benefit of previous tax
deductions by continuing the deferral of income from contributions and deductions taken in prior years. While the regulations do
not expand on what constitutes “reflecting the tax consequences of the strategy,” it could be argued that continued benefit from a
tax deferral for a previous tax deduction is within the contemplation of a “tax consequence” of the plan strategy. Also, many
taxpayers who no longer make contributions or claim tax deductions continue to pay administrative fees. Sometimes, money is
taken from the plan to pay premiums to keep life insurance policies in force. In these ways, it could be argued that these
taxpayers are still “contributing,” and thus still must file Form 8886.
It is clear that the extent to which a taxpayer benefits from the transaction depends on the purpose of a particular transaction as
described in the published guidance that caused such transaction to be a listed transaction. Revenue Ruling 2004-20, which
classifies 419(e) transactions, appears to be concerned with the employer’s contribution/deduction amount rather than the
continued deferral of the income in previous years. Another important issue is that the IRS has called CPAs material advisors if
they signed tax returns containing the plan, and got paid a certain amount of money for tax advice on the plan. The fine is
$100,000 for the CPA, or $200,000 if the CPA is incorporated. To avoid the fine, the CPA has to properly file Form 8918.
Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals,
Wallach is a frequent speaker on retirement plans, financial and estate planning, and abusive tax shelters. He is also a featured
writer and has been interviewed on television and financial talk shows including NBC, National Pubic Radio’s All Things
Considered and others. Lance authored 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 AICPA best-selling books
including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots.
Contact him at: