Section 79 - HG.org

For businesses with 10 or fewer employees, the law prohibits full medical underwriting of the policies that are issued ("group" underwriting is required, which is much more risky for an insurance company).

Beginning this article, I wanted to reiterate my comments on implementing plans with fewer than 10 employees.



Amazingly, one of the insurance companies offering this plan seemly doesn't have the ability to issue non-medical underwriting policies. This is laughable and pathetic all at the same time, and a plan you'll want to stay far away from.



As I briefly alluded to in my previous article, one of the reasons I really do not like Section 79 plans is that they basically force employers and those helping them set up Section 79 plans to lie to the employees when implementing the plan. 

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Tax Expert Lance Wallach Speaking at Attorney CPA Convention - Video Dailymotion

Tax Expert Lance Wallach Speaking at Attorney CPA Convention - Video Dailymotion



Tax Expert, Author, Expert Witness, Speaker Lance Wallach discussing tax audits, penalties, abusive tax shelters, 412i plans, 419e plans, 6707A plans, insurance fraud, listed transactions, etc. at convention. Contact him at 516-236-8440 for tax advice, and audit defense.

FBAR OVDI Offshore Tax Issues - HG.org

In 2012 the IRS announced another offshore voluntary disclosure program (the 2012 OVDI). These programs offer reduced penalties in exchange for taxpayers’ voluntarily coming into compliance before the IRS is aware of their prior tax indiscretions.

The 2012 OVDI is patterned after the 2011 OVDI, but increases the maximum Report of Foreign Bank and Financial Accounts (FBAR)-related penalty from 25 percent to 27.5 percent of the highest account value at any time between 2003 and 2010. The IRS can terminate it at any time as to specific classes of taxpayers or as to all taxpayers. In all, the IRS has seen 33,000 voluntary disclosures from the 2009 and 2011 offshore initiatives. Since the 2011 program closed last September, hundreds of taxpayers have come forward to make voluntary disclosures. Those who have come in since the 2011 program closed last year will be able to be treated under the provisions of the new OVDI program.

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IRS Penalties, Audits, Benefit Plans 419e 412i

New BISK CPEasy™ CPE Self-Study Course

CPA’s Guide to Life Insurance

Author/Moderator: Lance Wallach, CLU, CHFC, CIMC

Introduction
The CPA faces a daunting series of roles—those of advisor, practitioner, and consumer. Life insurance can be a powerful tool; improperly wielded, it can lead to malpractice.

The authors hope this text effectively introduces the advisor to basic and also more complex concepts, enabling the advisor to appropriately counsel clients, or at least spot pitfalls and client opportunities. Similarly, the authors hope the practitioner who is licensed and sells insurance is aware of the myriad options available and which best help the client. Finally, the authors hope the CPA as consumer gains an understanding of the important concepts that can help the CPA on a personal level.

This text and corresponding video was a daunting challenge—how to encapsulate the complex field of life insurance and its applications into an understandable and useful reference. The authors hope this was accomplished.

Program Learning Objectives
Upon successful completion of this program, the user should:

• Understand the basics of life insurance
• Have a general understanding in determining insurance needs
• Be aware of the major pros and cons of each type of insurance
• Be familiar with business related insurance
• Be familiar with “split-dollar insurance”
• Be familiar with foundational estate planning issues
• Understand how life insurance is used to protect the estate
• Understand basic buy-sell agreement theory (estate planning for the business)
• Understand basics about various retirement plans
• Understand alternatives to cashing out or terminating a policy
• Be familiar with how products are illustrated
• Have a general understanding of annuities
• Be aware of trouble areas

Prerequisite: None
Formats: Online, Software, Text $109.00/6 CPE Credit Hours
Formats: Audio w/text $119.00/8 CPE Credit Hours
Formats: DVD w/text $179.00/8 CPE Credit Hours

Bisk Education, Inc. • 9417 Princess Palm Avenue • Tampa, FL 33619-8313 • Phone 813-621-6200 • Fax 813-621-0127 • www.bisk.com • bisk@bisk.com

Could We Have This Debate Before It Is Too Late? - HG.org

Is the use of fully insured group health insurance products as stop-loss coverage for group health plans going to remain a viable solution?

The obvious question that follows is: Are State Departments of Insurance Compelled by the Affordable Care Act (ACA) To Limit Fully Insured Health Products to Minimum Essential Benefits?

Short answer is a resounding No. This is an intriguing question which is being hashed out across our land and I am sad to say that most DOIs are getting it wrong. Section 1301, Paragraph (b), 1, A, the ACA is very clear in its definition of a health plan:

1) Health Plans—

(A) In General.—the term ‘‘health plan’’ means health insurance coverage and a group health plan.

Did that come through? “And a group health plan”.

One of the things that came out of the ACA, which I only hear complaining about, is the Medical Loss Ratio (MLR) mandate; 80% of small group (99 and under) and 85% of large group premium dollars must go to fund patient care. This puts fully insured products in the strange position of being underpriced as a stop-loss product.

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Blogger: Blogger Dashboard

For years, life insurance companies and agents have tried to find ways of making life insurance premiums paid by business owners tax deductible. This would allow them to sell policies at a "discount."

The problem became acute a few years ago with outlandish claims about how §§419A(f)(5) and (6) of the Internal Revenue Code (IRC) exempted employers from any tax deduction limitations. Other inaccurate assertions were made as well, until the Internal Revenue Service (IRS) finally put a stop to such egregious misrepresentations in 2002 by issuing regulations and naming such plans as "potentially abusive tax shelters" (or "listed transactions") that needed to be registered and disclosed to the IRS.

This appeared to put an end to the scourge of scurrilous promoters, as many such plans disappeared from the landscape.

And what happened to the providers that were peddling §§419A(f)(5) and (6) life insurance plans a few years ago? We recently found the answer: Most of them found a new life as promoters of so-called "419(e)" welfare benefit plans.


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Should you File, and then Opt Out?

There's been discussion of "opting out" of the program to take your chances in audit, but it's a topic fraught with danger.  Now, however, there is guidance about opting out of the program that makes much of it transparent. Because of this late date it is recommended that you properly file FBARs and the 90-day request for amnesty extension. This is the first important step. If the forms are not done properly, you will have extensive problems and will not have to think about opting out. If your forms are properly done and filed, then your situation should be discussed with someone who is experienced in these matters.

Read the whole thing here

VEBA Basic Concepts Revisited | LifeHealthPro

Since my last article on Voluntary Employees' Beneficiary Associations, I've received hundreds of phone calls with basic questions which I will attempt to answer in this article.

First and perhaps most important, a VEBA only becomes a tax-exempt organization under Internal Revenue Code Section 501(c)(9) when it has received a Letter of Determination from the Internal Revenue Service granting it tax exempt status.

If a business or professional wants to participate, it joins an existing multiple employer VEBA which has received this determination letter from the IRS. (It is important to note that while several VEBAs have received IRS determination letters, not all programs purporting to be VEBAs have received them.)

VEBAs allow large amounts of tax-deductible contributions for the funding of life insurance, accident insurance, sickness and other benefits for the members of the VEBA, their employees, dependents and beneficiaries. Contribution amounts can be made flexible and benefits are highly favorable to the business owner.

Under the proper conditions, a small business can sometimes put in hundreds of thousands of tax-deductible dollars per year to fund its VEBA.

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Establishing a Buy-Sell Agreement | LifeHealthPro

Working with an attorney, you can help a company establish a buy-sell agreement that sets down in writing what happens to the company's ownership structure in the event a member of the ownership group or a major shareholder dies or becomes disabled.

Without such an agreement in place, a company can be thrown into disarray if one of its owners or key shareholders dies, since the deceased's stake will likely revert to their estate. In that case, the surviving owners' attempts to redeem stock from the estate of the deceased can be a complicated, prolonged, and sometimes contentious process, particularly when it comes to valuing that stock.

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How to Avoid IRS Fines for You and Your Clients | LifeHealthPro

Beware: The IRS is cracking down on small-business owners who participate in tax-reduction insurance plans sold by insurance agents, including defined benefit retirement plans, IRAs, and even 401(k) plans with life insurance. In these cases, the business owner is motivated by a large tax deduction; the insurance agent is motivated by a substantial commission.

A few years ago, I testified as an expert witness in a case in which a physician was in an abusive 401(k) plan with life insurance. It had a so-called "springing cash value policy" in it. The IRS calls plans with these types of policies "listed transactions." The judge called the insurance agent "a crook."

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