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419 Life Insurance Plans and Other Scams "" Large IRS Fines ""The IRS Raids Plan Promoter Benistar, and What Does All This Mean To You?

October 13, 2010

Recently IRS raided Benistar, which is also known as the Grist Mill Trust, the promoter and operator of one of the better known and more heavily scrutinized of the Section 419 life insurance plans. IRS attacked the Benistar 419 plan, and one of its tactics was to demand the names of all the clients Benistar worked with "" so they could be audited by the IRS, Benistar refused to give the names and actually appealed the decision to turn over the names. The appeal was unsuccessful, but Benistar officials still refused to give up the names. Recently, the IRS raided the Benistar office and took hundreds of boxes of information, which included information on clients who were in their 419 plan. In documents filed by Benistar itself, they stated that 35 to 50 armed IRS agents descended upon their office to seize documents. IRS has visited, and is still visiting most of the other plans and obtaining names of participants, selling insurance agents, accountants, etc. They have a whole task force devoted to auditing 419, 412i and other abusive plans.It's important to understand what could happen to unsuspecting business owners if they get involved in plans that are not above board. Their names could be turned over to the IRS, where audits could ensue, and where the outcome could be the payment of back taxes and significant penalties. Then they would be fined another time under Section 6707A for not properly reporting on themselves. Most promoters of 419 plans told clients that their plans complied with the laws and, therefore, were not listed tax transactions. Unfortunately, the IRS doesn't care what a promoter of a tax-avoidance plan says; it makes its own determination and punishes those who don't comply.

The McGehee Family Clinic, P.A. was recently hit with back taxes and a penalty under Code Sec. 666A in conjunction with a deduction to the Benistar 419 plan

Dr. McGehee's clinic took a deduction for a 419 plan (the Benistar plan) back in 2005. Eventually, the McGhee Family Clinic was audited. After the audit, the doctor was told that the deduction would be disallowed and that back taxes were due. Additionally, Dr. McGehee was hit with a 20 percent accuracy-related penalty under Code Sec. 6662A. Finally, the tax court sustained the IRS's determination that McGehee was subject to the increased 30 percent penalty, because its return did not include a disclosure statement indicating its participation in the Benistar Trust. I think that in addition to the aforementioned fines, IRS will now fine him, both on a corporate and personal level, another $200,000 or more, under IRC 6707A, for not properly disclosing his participation in a listed transaction. There was a moratorium on those fines until June 2010, pending new legislation to reduce them. The fines had been 200,000 per year on the corporate level and $100,000 per year on the personal level. You got the fine even if you made no contributions for the year. All you had to do was to be in the plan. So Dr. McGehee's fine would be a total of $300,000 per year for every year that he and his corporation were in the plan. IRS also says the fine is not appealable. His fine would be in the million-dollar range and it would be in addition to the back taxes, interest, and penalties already discussed earlier in this paragraph. Legislation just passed slightly reducing those fines, but you still have to properly file to start the Statute of Limitations running to avoid the fines. IRS is fining people who report on themselves, but make a mistake on the forms. Now that the moratorium on the fines has passed, and so has the new legislation, IRS has aggressively moved to fine unsuspecting business owners hundreds of thousands. This is usually after they get audited, and sometimes reach agreement with IRS. Then another division or department of the IRS imposes a fine under 6707A. I am receiving a lot of phone calls from business owners who this is happening to. Unfortunately, some of these people already had called me. I warned them to properly file under 6707A. Either they did not believe me - it is unbelievable - or their accountant or tax attorney filed incorrectly. Then they called again after being fined.If you were involved with one of these abusive plans, there are steps that you can take to minimize IRS problems. With respect to filing under Section 6707A, I know the two best people in the country at filing after the fact, which is what you would be doing at this point, and still somehow avoiding the fine. It is an art that both learned through countless hours of research and numerous conversations with IRS personnel. Both have filed dozens of times for clients, after the fact, without the clients being fined. Either may well still be able to help you.And the right accountant, one with the proper knowledge, experience, and Service contacts, can help with the other IRS problems as well. I recall a case where a CPA I knew and recommended was able to get $300,000 or so in liabilities reduced to three thousand dollars and change. Do not count on a result like this, but help is available.

It's not worth it!

Stay away from 419 and similar plans like Section 79 plans. Be very careful with 412i plans. Avoid most captive insurance plans.It's getting closer to the end of the year. This is when every scammer known to man/woman comes out of the woodwork to sell some fly-by-night tax-deductible plan to clients. Sometimes they come in the form of an accountant, insurance agent-financial planner, or even an attorney. I see this in all of my expert witness cases and when I speak at conventions. I have seen this since the 1990s. I wanted to remind readers that, if it sounds too good to be true, it probably is.

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.

Review #237438 is a subjective opinion of a user.

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Anonymous
Floral Park, New York, United States #1224706

Benistar Leader Goes To Jail
HOMEABOUT | BENISTARWHO IS THE FOUNDER OF BENISTAR DON TRUDEAU VS. DANIEL CARPENTER | BENISTAR
ABOUT | BENISTAR
Benistar Does not keep its word Untrusted leader 2015
Benistar Changes its agreement to suit their own needs Do Not Sign an agreement with Benistar its worth less than the paper its printed on!!! LANCE WALLACH HELPS IRS Lance Wallach even tries to help the IRS go after the sellers of abusive 419, 412i, captive insurance and section 79 plans. He has also spoken at conventions partially sponsored by the IRS, met with IRS officials at their headquarters in Washington D.C. and has received phone calls from the IRS on point. Lance Wallach does NOT give the IRS the names of people that RETAIN him to help them. Lance does not give the IRS the names of people that he refers to others for help. To: Itzkowitz Ronald R Subject: Lance Wallach Hope all is well with you. I never heard from your contact about the abusive shelter information that you sent to him. This stuff on section 79 and captive is not all over the net and is sold by the same promoters that used to sell the 412i and 419 scams?????? Also please see attached two articles that mention section 79 and captives. When I speak at accounting conventions, or write articles about them I am sometimes attacked by promoters of the plans. The articles are not 100% correct, as the publications sometimes change content without checking with the authors. To Read More Click Here Now
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Anonymous
Floral Park, New York, United States #1220608
n McGehee Family Clinic the Tax Court ruled that a clinic and shareholder’s investment in an employee benefit plan marketed under the name “Benistar” was a listed transaction substantially similar to the transaction described in Notice 95-34 (1995-1 C.B. 309). This is at least the second case in which the court has ruled against the Benistar welfare benefit plan.
Notice 95-34 was issued in response to trust arrangements sold to companies that were designed to provide deductible benefits such as life insurance, disability and severance pay benefits. The promoters of these arrangements claimed that all employer contributions were tax-deductible when paid, by relying on the 10-or-more-employer exemption from the IRC § 419 limits.
In general, contributions to a welfare benefit fund are not fully deductible when paid. Sections 419 and 419A impose strict limits on the amount of tax-deductible prefunding permitted for contributions to a welfare benefit fund. Section 419A(f)(6) provides an exemption from section 419 and section 419A for certain “10-or-more employers” welfare benefit funds. In general, for this exemption to apply, the fund must have more than one contributing employer, of which no single employer can contribute more than 10% of the total contributions, and the plan must not be experience- rated with respect to individual employers (that is, one that allows contributions to increase or decrease based on benefits or overall experience).
As discussed in Notice
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Anonymous
Floral Park, New York, United States #1220110
Benistar 419 plan is a listed transaction says the IRS
Published on February 16, 2016
LikeBenistar 419 plan is a listed transaction says the IRS1Comment4ShareShare Benistar 419 plan is a listed transaction says the IRS1
Stacey Arenas
Stacey Arenas
Assistant Managing Director, Marketing Manager at Vebaplan LLC BENISTAR 419 PLAN HELD BY TAX COURT TO BE A "LISTED TRANSACTION" The United States Tax Court has held that the Benistar 419 Plan & Trust, crafted by Daniel Carpenter, was a plan that offered the same type of tax benefits as those listed in IRS Notice 95-34 (i.e., the deduction of contributions made to the trust arrangement). In fact, the benefits of the Benistar Plan were touted as "virtually unlimited." Promotional materials described the Benistar Plan as a trust arrangement that claimed to meet the 10-or-more employers-plan exemption under IRC Section 419A(f)(6), offering life insurance. The policies require large contributions relative to the cost of the amount of term insurance that would be required. When the participants in the plan have the right to receive the value reflected in the underlying insurance policies purchased by the plan, despite the fact that the payments of benefits are contingent upon the death of the insured while employed. As long as participants were willing to benefit by Benistar Plan's distribution policies, there was no reason ever to forfeit a policy. This event was viewed to be an unanticipated event. While noting
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Anonymous
#1161567
BENISTAR 419 PLAN HELD BY TAX COURT TO BE A "LISTED TRANSACTION"
09 / 16 / 2010
The United States Tax Court has held that the Benistar 419 Plan & Trust, crafted by Daniel Carpenter, was a plan that offered the same type of tax benefits as those listed in IRS Notice 95-34 (i.e., the deduction of contributions made to the trust arrangement).
In fact, the benefits of the Benistar Plan were touted as "virtually unlimited." Promotional materials described the Benistar Plan as a trust arrangement that claimed to meet the 10-or-more employers-plan exemption under IRC Section 419A(f)(6), offering life insurance. The policies require large contributions relative to the cost of the amount of term insurance that would be required. When the participants in the plan have the right to receive the value reflected in the underlying insurance policies purchased by the plan, despite the fact that the payments of benefits are contingent upon the death of the insured while employed. As long as participants were willing to benefit by Benistar Plan's distribution policies, there was no reason ever to forfeit a policy. This event was viewed to be an unanticipated event. While noting that the plan does not reduce benefits if the assets derived from an employer's contributions are insufficient to fund all of the benefits promised to that employer's employees, the Tax Court found that since the plan does mantain separate accountings of the assets attributable to contributions in an
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Anonymous
#1127617
this has nothing to do with benistar that sells health insurance, lance wallach, google him for help
Anonymous
#1044277
Benistar Misleads its workers
Benistar's agreements are less useful than the paper its written on
Benistar does not keep its word to its workers
Anonymous
#1044275
Carpenter at first used an account at Merrill Lynch, which warned him about the dangers of options trading. He then switched to Paine Webber, which also warned him about the dangers. Initially his plan worked well, but early in 2000 he began suffering large trading losses. By late 2000 the losses had mushroomed to about $9 million.
In February 2004, a federal grand jury in Massachusetts returned a 19-count indictment charging Carpenter with 14 counts of wire fraud and five counts of mail fraud. The indictment identified seven exchangors who lost a total of about $9 million. Carpenter pleaded not guilty on all counts. In September 2004, the grand jury returned a superseding 19-count indictment. Carpenter again pleaded not guilty on all counts.
In July 2005, a 13-day jury trial ended with conviction on all counts. In December 2005, the judge granted Carpenter's motion for a new trial on the grounds that the government used inflammatory language in its closing argument. The First Circuit, in a split decision, upheld the district court's ruling. The Supreme Court declined to review the case.
benistar.sucks
Robbendo
https://www.youtube.com/watch?v=ce5EHM5Wat4
Benistar.sucks
Benistar
#966589
Benistar As the Untrusted Leader
Benistar is a famous leader that gets clients in serious trouble with the IRS. They administer and design medical benefits for post-sixty five group retirees. Maybe you should not trust Benistar.
Anonymous
Plainview, New York, United States #685975
also grist mill trust

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