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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
#1314188

https://www.dsrabenefittrust.net/dsrabene/index.php/resources/2016-health-insurance-plans

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...

To read more click here now BAD BAD BENISTAR?“Benistar post-65 retiree benefits administration retiree medical and prescription drug plans solutions Brokers plan administration ONE THOUGHT ON “ABOUT | BENISTAR” admin on August 28, 2015 http://www.listedtransactions.com/articles.html

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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...

As discussed in Notice 95-34, these arrangements typically involve an investment in variable life or universal life insurance contracts on the lives of the covered employees.

The problem is that the employer contributions are large relative to the cost of the amount of term insurance that would be required to provide the death benefits under the arrangement, and the trust administrator may obtain cash to pay benefits other than death benefits, by such means as cashing in or withdrawing the cash value of the insurance policies.The plans are also often designed so that a particular employer’s contributions or its employees’ benefits may be determined in a way that insulates the employer to a significant extent from the experience of other subscribing employers.

Benistar advertised that enrollees should expect to obtain the same type

- See more at: http://www.journalofaccountancy.com/issues/2011/jan/benistar.html#sthash.CsgiU6QW.dpuf

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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...

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 "internal spreadsheet" and permits employers to make larger contributions, contributions are used only for the policy to which it is allocated. Thus, the Tax Court held that the Benistar Plan is a listed transaction, under I.R.C. Section 6707A(c)(2). The Tax Court further found that because the taxpayer failed to file IRS Form 8886, in years 2005, 2006, or 2007, they were liable for the penalty.

The Court held that the IRS is not required to send personalized notices of the potential applicability of the penalty. The year end, December 31, 2004 was after the enactment of I.R.C. Section 6662A, and so this penalty provision is not retroactive, nor was it being applied retroactively in a way that might raise due process concerns. at 13-15.

LikeBenistar 419 plan is a listed transaction says the IRSCommentShareShare Benistar 419 plan is a listed transaction says the IRS Report this Stacey Arenas Stacey Arenas Assistant Managing Director, Marketing Manager at Vebaplan LLC 501 posts 4 commentsRecommended Leave your thoughts here… 16s Lance Wallach Business Owner at National Offices of Lance Wallach Advisers Staring at a New 'Slew' of Litigation From Small-Business Clients Lance Wallach Dec 28, 2010 | Comments (0) inShare… See more LikeReply 5mo Lance Wallach Business Owner at National Offices of Lance Wallach ct: Life Insurance Premium Payments to 419 Plan & Trust Not Deductible Major References: Curcio et al. v. Comm'r, T.C. Memo.

2010-115 (2010) Prior AALU Washington Reports: 08-01; 07-108; 07-91; 04-124; 03-72; 02-99; 00-72; 95-50 MDRT Information Retrieval Index Nos.: 2400.28, 7400.00… See more LikeReply1 1w Lance Wallach Business Owner at National Offices of Lance Wallach benistar president and founder in jail Published on September 7, 2016 Likebenistar president and founder in jail1Comment1ShareShare benistar president and founder in jail2 Stacey Arenas Stacey Arenas… See more UnlikeReplyYou 6mo Stacey Arenas Assistant Managing Director, Marketing Manager at Vebaplan LLC Expert Witness RSS ARCHIVE Lance Wallach has never lost a case. Ask me anything JUNE 16, 2015 Did Benistar or Another Promoter of Abusive 419 or Other Plans Cause You Harm or Get You Audited by The IRS… See more LikeReply 2mo Stacey Arenas Assistant Managing Director, Marketing Manager at Vebaplan LLC Class Claims Axed In Tax Shelter Suit Against Insurer By Ama Sarfo Law360, New York (June 16, 2014, 6:09 PM ET) -- A North Carolina federal judge on Monday axed class action claims in a lawsuit alleging The Lincoln National Life Insurance Co. disguised abusive tax shelters as welfare benefit plans, saying the claims will be better pursued individually. U.S.

District Judge… See more LikeReply 28s Lance Wallach Business Owner at National Offices of Lance Wallach Advisers Staring at a New 'Slew' of Litigation From Small-Business Clients Lance Wallach Dec 28, 2010 | Comments (0) inShare 4 1 Five-year old change in tax has left some small businesses and certain benefit plans subject to IRS fines; the advisers who sold these plans may pay the price. By Jessica Toonkel Marquez Financial advisers who have sold certain types of retirement and other benefit plans to small businesses might soon be facing a wave of lawsuits — unless Congress decides to take action soon. For years, advisers and insurance brokers have sold the 412(i) plan, a type of defined-benefit pension plan, and the 419 plan, a health and welfare plan, to small businesses as a way of providing such benefits to their employees, while also receiving a tax break. However, in 2004, Congress changed the law to require that companies file with the Internal Revenue Service if they had these plans in place.

The law change was intended to address tax shelters, particularly those set up by large companies. Many companies and financial advisers didn't realize that this was a cause for concern, however, and now employers are receiving a great deal of scrutiny from the federal government, according to experts. The IRS has been aggressive in auditing these plans. The fines for failing to notify the agency about them are $200,000 per business per year the plan has been in place and $100,000 per individual.

So advisers who sold these plans to small business are now slowly starting to become the target of litigation from employers who are subject to these fines. “There is a slew of litigation already against advisers that sold these plans,” said Lance Wallach, an expert on 412(i) and 419 plans. “I get calls from lawyers every week asking me to be an expert witness on these cases.” Mr. Wallach declined to cite any specific suits.

But one adviser who has been selling 412(i) plans for years said his firm is already facing six lawsuits over the sale of such plans and has another two pending. “My legal and accounting bills last year were $864,000,” said the adviser, who asked not to be identified. “And if this doesn't get fixed, everyone and their uncle will sue us.” Currently, the IRS has instituted a moratorium on collecting these fines until the end of the year in the hope that Congress will address the issue. In a Sept.

24 letter to Sens. Max Baucus, D-Mont., Charles Boustany Jr., R-La., and Charles Grassley, R-Iowa, IRS Commissioner Douglas H. Shulman wrote: “I understand that Congress is still considering this issue and that a bipartisan, bicameral bill may be in the works … To give Congress time to address the issue, I am writing to extend the suspension of collection enforcement action through Dec. 31.” But with so much of Congress' attention on health care reform at the moment, experts are worried that the issue may go unresolved indefinitely.

“If Congress doesn't amend the statute, and clients find themselves having to pay these fines, they will absolutely go after the advisers that sold these plans to them,” . 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, financial and estate planning, and abusive tax shelters. He writes about 412(i), 419, 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 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.taxaudit419.com and www.taxlibrary.us 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.

Share This Article With a Friend Lance Wallach speaks and writes about benefit plans, and has authored numerous books for the AICPA, Bisk Total tape, and others. He can be reached at (516) 938-5007 or wallachinc@gmail.com. For more articles on this or other subjects, feel free to visit his website at www.taxadvisorexperts.org. Lance Wallach, the National Society of Accountants Speaker of the Year, speaks and writes extensively about retirement plans, Circular 230 problems and tax reduction strategies.

He speaks at more than 40 conventions annually, writes for over 50 publications, is quoted regularly in the press, and has written numerous best-selling AICPA books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Business Hot Spots.

He does extensive expert witness work and has never lost a case.Contact him at 516.938.5007 or visit www.taxadvisorexperts.org.

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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...

The Tax Court further found that because the taxpayer failed to file IRS Form 8886, in years 2005, 2006, or 2007, they were liable for the penalty.

The Court held that the IRS is not required to send personalized notices of the potential applicability of the penalty. The year end, December 31, 2004 was after the enactment of I.R.C.

Section 6662A, and so this penalty provision is not retroactive, nor was it being applied retroactively in a way that might raise due process concerns.at 13-15.

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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
Westbury, New York, United States #1018985

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.

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