National Offices of Lance Wallach - 516-938-5007


Instructions for Form 8918

The link will take you to Instructions for Form 8918, or in other words, a Material Advisor Disclosure Statement.

Insurance Agents: Help for those who sold 419 and 412i plans.

Insurance Agents: Help for those who sold 419 and 412i plans.

Our team of experienced consulting "tax attorneys", CPAs, and "insurance expertsspecializing in 412iand "419 "IRS 
that resulted from plans you sold to your clients, mainly "419 plans", "412i plans", "captive insuranceplans 
"Section 79plans as well as other similar "employee benefit plansor "welfare benefit plansthat the IRS is 
targeting as
 "abusive tax shelters".

Our firm has been successful in
 "defending life insurance agentsand "material advisors" who have participated in 
the sale of these
 "benefit plans".

Transfer Pricing

The IRS dedicates enormous resources toward dealing with taxpayer’s who are involved with any form of transfer pricing. The transfer pricing provisions of IRC 482 address four general types of transactions between commonly owned or controlled parties.
1-     Use or transfer of tangible property
2-     Services
3-     Loans
4-     Use or transfer of intangible property  (especially cost sharing agreements)

Use of tangible property: When one member of a controlled group rents or leases property to another member of the group, the price paid for use of such property must equal an arm’s length amount. Per Treas. Reg. 1.482-2(c )(2)(i), the arm’s length amount is determined by reference to the amount that would have been charged between independent parties for use of the same or similar property under similar circumstances. 

Dont Give the IRS Every Last Drop

By Lance Wallach

Have you seen the commercials where certain companies advertise that they can settle an IRS debt for “pennies on the dollar”? Usually the offer is too good to be true. Besides, you never want to have the problem in the first place.

The chances of an individual being audited have approximately doubled since 2000. So you need to be careful with your tax return.

IRS officials say research has shown that tax “noncompliance” typically is highest among people who work for themselves, who deal in large amounts of cash, who don’t have taxes withheld from their pay and whose income isn’t reported separately to the IRS, such as by their employer.

Dont Give the IRS Every Last Drop

Lance Wallach -

IRS Secrets You Should Know by Lance Wallach

Before you buy you should know section 79 Plan history

Section 79 Scams and Captive Insurance HistoryWhen trying to understand how a product becomes a target of government scrutiny it helps to know its history. 
In the case of plans that fall under Internal Revenue Code Section 79, that history is complex.

Insurance companies, agents, financial planners, and others have pushed abusive 419 and 412i plans for 
years. They claimed business owners could obtain large tax deductions. Insurance companies, agents and 
others earned very large life insurance commissions in the process. Eventually, the IRS cracked down on the 
unsuspecting business owners. Not only did they lose the tax deductions, but they were also fined, in addition 
to being charged penalties and interest. A skilled CPA with extensive IRS experience could usually eliminate 
the penalties and reduce the fines. Most accountants, tax attorneys and others have been unsuccessful in 
accomplishing this.

After the business owner was assessed the fines and lost his tax deduction, he had another huge, unforeseen 
problem. The IRS then came back and fined him a huge amount of money for not telling on himself under IRC 
6707A. If you participate in a listed or reportable transaction, you must alert the IRS or face a large fine.  In 
essence, you must  alert the IRS if you were in a transaction that has the possibility of tax avoidance or 
evasion. Not only must you file Form 8886 telling on yourself, but the form needs to be filed properly, and 
done every year that you are in the plan in any way at all, even if you are no longer making contributions. 
According to IRC 6707A Expert Lance Wallach, "I have received hundreds of phone calls from business 
owners who filed Form 8886, usually with the help of their accountants or the plan promoter. They got the fine 
for either improperly filing, or for making mistakes on the form."

"The IRS directions about preparing the form are vague, especially if the form is filed late. They presume a 
timely filing. In addition, many states also require forms to be filed. For example, if you work in New York State 
and manage to properly fill out the Federal form, but do not file the State form, you may still get fined," says 
Wallach, adding that he only knows of two people that know how to properly prepare and file the forms, 
especially forms being filed late. As an expert witness in such cases, Lance Wallach’s side has never lost.

The result of the all of the above was many lawsuits against insurance companies, including Hartford, Pacific 
Life, Indianapolis Life, AIG, and Penn Mutual, to name just a few. Agents, accountants, and attorneys were 
also successfully sued.

Read the whole thing here

Investment News - Lance Wallach - 412i and 419 plan litigatation

       Investment News
    Five-year-old change in tax has left some small businesses and certain benefit plans subject to IRS fines; the advisors who sold these plans may pay the price.

    Financial advisors 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, advisors 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 advisors 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 advisors who sold these plans to small businesses 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 advisors 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 advisor 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 advisor, 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 advisors that sold these plans to them.
Investment News - Lance Wallach - 412i and 419 plan litigatation IRS Secrets You Should Know eBook: Lance Wallach: Books

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 Trap.
"Mr. Wallach, thanks so much for taking the

time to talk to me about VEBAs.

Any information you can send me would be

helpful. Hopefully, we can work together in

the future as interest in VEBAs increase."
Corman G. Franklin

Office of the Assistant Secretary for Policy

U.S. Department of Labor

Protect your clients – and yourself – from all kinds of financial chicanery and stupidity with this vital new book
It doesn't matter if a financial error was made because of malice or ignorance – the end result is that you lose money. Luckily, you don't have to sit idly and take it. If you have Protecting Clients from Fraud, Incompetence and Scams, you can identify and avoid the dysfunctional sectors of the financial industry, steer clear of the fallout from the Madoff Era, and guide your clients to real, healthy, sustainable returns. This powerful book
  • Pinpoints dysfunctional sectors within the financial industry and offers advice against frauds and scammers
  • Shows how a team approach to asset management can ward off financial predators
  • Offers practical strategies and tools to combat client risk for Risk and Asset Management
Offering insightful information to protect your clients from all sorts of frauds and incompetence, this essential guide equips you with tips and techniques to spot the red flags of fraud and prevent it before it starts.

IRS Secrets You Should Know


Tax, Insurance, and Cost Reduction Strategies for Small Business

Just one of these ideas from the book will save you thousands:

IRS red flags and how to audit proof your tax return

Why your retirement plan is an audit target: how to upgrade it

The only way to deduct estate and business succession plan costs

Turn your life insurance into a tax deduction

Reduce health insurance, workers’ comp and other insurance costs

Discover the only deductible benefit plan where money comes out tax free, even before retirement

Protect assets from creditors while obtaining a tax deduction

Why the IRS has turned your accountant into a tax collector, and what to do about this

Seven best new tax reduction ideas

Use a captive insurance company to reduce taxes and costs

And much more!!!

Books can be purchased here Lance Wallach: Books, Biography, Blog, Audiobooks, Kindle

The Irrevocable Trust Cash Release Program -

The Irrevocable Trust Cash Release Program

     By Lance Wallach, CLU, CHFC 

Through a special program, created by Money Watch Consultants Inc., called The Irrevocable Trust Cash Release Program, funds from the insured’s irrevocable trust can be released and made available to pay for long term care, in a facility or at home. And this care can even be provided by a family member.

The amounts of funds that can be made available are typically a vast multiple of the funds currently in the trust. Despite the leveraging, due to the unique structuring of the program, the funds in excess of the initial deposits, and prior to the death of the insured, are received by the trust, and paid out of the trust, on a tax free basis.

This program has recently attracted much attention because Congress has just extended estate tax exemptions to 5 million dollars for individuals and 10 million dollars for married couples. Thus many people who have set up and funded various irrevocable trusts in order to pay their estate taxes, feel that they are no longer needed.

This program gives them the ability to dramatically leverage these funds to pay for health care that they anticipate may eventually be required, without worrying about liquidating assets or making withdrawals on retirement accounts.

The latest development in irrevocable trust management can solve the insured’s desire to get, tax free cash out of the underused insurance policy when most needed, and prior to dying.

Through a special legal loophole, needed funds from the insured’s irrevocable trust can be released and made available to whoever you want, including yourself. Lance Wallach, who wrote the CPA's guide to trusts and estates, and other continuing education books read by CPA's attorneys and financial planners and associate William Kaufman have spent years studying the problem... Most life insurance trusts are underperforming, often requiring [Bill Kaufman] much greater premiums than anticipated. If they were properly designed, no more premiums would be due. Many policies in trusts are rapidly using up their insurance cash values, dramatically underperforming, and are at risk of failing altogether. There are many other problems with almost all of the trusts examined. If you advised your client on these matters, or serve as trustee for him/her, you may have a contingent liability suit on these matters, should the life insurance fail.

Now cash can be released to be used when really needed. Most attorneys, CPA’S, planners etc. that have heard me speak at thousands of national conventions don’t have a clue about the problems. Most of them even created some of these problems for their clients, who are also not aware. As an expert witness Lance Wallach has never lost a case. This does not necessate a lawsuit, just a simple fix. Make sure if you advisor tries it, he has successfully helped others with the program. If done wrong the IRS will come calling, Google Lance Wallach for articles on point. Despite the leveraging, due to the unique structuring of the program, the funds in excess of the initial deposits, and prior to the death of the insured, are received by the trust, and paid out of the trust, on a tax free basis.

If you have an insurance or similar trust you probably have lots of money in it. You may also have lots of problems that will not be discovered until you die. We have been consulted by many beneficiaries with these problems, usually after being charged thousands of dollars by their law firms to tell them about the problems, but not fix them. The way most of the trusts that we have studied, usually set up by law firms, are structured; the big beneficiaries at death will be the law firms. Worse, insurance in the trusts easily falls apart before death, unless you die young. Get an experienced person to review your trust, either to free up lots of money, or to review for problems before it is too late. [Bill Kaufman] If you don‘t [Bill Kaufman] believe me, than Google Lance Wallach and then Google your advisor and see who is more credible. You have worked hard for your money. Don‘t let poor planning, lawyers greed, insurance agents with big commissions disrupt what you thought was sound planning.

ABOUT THE AUTHOR: Lance Wallach, Bill Kaufman

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. He does expert witness testimony and has never lost a case.

Copyright Lance Wallach, CLU, CHFC

More information about 

How to Beat the IRS

Go to this blog to find helpful advice, articles, and contacts that will assist you with all problems dealing with Life Insurance, section 79 problems, Captive Insurance Plans, and 419 Welfare Benefit Plan Audits.  This blog also has in depth information about Offshore accounts and form 8886 listed transactions. 

Click the link to go to the blog: How to Beat the IRS