Lance Wallach"  

Managing Director

"Lance Wallach" is a frequent and popular speaker on "retirement plans, financial and estate planning, "reducing health insurance costs, and tax-oriented strategies at accounting and "financial planning conventions. Mr. Wallach has written for numerous publications including the AIPCA Journal of Accountancy, AICPA Planner, Accounting Today, and Employee Benefit News. Mr. Wallach is listed in Who’s Who in Finance and Industry and has been featured on television and radio financial talk shows.
Our team helps clients with the following "tax resolution services":
  • "IRS appeals"
  • "Tax Audit Defense"
  • "Business Tax Audits"
  • "Expert Witness Testimony"
  • "Form 8886 Help", Compliance, and "Listed Transactions"
  • "6707A Help"
  • "Circular 230" Issues
  •  Help for "Material Advisors"
  • "IRS Offer In Compromise"
  • "Unfiled Tax Returns"
  • "419 Plan Help"
  • "412i Plan Help"
  • All Other "IRS Tax Problems"
  • Promotion Advice

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All you wanted was a nice retirement.
Now all you see in your future is:

IRS Penalties, Fraud, Scams, Fines,

Lawsuits and Audits.

If you are in a 412i retirement plan or a 419 welfare benefit plan and got a letter from the IRS, your financial future may be in serious jeopardy.

Many of these plans were not in compliance with the law and are considered "abusive tax shelters". Some business owners are not even aware that they could be facing huge "IRS penalties" for each year that they have been in such a plan.

You may need to sue to get your money back; you may be the one getting sued. You may need help handling the IRS, or need help keeping the IRS from handling you. Whatever the predicament, we are here to help.




For expert advice regarding:

  • SADI Trust
  • Professional Benefits Trust PBI
  • Sea Nine Veba
  • Bisys
  • The Beta Plan
  • The Millennium Plan
  • Niche
  • The Ridge Plan
  • The Compass Welfare Benefit Plan
  • Section 79 Plans
  • Captive Insurance
  • Other similar 412i retirement plans and 419 welfare benefit plans

Call Today For Advice And Assistance 516-938-5007
or visit TaxLibrary.US or TaxAudit419

Find specific articles and additional trusted websites for your research:

Uncommonly Clever Economic Indicators_

Denim Sales

Denim offers a dependable take on the economy, says Marshal Cohen, chief industry analyst at NPD Group, a market research firm. Reason: Jeans are a relatively cheap investment and one of the first things consumers buy when the economy starts to bounce back. 

There is no simple answer to how much coverage is enough.

Some financial planners say you need enough insurance to replace five to seven years of your salary. If you have young children or significant debt, you should bump up your coverage so you have enough to replace as much as 10 years of your salary, they say. That would mean a person making $50,000 a year should have anywhere from $250,000 to $500,000 worth of coverage or more.

Remember, the sole purpose of life insurance is to replace your income in case you die, so that your dependents can maintain their current lifestyle.

Factors to consider include whether the surviving partner will have child care expenses if one partner is out of the picture. Do you have other assets on which to draw? Will your children be out of the nest soon? These, and many other factors, influence the decision on how much coverage you need.

California Broker June 2011                          Breaking News!


Employee Retirement Plans

By Lance Wallach

412i, 419, Captive Insurance and Section 79 Plans; Buyer Beware


The IRS has been attacking all 419 welfare benefit plans, many412i retirement plans, captive insurance plans with life insurance in them, and Section 79 plans.  IRS is aggressively auditing various plans and calling them “listed transactions,” “abusive tax shelters,” or “reportable transactions,” participation in any of which must be disclosed to the Service.  The result has been IRS audits, disallowances, and huge fines for not properly reporting under IRC 6707A. 

In a recent tax court case, Curico v. Commissioner (TC Memo 2010-115), the Tax Court ruled that an investment in an employee welfare benefit plan marketed under the name “Benistar” was a listed transaction.  It was substantially similar to the transaction described in IRS Notice 95-34.  A subsequent case, McGehee Family Clinic, largely followed Curico, though it was technically decided on other grounds.  The parties stipulated to be bound by Curico regarding whether the amounts paid by McGehee in connection with the Benistar 419 Plan and Trust were deductible.  Curico did not appear to have been decided yet at the time McGehee was argued.  The McGehee opinion (Case No. 10-102) (United States Tax Court, September 15, 2010) does contain an exhaustive analysis and discussion of virtually all of the relevant issues. Read more here

Get Sued

June 2011

The IRS is cracking down on what it considers to be abusive tax shelters. Many of them are being marketed to small business owners by insurance professionals, financial planners and even accountants and attorneys. I speak at numerous conventions, for both business owners and accountants. And after I speak, I am always approached by many people who have questions about tax reduction plans that they have heard about. Below are the most common 419 tax reduction insurance plans. 

These come in various versions, and most of them have or will get the participant audited and the salesman sued. They purportedly allow the business owner to make a large tax-deductible contribution, and some or all of the contribution pays for a life insurance product. The IRS has been disallowing most versions of these plans for years, yet they continue to be sold. After everyone gets into trouble and the insurance agents get sued, the promoters of the abusive versions sometimes change the name of their company and call the plan something else. The insurance companies whose policies are sold are legitimate companies. What usually is not legitimate is the way that most of the plans are operated. There can also be a $200,000 IRS fine facing the insurance agent who sold the plan if Form 8918 has not been properly filed. I've reviewed hundreds of these forms for agents and have yet to see one that was filled out correctly. 


When the IRS audits a participant in one of these plans, the tax deductions are lost. There is also the interest and large penalties to consider. The business owner can also be facing a $200,000-a-year fine if he did not properly file Form 8886. Most of these forms have been filled out improperly. In my talks with the IRS, I was told that the IRS considers not filling out Form 8886 properly almost the same as not filing at all. 

412(i) retirement plans 

The IRS has been auditing participants in these types of retirement plans. While there is generally nothing wrong with many of the newer plans, the IRS considered most of the older abusive plans. Forms 8918 and 8886 are also required for abusive 412(i) plans. 

I have been an expert witness in a lot of these 419 and 412(i) lawsuits and I have not lost one of them. If you sold one or more of these plans, get someone who really knows what they are doing to help you immediately. Many advisors will take your money and claim to be able to help you. Make sure they have experience helping agents that have sold these types of plans. Don't let them learn on the job, with your career and money at stake.


Do not wait for IRS to come and get you, or for your client to sue you. Time is of the essence. Most insurance professionals need help to correct their improperly completed Form 8918 or to fill it out properly in the first place. If you have not previously filled out the form it is late, and therefore you should immediately seek assistance. There are plenty of legitimate tax reduction insurance plans out there. Just make sure that you know the history of the people with whom you conduct business. 

Remember, if something looks too good to be true, it usually is. Be careful. 

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. Contact him at 516.938.5007 or visit www.vebaplan.com.

The information provided herein is not intended as legal, accounting, financial or any other type of advice for any specific individual or other entity. You should contact an appropriate professional for any such advice.

How to Avoid IRS Fines for You and Your Clients


Published: 2010/2011

By Lance Wallach

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.”

If your client was currently is in a 412(i), 419, captive insurance, or Section 79 plan, they may be in big trouble. Accountants who signed a tax return for a client in one of these plans may be what the IRS calls a “material advisor” and subject to a maximum $200,000 fine.Read more here

Offshore International Today                                          Aug 2011                                                                              

FBAR Offshore Bank Accounts and Foreign Income Attacked by IRS

By: Lance Wallach


You may want to think about participation in the IRS’ offshore tax amnesty program (called the Offshore Voluntary Disclosure Initiative). Do you want to play audit roulette with the IRS?  Some clients think they are too small to be prosecuted. They are wrong.

To the average businessperson, only the guys with tens of millions secretly stashed in Swiss bank accounts get prosecuted. Don't tell that to Michael Schiavo. He was just prosecuted for hiding money in a Swiss account back in 2003. How much money does the IRS say he hid? A whopping $90,000. That’s it.

But wait, there is more to the story. Schiavo attempted to do a quiet disclosure during the 2009 amnesty but instead of filling out the amnesty paperwork, he simply trusted that by coming forward voluntarily he could avoid criminal prosecution. He was wrong on all counts. Nothing is too small for the IRS, and nothing is too old.

“So, to save a whopping $40,624 in taxes, this guy risked a felony conviction and prison time, not to mention steep penalties that could very easily eat up the entire $90,000, and also his criminal and civil defense costs.

 The smart taxpayers are the ones coming forward and not having to look over their shoulders for the next 10 years.

Time is running out. The tax amnesty runs through August but it takes at least days to jump through all the hoops. We will also fight hard to reduce the penalties down even more. Remember, the IRS can go as low as 5%. Don’t want this to happen to you? Visit www.taxadvisorexpert.com today!

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. Contact him at 516.938.5007 or visit www.vebaplan.com.  

The information provided herein is not intended as legal, accounting, financial or any other type of advice for any specific individual or other entity. You should contact an appropriate professional for any such advice.

Should you File, and then Opt Out?


Announced February 8, 2011, the IRS 2011 Offshore Voluntary Disclosure Initiative (OVDI) program is a welcome but conditional amnesty allowing taxpayers with foreign accounts to come clean and get into compliance with the IRS.  The program runs through Sept.  9, 2011.


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.


Under the OVDI, taxpayers are subject to a penalty of 25 percent of the highest aggregate account balance on their undisclosed account(s) between 2003 and 2010.  If the value was less than $75,000 at all times during those years, the penalty is only 12.5 percent.

These account balance penalties are in lieu of all other penalties that may apply, including FBAR and offshore-related information return penalties.  Plus, participants are required to pay taxes and interest on any monies (such as interest income on foreign accounts) they previously failed to report.  Finally, they must pay an accuracy-related penalty equal to 20 percent of the underpayment of tax, plus interest.

Opting out of the program can make sense for some, though it involves taking your chances with an IRS examination. Someone should represent you with extensive experience in this. We always suggest they should at least be a CPA with years of experience in international tax. It’s even better if you use one that was with the international tax division of the IRS for a number of years. The IRS has published a separate guide detailing the rules and procedures for opting out. 

Here are some of the rules: 

1.      IRS Summary.  The IRS employee who has been handling your case summarizes it, agreeing or disagreeing with your view of penalties, and listing how extensive an audit he or she recommends.

2.      Program Status Report.  Before you can opt out, the IRS sends a letter reporting on the status of your disclosure and what you still must submit.  If you’ve given enough data, the IRS will calculate what you would owe under the OVDI.  You should provide any missing items within 30 days.

3.      Taxpayer Submission.  Within 20 days, the taxpayer opts out in writing and makes a written case what penalties should apply and why. 

4.      Central Committee.  A Committee of IRS Managers reviews the summary and decides how extensive an audit to conduct.  The IRS says “the taxpayer is not to be punished (or rewarded) for opting out.”   The Committee also decides whether to assign your case for a normal civil audit or to assign it for a criminal exam. 

5.      Written Warning.  The IRS sends another letter explaining that opting out must be in writing and is irrevocable.  You have 20 days thereafter to opt out in writing.

6.      Interview?  Some audits will include taxpayer interviews.

Bottom Line?  The “opt out” procedure is helpful but still a bit daunting.  If you are considering it, make sure you get some solid advice from an experienced person who, in my opinion, should have worked for the IRS and is a CPA about the nature of your case. This is just one of the many options that should be discussed with your advisor. There are many other strategies that you may want to utilize. Your advisor should be aware of all your options, and should explain them. If not, consider engaging someone else. Remember, the penalties can be very large, especially if your advisor is not skilled at this. There is even the potential for criminal prosecution.  See taxadvisorexpert.com for the latest information in this area or to contact one of our professionals today.


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, international tax, and other subjects. He writes about FBAR, OVDI, international taxation, captive insurance plans and other topics. He speaks at more than ten conventions annually, writes for more than 50 publications, is quoted regularly in the press and has been featured on television and radio financial talk shows including NBC, National Public 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 the 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, lawallach@aol.com,lanwalla@aol.com or visit www.taxadvisorexpert.com.


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.



The Team Approach to Tax, Financial and Estate Planning.


by Lance Wallach



CPAs are the best and most qualified professionals when it comes to serving their clients needs, but they need to know when and how to coordinate with other experts.


Over the last twenty years we have worked with thousands of practitioners who have decided to add financial services to their practices. They do it for a variety of reasons, but the most common are as follows:



*They don’t want to refer their client elsewhere when they request financial services.


* They want to remain competitive.


*They want to diversify and increase their revenue as opposed to depending solely on tax and accounting revenue.

Click here to read full article.

Plan Administrators Frustrated with IRS Attacks on 412i, 419e Plans

IRS Auditing 412(i) Plans

Our tax resolution offices have received calls regarding the following companies or plans: CJA, CJA and Associates

Section 79, captive insurance, 412i, 419, audits, problems and lawsuits

Taxpayers who previously adopted 419, 412i, captive insurance or Section 79 plans are in
big trouble. To Read More:http://wallacharticles1.blogspot.com/

Notice 2007–84 Notice to all that 419 plans are abusive

The arrangements described in this notice involve
purported welfare benefit funds that,
in form, provide post-retirement medical
and life insurance benefits to employees on
a nondiscriminatory basis, but that, in operation,
will primarily benefit the owners
or other key employees of the businesses. To Read More Click Below:


The Process Of Submitting Section 79 Business



After an Agent has attended a Section 79 training and signed a Marketing Agreement; The Business Planning Group will e-mail the agent  a blank census, Section 79 coverage options, Section 79 case check list, Section 79 TPA services and other Why choose Section 79 materials. The Business Planning Group will also mail the Agent the Section 79 Sales Book and Advisor Brief to give you a quick reference guide to Section 79. 

The process of Submission for Section 79 New Business:

1-       Agent has filled out a blank census on prospective client and faxed/e-mailed it to The
           Business Planning Group 24-48 hours prior to meeting with prospcted client.

2-       The Business Planning Group runs the prospective case and e-mails the agent:

a.       Client Analysis

b.       Client Illustration

c.       Prospective Business Census

d.       Hold Harmless Forms

e.       Client Administrative Fee

f.        Client Adoption Agreement

g.       Employee Benefit Election Form

3-       Agent sells Section 79

4-       Agent sends originals/color copy of applications to The Business Planning Group

5-       The Business Planning Group stamps, codes and submits the Section 79 New Business

6-       The Business Planning Group will e-mail Agent and inform them when their application
           was submitted, National Life’s Contact information and a policy number when available. 



This sales pitch does not discuss that ITS audits these plans and then you pay large fines.


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.