419, 412i, and Captive Insurance and Section 79 Problems
Sometimes the IRS might disagree with planning you did with other advisors and you need to find help to ensure that your rights are protected, the facts are interpreted accurately and the law applied correctly.Lance Wallach is among the few in this country who fully understand the mechanics and legal issues surrounding what has become known as “419 Plans,” 412i plans, captive insurance and section 79 programs. He wrote the book, that others read for CPE on these subjects. For that reason taxpayers throughout the country seek his services in dealing with the Internal Revenue Service in audits, appeals and in the Tax Court with his associates. As an expert witness Lance Wallach's side has never lost a case. Sometimes it is easy to get your money back with a letter.
TOM S. LEE, District Judge.
This cause is before the court on the motion of defendants Williams Coulson, Attorneys at Law, and Michael E. Lloyd, individually, to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, to dismiss based on improper venue pursuant to Rule 12(b)(3) and 28 U.S.C. § 1406, or alternatively, to transfer to the state of Pennsylvania pursuant to 28 U.S.C. § 1404(a). Plaintiffs Dr. Vibha Vig and Dr. Vibha Vig, M.D., P.A., have responded to the motion and the court, having considered the memoranda of authorities, together with attachments, submitted by the parties, concludes that the motion should be denied.
Plaintiffs, residents of Mississippi, filed this action alleging various breach of contract and fraud-based claims and seeking to recover damages stemming from their participation in a Xelan, Inc. Welfare Benefit Trust (WBT). Plaintiffs allege that they were contacted by Xelan, a California company, both directly and through Xelan's local agent, Steve Spencer, and were induced to invest in the Xelan WBT by false and misleading representations. More specifically, plaintiffs allege that defendants misrepresented that the Xelan WBT was a viable tax shelter investment and concealed from plaintiffs the fact that the Xelan WBT was merely an illegal tax-avoidance scheme. Plaintiffs allege that as a result of defendants' actions, they lost all of their contributions, totaling $143,500, and are subject to paying taxes, interest and penalties to the IRS.(1)
As is pertinent to the present motion, the complaint alleges that defendant Michael Lloyd, a member of the Pennsylvania law firm of Williams Coulson, participated with Xelan in marketing the Xelan WBT by generating an opinion letter which falsely represented that the Xelan WBT was a welfare benefit fund within the meaning of Code Section 419(e)(1) and entitled to tax deductions. Plaintiffs claim they relied, in part, on the Lloyd/Williams Coulson letter in deciding to participate in the Xelan WBT, and charge that "[e]ither
Watch Out Because the IRS is Watching 419 Plans
A business owner wants legitimate tax planning ideas. One solution sometimes offered today is a 419(e) plan (419 Welfare Benefit Plan). The local insurance agent or the company’s CPA who may have an insurance sales license, may suggest that the 419 Welfare Benefit Plan will provide shelter from taxes today, the costs of the plan are tax deductible and the plan will provide tax free benefits for the owner when he or she is ready to retire. The concept seems too good to be true.Watch out because the IRS is watching, and it often says that the plan is too good to be true.A 419 Welfare Benefit Plan is generally a plan set up in the form of a trust to provide certain benefits to the employees of a company. You will notice that the term trust is used because the large whole life insurance policies that the owner is instructed to buy go into a trust where neither the company nor the business owner actually owns them. The trust owns the policies.
Can You Recover Money From 419 and 412i Plans?
Welfare Benefit Plan Fraud: What Remedies Are Available? If you’ve been the victim of a 419 Welfare Benefit Plan scheme and now find yourself owing the Internal Revenue Service (IRS) taxes on something you were told was going to be tax deductible, it’s important to know what remedies might be available to you. Remedies for abusive tax shelter schemes Lance Wallach says that there are remedies for those who have been injured by an insurance company’s abusive tax shelter schemes. He predicts that we’ll see a huge spike in the number of people getting audited by the IRS.
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