October 2010
By Lance Wallach

The bill reducing fines for improperly or not filing under 6707A has passed. That sigh of relief you heard last week might have come from
people participating in the plans named above, or anything seeking tax relief that is similar to them – what the IRS calls a listed
transaction. People think that Congress bailed them out of trouble for participation in such transactions, and that the excessive fines that
were being imposed are now a thing of the past. While the situation is certainly better than it was for some people, and while I do not
want to rain on anyone’s parade, you are still in Disasterville, and the next to last bus out just left.

Consider this: The new legislation calls for MINIMUM penalties of $5,000 per person per year, and $10,000 for a business. That is
$15,000 per year if you are incorporated. So, if you have been in a plan since, say, 2003, you are looking at fines in excess of $100,000
before you even start to talk about how much of a tax benefit there has been.

Further fines would be seventy-five percent of the tax benefit derived from participation in the transaction. These are also applied each
year. The point is that you are looking at fines, in all likelihood, to some degree in the six-figure range.

You can possibly still avoid all this by properly filing form 8886 IMMEDIATELY with the IRS. Time is especially of the essence now.
You MUST file before you are assessed the penalty. For months the Service has been holding off on actually collecting from people that
they assessed because they did not know what Congress was going to come up with. But now they do know, so they are going to move
aggressively to collection with people they have already assessed. There is no reason not to now. This is especially true because the new
legislation still does not provide for a right of appeal or judicial review. The Service is still judge, jury, and executioner. Its word is
absolute as far as determining what is a listed transaction.

So you have to file form 8886 FAST; like NOW.  But you also have to file it RIGHT. The Service treats forms that are incorrectly filed
as if they were never filed. You get this fine for filing incorrectly or for not filing at all. The Statute of Limitations does not begin unless
you properly file. That means IRS can come back to get you any time in the future unless you file properly.
You must take care as to WHO prepares the form. Most accountants have no idea how to file these forms late. They will simply follow
the filing instructions, which presume a timely filing. If you did not file in a timely manner, you need someone who knows how to file the
forms late without incurring the penalty. This is an art. I know probably the only two people who have filed dozens of forms late, or
more, without anyone being penalized. They learned how by dozens of conversations with IRS personnel. I can put you in touch with
either or both of them, and they can help you.

I am sure that you agree that you may still be in trouble. If you thought that you were not, I am sorry if I brought you bad news. The
good news is better because you can still get out of it. All you have to do is call.

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 gives expert witness testimony and his side has never lost a case. Contact him at 516.938.5007, wallachinc@gmail.
com or visit www.taxadvisorexperts.org or www.taxaudit419.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
Benistar, SADI Trust,Beta 419,Millennium Plan,Bisys,Creative Services Group,Sterling Benefit Plan,Compass 419,Niche 419,CRESP,Sea Nine Veba, American Benefits Trust, National Benefit Plan and
Trust, ABT, Professional Benefits Trust,Benistar 419 Plan, Millennium 419 Plan,Bisys 419,Creative Services Group 419 Plan,Sterling Benefit 419 Plan,CRESP 419,Sea Nine Veba 419, National Benefit
Plan and Trust 419, American Benefits Trust 419,ABT 419,Grist Mill Trust, Penn Mont, Real Veba, United Financial Group,Kenny Hartstein,Millennium Plan,Kenny Hartstein,Millennium Plan,,captive
insurance,cresp,Ridge Plan, Professional benefits Trust,PBT,Dennis Cunning, Steve Toth, Michael Sonnenberg, Larry Bell, Scott Ridge, Randall Smith, Greg Roper, Tracy Sunderlage, Hartford 419e,
Pacific Life 419e, PAC Life 419e, AVIVA 419e, Indianpolis Life, Penn Mutual 419e,Bankers Life 419e, John Hancock 419e, Security Mutual 419e, Transamerica 419e,Prudential 419e, Kansas City
Life 419e, Mass Mutual419e, Guardian 41e9, Amerus 419e, Wells Fargo 419e, Fifth Third Bank 419e, Arrow Head Trust 419e,
Hartford 412i, Pacific Life 412i, PAC Life 412i, AVIVA, 412i, Indianpolis Life, Penn Mutual412i,Bankers Life 412i, John Hancock 412i, Security Mutual 412i, Transamerica 412i,Prudential 412i,
Kansas City Life 412i, Mass Mutual412i, Guardian 412i, Amerus 412i,
The New Law Guarantees A Substantial Fine
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