Business Owners and Their Accountants to be Fined for 412i and 419 Plan Participation

by Lance Wallach

For those who participated in a 419 welfare benefit plan or a 412i retirement plan or other abusive tax shelter as well as those who prepared and/or signed a tax return for someone who did participate in such a plan, the information that follows is critical. 

Participants probably did not properly file with either the IRS or the Office of Tax Shelter Analysis, as required by IRC Section 6707A, or with their state. Non-filed or incorrectly filed forms mean the Statute of Limitations is open, and participants will probably be fined $200,000 or a lot more. 

In July I started receiving a lot of phone calls from business owners who are being advised that the IRS is considering asserting penalties provided under Internal Revenue Code 6707A for not adequately disclosing a listed transaction. If plan participants have not yet gotten the letter, they will shortly. 
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