Captive Insurance & 419 Plans Litigation: September 2013

Captive Insurance & 419 Plans Litigation: September 2013

Offers in Compromise (IRS settlements)

Offers in Compromise (IRS settlements) are very difficult to get, but the IRS does grant them.
I put together this short questionnaire for taxpayers to use to determine whether or not they qualify for an IRS settlement.
Form 656 is the Offer in Compromise (Offer) form. On its face the form seems simple enough, but if you read the instructions carefully you will soon see that most of the work is in assembling and presenting detailed financial information in support of the Offer.
Far too many taxpayers have tried to file an Offer themselves only to get rejected for failure to comply with the instructions.
The IRS receives hundreds of thousands of Offers in Compromise each year, most of which do not comply with the instructions or are incomplete. A thorough Offer filed in compliance with the instructions stands out.
The proper initial filing of an Offer greatly increases the chances of IRS acceptance.
The Questionnaire
In deciding whether or not to pursue the Offer in Compromise option, you should ask yourself the following questions:
1. Are you in bankruptcy proceedings?
If so, the IRS cannot consider and will not accept your offer.
2. Are you current with all your tax returns?
The IRS will not consider an Offer in Compromise unless you are completely current with all of your tax filing requirements.
3. Are you paying taxes on your current income?
A condition of the Offer is that you are now complying with the tax laws. This means you must have the proper amount of taxes withheld from your paycheck and remitted to the IRS or, if you are self-employed, you must make your quarterly estimated tax payments.
4. Do you own assets having a value (after deducting encumbrances mortgages and secured loans) that is exceeds the amount you owe the IRS (including penalties and interest)?
If the answer is “yes”, you do not qualify for an Offer in Compromise based on doubt as to collectability.
Points to Remember
If after answering the above questions, you believe an Offer in Compromise might be right for you, remember the following:
The IRS Will Ask for Additional Financial Information after the Offer is Filed
You can count on the IRS making several requests for additional information and clarification of the information already provided. You must respond to these requests thoroughly and on a timely basis or the IRS will reject the offer.
You Must Pay a 20% Non-Refundable Down Payment on the Offer at the Time of Filing
Remember, when you first submit your Offer in Compromise (if it is based on doubt as to collectability) you must include 20% of the amount offered and the $150 dollar application fee. If your offer rejected, your money will not be refunded but the 20% will be applied to reduce your liability.
If an Offer is Worth Filing, it’s Worth Filing Properly: Seek the Advice of Experienced Tax Counsel
The Offer in Compromise is a complex document that must be completed carefully and thoroughly.
The IRS is not going to give up something for nothing. You have to prove that it is in the government’s best interest to accept your offer.
Use a CPA who was with the IRS, or a tax lawyer CPA.

 

Is filing a claim worth it if the value isn't that high?

Is filing a 

home or renters insurance claim worth it if the value isn't that high?  Items worth: ~$1500  Deductible: $1000

A few questions to ask yourself:

• Could this turn into a larger claim down the line?
• Am I willing to pay a higher premium if I make this claim?
• If I'm not sure if I'm going to make a claim for $500, would I be better off at a $1,500 or $2,500 deductible?

So here's the rub.  One claim isn't going to kill you and may not affect your premium at all.  You could lose any 'claims free discount' that some companies offer. 

If you have another big claim such as a water damage claim, you now have a severe claim and have a frequency of claims (2), so you may not qualify for the best rates anymore.  
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Also, keep in mind that many brokers will have to report your claim to the company even if you don't want them to because of the nature of their contractual relationship with the carrier.

Prevention:
Creating a spreadsheet along with when, where, and the cost of items is a great way to keep track of your household inventory.  There is also software that will do this for you and lets you scan in receipts and attach pictures (knowyourstuff.org).  By going room by room and listing everything, you will have a better case when speaking to adjustors.

Schedule any heirlooms onto the policy with a specific agreed value.  Also, you can raise the limit for jewelry by endorsement.

Also, here's 10 ways to discourage break-ins.

This blog was a combination of two questions I answered on Quora.  See my answer and others here:

Is it worth filing a stolen item claim against a home renters insurance when the value is not very high

How will my insurance company determine the value of my personal property after payoff after a fire

Tax Crimes - Is the IRS Coming to Get You? Lance Wallach, expert witness.

People who have money in other countries are a target of the IRS. I get a lot of phone calls with people who have these problems. 419, 412i, hiding money offshore etc. The IRS may be looking for you if you had anything to do with this. Tax crime attacks by the IRS are up almost 50% so you need to be careful. Last year IRS raided the offices of Benistar, Grist Mill Trust, Nova with about 50 agents and took all the files. If you did business with them the IRS will probably come to you.

The numbers are out and they aren’t good for people convicted of tax crimes. While the U.S. Department of Justice Tax Division has always enjoyed a very high conviction rate, many people convicted of tax crimes never went to jail. Not anymore. In 2001, the average tax offender received a sentence of 18 months. Now those sentences average 25 months.

The statistics are a bit misleading because a decade ago, half the people convicted never went to jail. The average sentence may have been 18 months but many folks got house arrest while others received sentences of several years. Now, those convicted are probably going to jail. In other words, not only has the average sentence increased but also so has the likelihood of receiving a prison sentence.

Sentences in federal criminal cases are governed by the United States Sentencing Guidelines. Although no longer binding on judges, they are the court’s starting point and most judges’ stay within guidelines.

The sentencing guidelines attempt to account for a wide range of factors including one’s criminal history, whether the defendant used “sophisticated means” to carry out the crime and whether the defendant took early acceptance of responsibility for his or her actions. For tax cases, the guidelines also look at “relevant conduct” tax loss. The higher the tax loss, the longer the recommended sentence.

The current guidelines impose suggest stiff penalties for tax crimes and many judges now believe that house arrest is not a strong enough deterrent to insure voluntary compliance.

What does this mean for people with tax problems? Plenty.

First, if you know you have a problem, don’t bury your hand in the sand. The IRS operates on a “first contact” basis. That means if you come clean before you are caught, criminal penalties can generally be avoided.

Second, if you are indicted and convicted, it pays to have a lawyer with extensive federal criminal tax appearance. Adjustments to the sentencing guideline calculations often can mean the difference between prison and freedom. Although there are many good lawyers that can negotiate a fair plea agreement, the final sentence is up to the court. Mastery of the federal sentencing guidelines and the thousands of court cases interpreting those guidelines separates great criminal tax lawyers from the rest of the pack.

As an expert witness Lance Wallach's side has never lost a case. People need to be careful of 419 Welfare Benefit Plans, 412i plans, Section 79 plans and Captive Insurance Plans. Most of these plans are sold by insurance agents. If you are in an abusive, listed or similar transaction plan you need to file under IRS 6707a. The participant files form 8886, and the salesmen or accountant who signs the tax returns files form 8918 if they got paid over $10,000. They are called Material Advisors and face a minimum $100,000 fine. Some plans are offshore which could involve FBAR or OVDI filings. If you have money overseas you probably need to file for IRS tax amnesty. If you want to reduce the tax we suggest that you first file and then opt out. For more information Google Lance Wallach.

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

4 Things to Think about Before Subleasing your Commercial Space

Why Subleasing Complicates Your Liability

Leasing part of your space can be a great way to make a little extra money for space you are not using.  It helps pay the rent, complimentary businesses could lead to referrals, and it could lead to great personal or professional relationships.  However, you could be putting you and your business at risk.  

Here are some liability points to consider:

Your Landlord Doesn't Care if Its the Sub-lessors' Fault

1. Your agreement between you and the landlord are between the land lord and you.  Unless the person subleasing is specifically named in the lease, the landlord is not responsible for any agreed terms to the subleased entity.

Create your own lease (with help from legal counsel) between yourself and the tenant just as if you were the landlord.  Require in the lease that the sub-lessor has at least as much insurance as you have.  A waiver of subrogation saying that you are going to take care of your stuff and they are responsible for their stuff is a great standard clause to add.  

Beware of subleasing - Picture by Josh Ulfers

Your Insurance Company Doesn't Care if its the Sub-Lessors' Fault

2. You need to tell the insurance company that you are subleasing space.  The entity you sublease to should have its own insurance and name you as an Additional Insured.  By doing that you gain protection on the sub-lessors policy if the sub-lessor has a claim that is his fault.  Without the sub-lessor having his own policy, your insurance company could even deny a claim stemming from an action from your sub-lessor.

Your Business Income Doesn't Include Rental Income

3. Making $5,000/month from leasing part of your space?  If business income from renting isn't explicitly added to your policy, then you won't be paid for that income in case of a covered loss.  It's inexpensive, but often overlooked on most business owner policies.

You Could be in Violation of your Lease
4. Make sure that your lease doesn't have a clause that prohibits sub-leasing.  In most cases it is best to talk with your landlord before making any subleasing decisions.  Violating your lease could put you in jeopardy of eviction or hefty penalties.

Talk to your landlord, commercial real estate broker, and your insurance agent before making any subleasing arrangements.

This blog article is not a substitute for professional legal advice. This answer does not create an insurance agent-client relationship, nor is it a solicitation to offer legal/insurance advice. If you ignore this warning and convey confidential information in a private message or comment, there is no duty to keep that information confidential or forego representation adverse to your interests. Seek the advice of a licensed insurance agent in the appropriate jurisdiction before taking any action that may affect your rights.  

UK Car Insurance - The Top 10 Cheapest Cars To Insure

The cheapest cars to insure

The type of car you drive is likely to have a big effect on the price of your car insurance – find out which cars are the cheapest to insure and why There is no definitive cheapest car insurance in the UK, so finding the best deal depends on a range of factors – namely, the vehicle. While common sense tells us it costs less to insure a Fiesta than a Ferrari, the value of your vehicle isn’t the only factor involved in determining car insurance cost – scroll down to see ten of the cheapest cars to insure:

1. Chevrolet Spark
Cheap to buy and decent for safety, the Chevrolet Spark makes up for what it lacks in performance with its cheap car insurance rate.

2. Citroen C1
The C1 is cheap to run, while servicing costs are also reasonable. Some Citroën deals also come with one year’s free insurance to appeal to young drivers and first-time car buyers.

3. Fiat Panda
Boasting a super-efficient engine, the pocket-sized Panda is a practical city car with low running costs across all models.

4. Vauxhall Corsa Hatchback
Popular with young drivers for well over a decade, the Corsa is a sensible and reliable supermini – all models from 2006 onwards appear in car insurance group 1.

5. Volkswagen Fox and Up
Originally designed as a Brazilian city car, the Fox is cheap to run and offers good fuel economy. Its successor, the Up, won What Car? ‘Car of the Year’ for 2012.

6. Ford Fiesta and Ka
The new Ford Fiesta is officially the UK’s best-selling car, and both the Fiesta and Ka can be found in car insurance group 2, making them the cheapest Ford cars to insure.

7. Nissan Pixo
A collaboration between Nissan and fellow Japanese manufacturer Suzuki, the Pixo is cheap to buy and comes with extremely low running costs.

8. Peugeot Partner Tepee 
The Partner Tepee is a compact and durable people carrier that’s only slightly bigger than an average hatchback. Maintenance costs are low and it generally only needs servicing every two years.

9. Skoda Fabia Hatchback and Estate
Part of the Volkswagen group, the Fabia Hatchback and Estate are both in car insurance group 2 as a result of their low prices and solid engineering.

10. Smart Fortwo Coupe and Cabriolet
Smart cars are renowned for being able to squeeze into tight spaces and are often attract cheap car insurance, though servicing and parts can be expensive.

Car insurance groups – how do they work?

Every car on the market belongs to one of 50 car insurance groups set by the Group Rating Panel (members of the Association of British Insurers and the Lloyds Market Association).
Typically, the lower a car’s group number, the cheaper it will to be to insure – for example, cars within groups 1-5 are far more likely to attract the cheapest car insurance. Insurers can also use their own grouping system if they want.
When the panel decides on which car insurance groups to assign cars to they look at:

• Car performance: the car’s acceleration and top speed
• Car security: what security features the car has
• Cost of parts: the cost of 23 of the most common parts
• Maintenance: how much and how long the car takes to fix
• Car value: the price of the car as new

West Virginia Car Insurance

West Virginia Car Insurance: Simple WV Auto Insurance Guide

It is mandatory for car owners to have car insurance in the state of West Virginia. You also need to carry a proof of car insurance while driving in WV. The Tort system is followed in the state of West Virginia, which means that the driver of the car is financially responsible for damage to property and injuries caused to any other party due to his/her negligence or fault.

The minimum liability coverage required to satisfy this responsibility is often referred to as 20/40/10: $20,000 to cover the expenses for bodily injuries per individual, $40,000 to cover for bodily injuries caused to all, and $10,000 to cover for property damage to the victim.

A minimum Uninsured/Underinsured Motorist coverage of $25,000 per individual to a total of $50,000 per accident for bodily injuries caused by an uninsured/underinsured driver's negligence is also required in West Virginia.

If you require further information on WV auto insurance policies, you can contact West Virginia Offices of the Insurance Commissioner by calling 1-888-TRY-WVIC or by visiting their website at http://www.wvinsurance.gov.

It is recommended to first get free quotes to see what’s available to you before you select and purchase a policy. A car insurance policy is something which every driver needs. Car drivers also want the premiums to be affordable. Therefore, we have a complied an easy to follow tips to get cheap insurance quotes in the state of West Virginia.

Credit Score

You can get cheap insurance quotes from car insurance companies by keeping your credit history clean. Insurance companies decide the rate of your policy by checking your credit history. This is available via credit scoring agency who provide this data to most financial institutions. If your history is not satisfactory, it is recommended you find companies that do not resort to credit checks.

Driving Courses

You can get cheap insurance quotes by taking driving courses. Insurance companies believe that drivers who have taken a specialized driving course, such as defensive driving are safe drivers and less likely to get into an accident.

Combine Car and Home Policies

You can obtain a discount by buying your home and car insurance from the same company. A 5-20% discount is offered for a combined policy.

Security System In your Car

Cars insurance companies offer discounts on cars that are less likely to be stolen. Many pay more for their auto insurance simply because the car module they drive is on the top stolen vehicles in their states or in U.S.

Comprehensive Storage Cover

It is recommended to keep just the comprehensive coverage if you’re not planning to use your car for a long time. If a car is not used often, it will not need liability coverage, as it is less likely to get into an accident.

Location and Miles Per Year

Your address is an important factor in on your insurance rate will be. If you live in an area when low crime rate, you can get your a cheap insurance quote. It is also recommended that you move near your workplace or college/school to reduce the mileage of the car. Cars that have ‘traveled less’ are given discounts by insurance companies.