The Internal Revenue Service (IRS) says that 412(i) pension plans are reportable transactions and participants must file Form 8886 or face hundreds of thousands of dollars in fines. Unfortunately, it's forced many of the small companies in high tax brackets who unknowingly participated in these tax shelter retirement plan schemes to file for bankruptcy. IRS says report it – or else s, an insurance expert on 412(i) pension and 419 welfare benefit plans, says that in 2004, the IRS came out and said that these were reportable transactions and that if you were involved in them, you must report it by filing a specific form – IRS Form 8886. So, where does the “or else” fit it? Burgess explained:
If you don’t file that form, then the penalty for not reporting the transaction to the individual participant is $100,000 a year for every year you don’t file. Corporations pay an additional $200,000 penalty per year for not reporting the transaction. I've spoken with people that had put $50,000 a year into these plans through their corporation. They didn’t report the transaction for three years, so now they owe in $900,000 in penalties to the IRS for a tax deduction that was only $150,000 total. I know of several business owners that have had to file for bankruptcy because the penalties are so large that there’s no way that they could pay them.
Read more: http://employment-law.freeadvice.com/employment-law/pensions_benefits/irs-says-412i-pension-plans-must-be-reported Under Creative Commons License: Attribution Follow us: @FreeAdviceNews on Twitter | freeadvice on Facebook
The Internal Revenue Service (IRS) says that 412(i) pension plans are reportable transactions and participants must file Form 8886 or face hundreds of thousands of dollars in fines. Unfortunately, it's forced many of the small companies in high tax brackets who unknowingly participated in these tax shelter retirement plan schemes to file for bankruptcy.
ReplyDeleteIRS says report it – or else
s, an insurance expert on 412(i) pension and 419 welfare benefit plans, says that in 2004, the IRS came out and said that these were reportable transactions and that if you were involved in them, you must report it by filing a specific form – IRS Form 8886. So, where does the “or else” fit it? Burgess explained:
If you don’t file that form, then the penalty for not reporting the transaction to the individual participant is $100,000 a year for every year you don’t file. Corporations pay an additional $200,000 penalty per year for not reporting the transaction.
I've spoken with people that had put $50,000 a year into these plans through their corporation. They didn’t report the transaction for three years, so now they owe in $900,000 in penalties to the IRS for a tax deduction that was only $150,000 total. I know of several business owners that have had to file for bankruptcy because the penalties are so large that there’s no way that they could pay them.
Read more: http://employment-law.freeadvice.com/employment-law/pensions_benefits/irs-says-412i-pension-plans-must-be-reported
Under Creative Commons License: Attribution
Follow us: @FreeAdviceNews on Twitter | freeadvice on Facebook