“The Internal Revenue Service says it will be challenging efforts by wealthy individuals to use small welfare benefit funds to reduce their taxes.
The IRS today issued two notices and a revenue ruling challenging use of voluntary employees’ beneficiary associations, plans said to be based on sections 419 and 419(e) of the Internal Revenue Code, and other trust arrangements that use an employer’s income to buy large amounts of cash value life insurance and provide relatively modest benefits for ordinary employees.
In IRS Notice 2007-83, IRS officials warn that employers cannot deduct the premiums for the cash value life insurance policies used to fund small “welfare benefit” trust arrangements that are created mainly to reduce taxpayers’ federal income and federal employment taxes.
Officials designate some of the arrangements as “listed transactions,” which means that taxpayers who use those arrangements may have to comply with extra disclosure rules and pay penalties.”
I suppose an extra few thousand or tens of thousands of dollars saved is worth not providing more benefits to employees in some people’s minds.
This is a disturbing mindset, but it is in-line with the sad state of values espoused by many people today. It leads me to believe that, if they are not willing to provide decent insurance and other benefits for employees, then they really are all about themselves first, no matter what. It's a crappy and unfulfilling way to live one's life, in my humble opinion.
Jerry
www.leads4insurance.com
Posted by: Jerry | October 18, 2007 8:35 PM | Permalink to Comment