Friday, January 13, 2012

What's the 419?

Section 419 of the Internal Revenue Code outlines the steps necessary for companies to deduct various insurance premiums from their taxes. The first (and, as it turns out, last) time we discussed these was about 4 years ago, when we noted FoIB Joe Kristan's interesting post on 419's apparent demise.

Fast forward 4+ years, and Joe's at it again:

"A defense industry consultant signed on the Millenium Plan, set up as a section 419A(f)(6) welfare benefit plan to provide death, medical and involuntary severance benefits to employee participants. The IRS decided that the plan looked too much like a tax-free piggybank for the consultant and assessed over $5.5 million in taxes to the contractor and his corporation."

Ouch!

Definitely check out the rest of the story.

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