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Bates & Company, Inc.
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Defined Benefit Combo Cash Balance Compliance Consultant Loren D. Stark Company (LDSCO)
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Guest Article
(From the December 12, 2005 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)
The IRS recently announced a one-time opportunity for taxpayers to voluntarily disclose and resolve certain listed and potentially abusive transactions. Announcement 2005-80. Among the 21 transactions that can be settled pursuant to this initiative, four relate to retirement plans and at least three others may be of interest to the retirement plans community. This settlement initiative is open until January 23, 2006.
Eligible Transactions Related to Retirement Plans
According to a December 1, 2005 special edition of the IRS's "employee plans news," the four retirement plan-related transactions eligible for settlement are as follows:
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Settlement Terms
Participants in the settlement initiative will be required to pay 100 percent of the taxes owed, interest and, depending on the transaction, either a quarter or a half of the accuracy-related penalty the IRS would otherwise seek on the underpayment of tax related to the transaction. There is penalty relief for transactions properly disclosed to the IRS under Announcement 2002-2 or in certain circumstances where the taxpayer received and relied on a tax opinion from an independent tax advisor. Transaction costs, including promoter fees and fees paid for accounting, appraisal, and legal services, actually paid by the taxpayer who settles under this initiative will be allowed to be treated as a loss. The loss will be limited to the amount of transaction costs less the tax benefits claimed in earlier years barred by the statute of limitations.
The IRS is advising eligible taxpayers to take advantage of this settlement initiative rather than face more substantial penalties in the future. Carol Gold, Director of Employee Plans, stated, "Failure to participate in this one-time settlement initiative will likely result in additional tax liabilities and penalties as well as additional costs associated with the audit process and potential litigation. I strongly recommend that eligible taxpayers apply for this settlement initiative."
For More Information...
Additional information about the settlement initiative is available on the IRS's Web site, at www.irs.gov. (From the menu at the top of the main page select "Tax Professionals," and then "Compliance & Enforcement" under "IRS Resources." Then select "Compliance & Enforcement News.") Available resources include the text of Announcement 2005-80, a fact sheet on the settlement initiative, a series of "frequently asked questions" about the settlement initiative, and links to forms needed to participate in the settlement initiative.
For more details about the listed transactions relating to employee benefit plans, see the "Examinations/Enforcement" section of the IRS's Retirement Plans Community Web site (www.irs.gov/retirement)
The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations.
If you have questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Taina Edlund 202.879.4956, Laura Edwards 202.879.4981, Mike Haberman 202.879.4963, Stephen LaGarde 202.879-5608, Bart Massey 202.220.2104, Diane McGowan 202.220.2077, Martha Priddy Patterson 202.879.5634, Tom Pevarnik 202.879.5314, Carlisle Toppin 202.220.2067, Tom Veal 312.946.2595, Deborah Walker 202.879.4955. Copyright 2005, Deloitte. |
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