Tax Cowboy

In a US Tax court case re ESOP disqualification the government filed its certification of the admin file. My question is how long does petitioner have to file an objection (if any) and file a motion to supplement record?

I apologize if this isn't the proper group to post. Anyone use Judy Diamond to obtain updated lists of retirement plans for marketing purposes? I always thought the DOL website would have similar information but maybe not in a all on one solution which provides reports and analysis based on 5500 filings. Does anyone use judy diamond? Other marketing provider to target retirement plans for marketing? Thank you in advance.

Group: It's been a while since I filed a Declaratory action for retirement plan disqualification filed in USTC. In the Reply to Govt Answer am I correct the only paragraphs I should reply to relate to where the Govt has burden of proof. Under USTC rule 213 says: Rule 213 Form and Content: "In response to each material allegation in the answer and the facts in support thereof on which the Commissioner has the burden of proof, the reply must contain a specific admission or denial; however, if the petitioner lacks knowledge or information sufficient to form a belief as to the truth of an allegation, the petitioner must so state, and that statement will have the effect of a denial. " I've always thought that unless there's a new issue under US tax court rule 142 the burden almost always stays with petitioner. Or of course if the court shifts burden under 7491. Which seems to be very rare. Thoughts on how do you prepare your Reply? Do you Reply to each Answered paragraph? Thoughts and comments appreciated.

Group: IRS audited clients retirement plan an esop. In the USTC declaratory action retirement plan is disqualified. Typically on an appeal from USTC the bond amount determined from tax deficiencies. However since the Dec action doesn't have a tax deficiency how do you proceed with appeal? File a bond with $0? What companies have you used for appeal bonds? Thank you

Group: Seeking an expert to assist a US Tax court case on a few narrow issues dealing with S-ESOP prudent investing standards. Please reply privately. Thank you

Group: I wasn't sure which area to post this. Brief facts: Case no. 1: In June 2022 IRS TEGE issued a notice of plan disqualification for an ESOP client. The agents notice clearly stated "The plan is disqualified" thereby allowing TP to timely file in US Tax Court within 90 days. In Dec. 2022 Govt files to dismiss based on lack of jurisdiction. Pending USTC Case no. 1 is still pending and no order from USTC. Pending USTC Case no. 2. - May 2023 IRS TEGE issues a one page notice of disqualification stating: The Plan is no longer disqualified under 401a and 501a. No 886-A and no further information. Q: Is there a motion you'd file to stay proceedings? I don't see IRC 6213a applying to retirement plan declaratory actions? Here is what 6213 a states: 6213(a) states that “no assessment of a deficiency in respect of any tax . . . and no levy or proceeding in court for its collection shall be made, begun, or prosecuted until such notice has been mailed to the taxpayer. I'm looking at guidance for which US Tax Court rule (or Fed Rules) allow me to motion the Court to stay Case no 1? other than saying it would deprive petitioner of due process rights to not allow him to have that matter resolved. Thoughts and comments appreciated.

Group: Over the years I've seen Plan Sponsors (for ESOP's) setting up sinking funds to pay for future participant benefits. Where do I find the citation/authority for types of assets a plan sponsor can use to fund the repurchase obligation? Is there a specific DOL citation? Treas regulation? I was thinking about this awhile back at a conference for civil/criminal tax matters and one speaker referenced that there's no guidance even on investing in Crypto. Other than a DOL letter/notice (?) with a stern warning that retirement plan investments in 'crypto' may be a breach of fiduciary duties. I don't have the date readily available. I may be conflating the two items as this didn't per se relate to ESOP's. But, could a ESOP trustee invest in crypto as their asset for the repurchase obligation? Seems the IRS/DOL leaves this in a grey area on purpose. Thoughts and comments appreciated.

To clarify Peter, The Plans trustee did determine the appraiser was qualified for the tax years in question. Beginning 2008 through 2020. But the appraisal report doesn't have two of the required declarations. Probably important is that the appraiser was not a party to the transaction. So that isn't an issue. I've requested time to correct this issue but I'm preparing for worse case scenario in a disqualification. As we taxpayer was issued a draft Rev Agent Report. Trying to find an argument (Treas reg cite, US supreme court case, other persuasive regulations, etc) to show a court that the error in not inserting the declaration should not take away the participants value by disqualifying the plan. Seems like the US tax courts will throw away the Baby with the bath water due to an inadvertent oversight of not including the declaration. Thoughts and comments are always appreciated.

Group: I'm aware of the requirements for the appraiser to sign and declare certain statements on the valuation report annually for an esop. An esop adopted in 2007 is under audit and the appraiser has passed away. One issue the IRS had brought up is that the appraisal didn't have a statement indicating they hold themselves out to the public and conduct appraisals for other plans. And that the appraisers identifying number which I believe would have included it's EIN were not provided as well. I've had other audits where these issues were not relevant. And the IRS didn't disqualify the plan. Since this Taxpayer can't call the appraiser to testify what is the solution to prevent disqualificstion of plan? Seems odd the Govt would disqualify a plan merely because an EIN wasn't stated on summary or appraisal itself. And that a court would disqualify a plan, depriving participants of their benefits, for such a minor error. If the irs does disqualify the plan my thoughts were to have taxpayer testify that the trustees were provided the appraisers' identifying number when they hired the company. Thoughts and comments appreciated.

Group: I may not state this properly. The facts as I know them. * ESOP owned by an S Corporation was adopted and set up in 2013 by clients ESOP advisor. (no longer working with TP) * The original sale of stock was 100% of corporate stock sold for $20k to the ESOP. (I'm not concerned about this $20k value, fyi) Promissory note, loan agreement, security agreement prepared and signed by Plan trustee. * Terms state the note will be paid off over 10 years in a balloon payment. * Client audited for 2013 and 2014 years. IRS issues no-change letter accepting all filed returns. (final notice issued early 2015.) The IRS during that audit didn't address or bring up as an issue the non-payment of the note. * A 2nd audit ensued in 2018. The TP had not paid the ESOP note. The most recent revenue agent report states part of the rationale for disqualifying the plan was because the $20k note was not paid. * TP is not in Court for this plan. There's a few other IRS issues that are defensible. * The disqualification of the plan may result in a large tax for a number of reasons not germane to this inquiry. Related to the $20k note, my initial argument (I haven't began much research just yet) is that since the TP was still under audit and the TP asked to pay off the $20k note as a corrective action, the IRS should have allowed the TP the ability to pay off said note. Even if the IRS didn't allow the payoff, the TP was still within the terms of the note. The IRS did not allow TP to pay off the loan. Q: Are there no defenses available to a TP who (for one reason or another) did not pay the original ESOP note? even though the terms hadn't come due yet. Q: Are having the terms of a 10 year balloon payment in violation of ERISA 4975? What's odd is I've represented other ESOP's where - during an audit -the TP was afforded the ability make catch up payments for the original note on the sale of stock. Seems like the Govt - which may have the right - can be selective depending on what day of the week it is. There's no rhyme or reason to which TP's are afforded the right to make catch up payments. Thoughts and comments are appreciated. Or cases on point or any other regulations that may assist TP would be much appreciated.

Thank you for these resources! Much appreciated.

Group I'm looking for a comprehensive checklist to review an ESOP plan for compliance. Anyone have a checklist they're willing to share and/or a resource that does a pretty good job. Anyone using artificial intelligence/chatgpt /othet apps to review ESOP plans and compliance? I have an old checklist and just want to see if there's something I'm missing or should change. Thoughts and comments and resources are much appreciated.

thank you for the resources. much appreciated

Group: Anyone have a good resource they use that shows to side-by-side comparison with SAR's, Phantom stock other RSO's and non-qualified executive compensation packages that will include tax consequences for employees and employers, limitations if any, along with necessary documentation (plan documents, corporate resolutions other documents?)? Or a company that can assist in creating the above. Thank you in advance.

Very helpful CB and Cusefan!!