Insurers Knew VEBAs Were Non-IRS-Compliant, Lawsuit Says VEBAs are ordinarily used to provide employee benefits such as healthcare and life insurance. However, our lawsuit alleges that the insurers marketed tax deductions for any contributions that the small businesses made to the VEBAs, along with tax-free access to the funds years down the road.
The lawsuit further alleges that defendants knew that the promised tax benefits to the small businesses were illusory, and that the IRS would likely perceive the VEBAs as an illegal deferred-compensation scheme. According to the complaint, the VEBAs’ plan documents were identical to those that the IRS had deemed non-compliant in 2000.
Indeed, the lawsuit says that in 2003, the defendants received a legal opinion that the plans were likely illegal, but did not disclose this to the small business contributors. According to the complaint, even after receiving this legal opinion, American General, Sea Nine Associates, and their agents continued to help market the illegal VEBAs and sell American General policies for at least four more years.
San Nine VEBA Participants Audited by the IRS The lawsuit states that many victims were audited by the IRS and forced to pay back taxes and penalties. The lawsuit further states that whether audited or not, Sea Nine VEBA participants do not have access to the funds they originally placed in the VEBAs and must wait to exercise a court-approved exit strategy before they can possess those funds again.
The lawsuit alleges VEBA participants have suffered financial losses as a result putting money into this VEBA scheme instead of an alternative investment.
Insurers Knew VEBAs Were Non-IRS-Compliant, Lawsuit Says
ReplyDeleteVEBAs are ordinarily used to provide employee benefits such as healthcare and life insurance. However, our lawsuit alleges that the insurers marketed tax deductions for any contributions that the small businesses made to the VEBAs, along with tax-free access to the funds years down the road.
The lawsuit further alleges that defendants knew that the promised tax benefits to the small businesses were illusory, and that the IRS would likely perceive the VEBAs as an illegal deferred-compensation scheme. According to the complaint, the VEBAs’ plan documents were identical to those that the IRS had deemed non-compliant in 2000.
Indeed, the lawsuit says that in 2003, the defendants received a legal opinion that the plans were likely illegal, but did not disclose this to the small business contributors. According to the complaint, even after receiving this legal opinion, American General, Sea Nine Associates, and their agents continued to help market the illegal VEBAs and sell American General policies for at least four more years.
San Nine VEBA Participants Audited by the IRS
The lawsuit states that many victims were audited by the IRS and forced to pay back taxes and penalties. The lawsuit further states that whether audited or not, Sea Nine VEBA participants do not have access to the funds they originally placed in the VEBAs and must wait to exercise a court-approved exit strategy before they can possess those funds again.
The lawsuit alleges VEBA participants have suffered financial losses as a result putting money into this VEBA scheme instead of an alternative investment.