KORESKO V. UNITED STATES Share Save PDF STENGEL, District Judge
John J. Koresko, Bridgeport, PA, pro se. Sean P. Beaty, U.S. Dept of Justice Tax Div., Washington, DC, for Defendant.
MEMORANDUM STENGEL, District Judge
John Koresko is the creator of the Regional Employers Assurance Leagues Voluntary Employees' Benefit Association (REAL VEBA) trust, which the IRS determined was a tax shelter. In November 2012, the IRS assessed 26 U.S.C. § 6700 penalties against both Koresko and Penn–Mont Benefit Services, the plan administrator, for their respective roles in promoting the REAL VEBA plan in 2003. As required by statute, Mr. Koresko and Penn–Mont paid a portion of their respective assessments. They then sued the United States in separate suits for a refund of the penalty they each paid—asserting that it was unwarranted, incorrect, or impermissible under several legal theories.
The action filed by Penn–Mont can be found at 13–cv–4130, E.D. Pa.
The United States filed counterclaims, requesting the penalties be paid in full. The Government asserts six counts or reasons why the REAL VEBA scheme was not a legally permissible tax exemption vehicle. The United States moved for partial summary judgment on two of those bases. Specifically, the Government is asking this court to decide if the REAL VEBA scheme failed to comply with I.R.C. § 419A(f)(6) by: 1) not providing a fixed welfare benefit for a fixed coverage period (Count V), and 2) using non-standard triggers for paying benefits (Count VI).
For the reasons stated below, I will grant the Government's motion and find that the REAL VEBA scheme did not provide a fixed welfare benefit for a fixed coverage period and used non-standard triggers for payment of benefits.
KORESKO V. UNITED STATES
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STENGEL, District Judge
John J. Koresko, Bridgeport, PA, pro se.
Sean P. Beaty, U.S. Dept of Justice Tax Div., Washington, DC, for Defendant.
MEMORANDUM
STENGEL, District Judge
John Koresko is the creator of the Regional Employers Assurance Leagues Voluntary Employees' Benefit Association (REAL VEBA) trust, which the IRS determined was a tax shelter. In November 2012, the IRS assessed 26 U.S.C. § 6700 penalties against both Koresko and Penn–Mont Benefit Services, the plan administrator, for their respective roles in promoting the REAL VEBA plan in 2003. As required by statute, Mr. Koresko and Penn–Mont paid a portion of their respective assessments. They then sued the United States in separate suits for a refund of the penalty they each paid—asserting that it was unwarranted, incorrect, or impermissible under several legal theories.
The action filed by Penn–Mont can be found at 13–cv–4130, E.D. Pa.
The United States filed counterclaims, requesting the penalties be paid in full. The Government asserts six counts or reasons why the REAL VEBA scheme was not a legally permissible tax exemption vehicle. The United States moved for partial summary judgment on two of those bases. Specifically, the Government is asking this court to decide if the REAL VEBA scheme failed to comply with I.R.C. § 419A(f)(6) by: 1) not providing a fixed welfare benefit for a fixed coverage period (Count V), and 2) using non-standard triggers for paying benefits (Count VI).
For the reasons stated below, I will grant the Government's motion and find that the REAL VEBA scheme did not provide a fixed welfare benefit for a fixed coverage period and used non-standard triggers for payment of benefits.