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April 01, 2006 at 02:00 AM
Make sure you take these precautions when checking out the latest tax shelter.
o Read everything! Don’t rely on the sales presentation and reassurances of the promoter. Ask to read the advisor guides, the client material, the plan documents, opinion letters, the basis for actuarially determinations, everything. Today’s plan promoters are much more concerned about toning down promises and providing disclosure.
o When the lady doth protest too much, your antennae should go up. If the promoter’s package spends an inordinate amount of time defending the plan’s “substantial legal authority,” assume the law is not settled in this area.
o Get a second opinion. Tax opinion letters written to the promoter do not protect you or your client. Provide the tax letters and other tax-related materials to the client’s independent tax advisor for review.
