Tax Dodges for Sale on the Internet

A reader of Debtor and Attorney Burned in Asset Protection Scheme asked about an asset protection scheme he found here. He wanted to know whether a “508 Trust” will really provide the kinds of protection the website claims. In a word, “No.”

The website provides do-it-yourself estate-planning documents that could work like a revocable living trust to help organize your assets and (maybe) avoid probate on your death. However, DIY estate planning is very dangerous unless you really know what you are doing and to know what you are doing would take the equivalent of three or four college classes. You would have to study wills, trusts, income tax, personal property, real estate, and probate, among other subjects. Otherwise, you are groping around in the dark.

The website’s claims about tax avoidance and creditor protection are malicious fabrications. There is no hidden mystery in IRC § 508 that will hide a family’s income or assets from either the Internal Revenue Service or a creditor. Section 508 says that a faulty charity is treated as a “private foundation,” which means that it is not tax-exempt. Tax schemes like 508 Trusts are not sophisticated investment vehicles that take advantage of tax shelters, they are houses of cards that fall apart as soon as an IRS auditor breathes on them.

Ordinary citizens cannot take advantage of the tax dodges used by billionaires, such as private foundations and charities. Those types of entities have five- and six-figure price tags. They are not available for download for $500 or $1,000. Tax “gurus” who claim that they can set up trusts or other legal gimmicks to avoid taxes are either deluded or crooked. The best and the brightest tax attorneys and the best and the brightest regulators and legislators have been hammering out tax law since Egypt was ruled by a pharaoh. There is no miracle trust or legal entity that will make the individual’s or family’s income and assets fall off the IRS’s radar. Sorry, but that is the way it is.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2012 John B. Payne, Attorney
 
 

No Comment on "Tax Dodges for Sale on the Internet"

  • I always love when a so called attorney gives information, based on years and years of service to the BAR (British Accreditation Registry), These are usually those people that want you to spend thousands of dollars and they will not tell you that HJR192, Public law 73-10 is real. They are the ones that pray on the poor. These are the Attorneys that have let people lose there homes. These are the Attorneys that send people letters of claiming a debt is owed, and then take a clean these people out in court. It is the Attorneys that have made the real act of law a covert operation for the very elite.

    The 508 trust is covered by the very important document that these attorneys always fail to uphold. The constitution of the united States of America ( yes the capitalization is correct).

    “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof…”

    — The First Amendment
    The IRS, cannot breach this unless you allow them to. It would be far better that your attorney would explain the commercial aspect, and the importance of remaining in honor with any letter sent by the IRS.
    To remain in honor would require a letter of ” conditional acceptance upon verification that the IRS is not in violation of the constitution, and a signed sworn affidavit that the action of the IRS agent, and the IRS has not stepped over this line.The IRS agent cannot move unless you give them jurisdiction period.
    The IRS agent will not step over this. In most cases the IRS letter will be sent to these attorneys and they will respond incorrectly, because they have failed to follow the Uniform Commercial Code.
    So before someone off the TOP OF THEIR HEAD, tell you its a scam. Ask that person if they understand the constitution, that they are supposed to uphold. Or is it the BAR who they really have sworn an alligence to. (loyalty or devotion to some person, group, cause, or the like).

    Reply
    • I am glad that you think you are a genius and a self-taught constitutional law expert. It is a good thing to have a positive self image. I cannot agree with your belief that you are a legal whiz kid, since your legal analysis is nonsense, but nothing I say will change your opinions.

      I have nine years of post-secondary education and I am recognized as a estate-planning, tax and elder law expert. Your ideas about what the Constitutional says are contradicted by the Supreme Court. Surely you have heard of the Supreme Court. I have carefully studied Supreme Court opinions and your absolutist view of the First Amendment is contrary to the Supreme Court’s. I have no clue as to what you think the UCC says about sec. 508, but I tell you three times that it is irrelevant to sound estate planning.

      You may think you know better than the Supreme Court what the Constitution says, but the IRS, the Department of Justice and Art. III judges apply the Constitution as interpreted by the Supreme Court. Ignore the highest court in the land at your peril, Smart Guy.

      Reply
  • Planning and knowing your rights and some constitutional grounds about on some mortgage plan could be your advantage in a way that you could organize and compiled all necessary document before you take your legal actions and that you really are taking the right procedure.

    Reply
  • There is actually no such thing as a “508 Trust” recognized by the IRS CODE…508 is only an exception for churches, association of churches, and it integrated auxiliaries from reporting requirements, but fall directly under the same restrictions as 501c3…Again there is no such thing as a 508 Trust…the closest I have seen is the 4947a1 Charitable Trust…I am not a lawyer, but I have researched the IRS Code…Now to conclude that the IRS is infringing on First amendment constitutional rights is far fetched, especially since your claim of a “508” Trust is a misinterpretation of the 508c1a exception for churches.

    Reply
      • Thanks lawman83…I am a Pastor. Our Church is an Unincorporated Church…I am the incumbent of the Office of the Corporation Sole, and the Church Building is owned by an Irrevocable Land trust, which falls under 4947a1 Trust, that is treat as a private foundation, and treated as a 501c3 organization for tax purposes.

        Reply

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