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San Diegan Who Spearheaded Tax Avoidance Schemes for Dentists and Doctors Indicted on Tax Charges
Actually the situation was very much as one-sided as MichaelS1962 suggests. ...and you are also correct: the situation was much more complicated than should have been covered in a brief blog. Firstly, you are confusing 3 separate entities: Xelan, Inc, The Xelan Foundation, and Doctors' Benefit Insurance Company (DBIC). DBIC was under IRS scrutiny, however there were no cases ever brought into court after years of inquiry - other than the emergency injunction the IRS hid behind in order to seize DBIC's assets and raid on Xelan's office and full disclosure of DBIC's records (including a list of all policy holders - who were subsequently audited). Of the literally thousands of individual and corporate audits that resulted from this push, none of the DBIC-related deductions were disallowed. Quite the contrary actually. All DBIC-related deductions were allowed. You see, the situation boiled down to this: the IRS has unlimited resources, DBIC did not. In an effort to protect its policy holders, DBIC decided to settle and shut down before the costs of defending the IRS' assault drove them into bankruptcy. The result? All policy holders received their premiums back (taxable of course, yet with no penalties or interest). This is the highly-simplified version of what took place over several years. Regarding the foundation, after its initial trial period AND a full internal audit by the IRS, the Xelan Foundation received a permanent letter of determination from the IRS. The Foundation was dragged into the fray as the IRS cast increasingly broad nets in their attack on DBIC and decided to focus on one aspect of the foundation's activities - which represented less than 8% of the foundation's total. The result of this was that the disputed activity was adjusted and discontinued, but not deemed illegal (merely logistically not done properly). The foundation is still in existence today, however it was forced to change its name in light of several extremely negative press leaks regarding it, DBIC, and Xelan in major national news papers. The lesson for me out of all this? The government not only makes the rules, they tend to not want to play by them.— March 12, 2009 8:17 p.m.