Calling Out Lance Wallach

Some time ago I called out attorney Jay Adkisson for unprofessionally marketing his services by: (1) terrifying the public into thinking the IRS is out to get them, and (2) suggesting that his firm was the only one who knew how to keep them out of trouble. Regrettably, such marketing tactics are becoming more and more common.

Consider, for example, this article by Lance Wallach titled "The dangers of being 'listed'". The article is clearly designed to be alarming. For instance, the opening sentence begins, "Taxpayers who previously adopted 419, 412i, captive insurance or Section 79 plans are in big trouble." He tells us the purported reason in the next sentence: "In recent years, the Internal Revenue Service has identified many of these arrangements as abusive devices to funnel tax-deductible dollars to shareholders, and classified these arrangements as "listed transactions." He goes on to impugn the motives and competence of other professionals who assist the public with such plans by remarking "[t]hese plans were sold by insurance agents, financial planners, accountants and attorneys seeking large life-insurance commissions." Mr. Wallach clearly attended the Jay Adkisson school of self-promotion.

Would any fair person reading the headline and opening paragraph of Mr. Wallach's article conclude that it is only certain types of 419 plans, 412(i) plans, captive insurance arrangements, and Section 79 plans that are "listed"? Maybe, but I doubt it. Reading the opening sentence again, it seems clear the article was written to cause anyone "who previously adopted 419, 412i, captive insurance or Section 79 plans" to think that they are now "in big trouble" thanks to greedy advisors who have led them down the primrose path.

Mr. Wallach would also seemingly have us believe that other professionals are conflicted while he is objective. But, simply reading the virtual "autobiography" he provides at the end of the above-linked article shows that his own motivations in writing the article are hardly selfless:

Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals, is a frequent speaker on retirement plans, financial and estate planning, and abusive tax shelters. He writes about 412(i), 419, and captive insurance plans. He speaks at more than ten conventions annually, writes for over fifty publications, is quoted regularly in the press and has been featured on television and radio financial talk shows including NBC, National Public Radio’s All Things Considered, and others. Lance has written numerous books including Protecting Clients from Fraud, Incompetence and Scams published by John Wiley and Sons, Bisk Education’s CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as AICPA best-selling books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots. He does expert witness testimony and his side has never lost a case. Contact him at 516.938.5007,wallachinc@gmail.com or visit www.taxadvisorexperts.org or www.taxlibrary.us.

Mr. Wallach is clearly a self-promoter extraordinaire. Once we understand this, and once we understand how Mr. Wallach makes a living (he tweets that he is in the business of "[d]efending & protecting businesses & financial professionals from IRS audits, insurance & brokerage firms..."), then it becomes clear why he fails to emphasize in his article that not every 412(i) plan is a listed transaction, nor every 419 arrangement nor every Section 79 plan. In fact, contrary to his implication, 831(b) captive insurance companies are not listed transactions at all! Why does he not make these facts plain?

The reason is obvious. This article, and others like it, are clearly designed to drive inquiries to Wallach's firm. The more people he alarms, the more inquiries he receives, and the more likely he is to develop business.

Don't get me wrong, I have no objection to self-promotion, and I don't blame Mr. Wallach for pursuing his own self interest. But I do resent the alarmism that results from Mr. Wallach's lack of full-disclosure on these points, and I especially resent his implication that other advisors were improperly motivated by commissions whereas his own fee-based (?) motives are somehow purely benevolent.

Mr. Wallach is clearly a knowledgeable and respected professional, one who shouldn't need to engage in such unseemly marketing practices.

If Mr. Wallach or his defenders would like equal time, they are free to reply via comments to this post. I will be sure to post any such reply.



UPDATE:> Heavens to Betsy, when I said above that Mr. Wallach was a "self-promoter extraordinaire", I was understating things considerably. His self-promotion borders on megalomania. This from his website:

"Lance Wallach, Managing Director, is the nations [sic] leading expert on employee benefit plans, tax problem resolution and IRS audit defense."

That's a bold statement by itself, but that's not the half of it. Under the "life insurance" tab on the same website, I find this:

"Lance Wallach, Managing Director, is the nations [sic] leading expert on life insurance, annuities,
retirement & financial planning for business
executives, sports figures, entertainers, affluent
families and successful entrepreneurs."

Wow! And to think I've never heard of him till recently.

The only thing we can say with certainty that Mr. Wallach is not the "nation's leading expert" on is...grammar. (Oh wait, that last sentence wasn't very grammatical, was it?)