Tax Notes Quotes Carolyn Schenck on Malta Pension Plans  

When the IRS moved to curb abuse of Malta pension plan arrangements, advisers turned to a powerful Washington tax lobbyist for help.

Kenneth Kies, now acting IRS chief counsel and Treasury assistant secretary for tax policy, was engaged by a company offering Malta pension plans called Water Structures LLC, led by Joshua Gottlieb of the Gottlieb Organization. Gottlieb was barred from practice by the Financial Industry Regulatory Authority in 2017.

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Some attorneys say the arrangements are legally defensible, at least in some instances.

“These arrangements sit at the intersection of U.S. and foreign pension rules, treaty interpretation, and anti-abuse doctrines, which is why reasonable professionals have disagreed about their treatment,” Carolyn A. Schenck of Caplin & Drysdale said in an email.

Schenck, former IRS national fraud counsel, said that from the government’s perspective, “the guidance is straightforward and certain assets have no business being in a Malta pension plan.”

From a defense standpoint, Schenck added, “these cases are highly fact-specific, and intent, reliance on advisors, and timing all matter,” and “assets that provide personal use, lack reliable valuation, or involve participant control tend to attract government scrutiny.”

To read the article in full, please visit Tax Notes’ website.