STOP OVERPAYING YOUR TAX LIABILITY!

There is no way to say this nicely - a great deal of the representation of taxpayers by trusted professionals and so-called "tax experts" is inept. Consequently, taxpayers vastly overpay their tax liability.

CPAs, accountants, bookkeepers, enrolled agents, and attorneys without a tax specialty may not have the time, experience, education, insight or technical skill to deal with the technical analysis, legal research, identification of issues, interpretative creativity and insight, negotiating skills, knowledge of the IRS, or technical writing ability necessary to effectively prevent avoidable tax overpayments. Unqualified representatives are easily coerced, bluffed and intimidated into tax settlements or adverse determinations that should be contested. Even worse is the representative who is unable to identify a tax issue, tax law or fact that supports and justifies a reduced tax liability or penalty.

The person who prepares your tax return may only have six weeks of training, and that training may be limited to how to put numbers into an IRS income tax return. Your bookkeeper is not a tax expert. Your CPA prepares tax returns for approximately three months out of the year and spends the balance of the time preparing books, records, and financial statements . Most, if not all enrolled agents are not tax lawyers. Attorneys may have a general or a specialized practice that does not include tax issues and problems. Nevertheless, accountants, CPAs, bookkeepers, enrolled agents, and non-tax attorneys will usually agree to represent you if you approach them with a tax issue even if they do not have the training or experience to handle difficult, complex, or creative tax issues.

Taxpayers are "captive clients" of the CPA or the family attorney. The representative has earned the respect and trust of his client for prior meritorious performance on other matters, and the client has come to rely on the representative for all purposes. Therefore, "captive clients" are subject to tax assistance by individuals who may not offer competent tax law services.

Why would a person who is not a tax law expert try to represent you on a complex tax issue or important transaction? The answer is - "money." Taxpayers are billed if his representative meets with or speaks with IRS personnel. If the representative agrees with the IRS, the agreement can be passed of as your legitimate agreed upon tax liability. You pay a fee to your representative even if that person is unaware that there are issues and argument that would have reduced your tax liability. The representative, in effect, "churns" his clients by closing the matter with the IRS as quickly as possible in order to collect fees from a new client. Unfortunately, some representatives have no clue that they are missing issues that could reduce or eliminate a tax liability.

Taxpayers will never know if a legal or factual issue was available to either reduce or eliminate tax liability. For example, if there is legal precedent for the elimination of a tax penalty under certain factual situations, neither the representative nor the taxpayer will know that the tax penalties and interest could have been avoided with successful research of the tax cases and effective legal argument. The representative is paid for his services even if those services are inadequate. The taxpayer/client is the only loser. The taxpayer could be required to pay a tax liability that can cost him his home, his business and his life savings. Even a taxpayer's freedom can be jeopardized if the taxpayer is the victim of an adverse fraud investigation that could be resolved for the taxpayer with the proper defense.

A tax attorney can do something an accountant cannot do. An experienced tax attorney can thoroughly research a tax statute and master it. He will know its legislative history. He will be familiar with the Treasury regulations and IRS rulings on that statute. He will penetrate the many court decisions involved in the litigation of the tax statute. He will have read tax articles and books that deal with the tax statute. It is improbable that your accountant has the training or experience that would permit him to penetrate the complexity of the tax law on a particular tax issue. It is also not likely that the accountant can take the time out of a busy accounting practice, working with numbers and preparing financial statements, to master the vast array of difficult tax law that bears on a tax statute.

Even worse is the fact that the mind-set of an accountant is to see "black and white" rather than the "gray" because they are trained to be precise with numbers. Tax law is drenched with ambiguity where there is mostly no answer that is right or wrong. Tax lawyers are trained to seek and find the ambiguity in the law (i.e., the "gray"). Tax law ambiguity can be used as a "sword" to attack and IRS position and also as a "shield" to protect the taxpayer.

However, not all tax attorneys are equal just as, for example, professional golfers have difference levels of skill and ability. Tax attorneys have different levels of creativity, insight and skill.

The most important attribute of a good tax attorney is to be "creative" with the tax law. This creativity may arise in many ways. A creative tax attorney will use interpretative skill to find support of a taxpayer position. A creative tax attorney will find a gap in a statute or a regulation (a "tax loophole") that permits favorable tax treatment in situations not covered by the statute under consideration. A creative tax attorney will be able to identify inconsistencies by the IRS in its published positions or private ruling letters. A creative tax attorney will use interpretative skills to spin facts, case law, regulations in favor of the taxpayer. Creativity is unlimited in its potential to interpret and apply the law or the ability to develop that knowledge through research skills.

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Alvin Brown and Associates, Attorney at Law

Phone: (888) 712-7690
Fax: (703) 425-1567
E-Mail: info@irstaxattorney.com