Volume 11 Issue 5-- September/October 1999
Many of you may still be under the impression that The Tax and Business Professionals' main activity is to write newsletters. (See "What We Do") That is far from correct. We, like Jesse Ventura, are frequently called upon to serve as a referee.
A CPA in Maryland recently had an issue with an attorney who believed that he knew more than the CPA did about the tax basis of assets the client received in a messy divorce. Did the CPA call Jesse Ventura to referee the differences between the two professionals? No, he called us for a letter confirming his point of view (which was, in our opinion, correct).
What would you do in a situation where another professional or a client simply won't accept what you are telling him. You could consult another local professional for a second opinion. But, what if the disagreeing professional or client, or even the issue involved, is well known in your area? How do you ensure confidentiality? Call Tax and Business Professionals! Since we are not located in your "backyard," privacy is assured.
Suppose your client would like you to work on his matter with another professional whom he has used for sometime, someone with whom you do not particularly like to deal. You know that the mutual client won't even think about bringing in a different local attorney or accountant. In such situations, you can turn to us for help in preserving client relations and easing the burden of gracefully informing a client or another professional that he is not half as smart as you.
Saul Bashoff, CPA, in Baltimore, Maryland, has access to many competent professionals, as does John Epeneter, CPA, CVA, CFS, in the Boston area, but they regularly call us. Aside from disagreements, the most common reason practitioners call us is the need to obtain assistance in areas that are unique or inherently difficult. This was the subject of our May/June 1999 newsletter, Incoming . . . . Watch Out!, about assisting businesses coming into the U.S. market from abroad.
How do you assist your client with estate planning when he has an IRA worth $4,000,000, a successful business, a second wife and young children, and adult children of a first marriage who are assisting the principal in running the business? Tax Attorney Larry Fuchs knew what to do; he called us. Why would an established tax attorney call us when he could do the research himself? It saved him the time of doing the research, plus it gave him the chance to discuss the problem with another professional and obtain the benefit of an independent point of view.
Lee Curtis, CPA, in Vienna, Virginia, recently called to ask, Do these problems warrant research? After discussing his client's matter, we mutually decided that research was not necessary. Were we 100% sure? In this case, "no," which leads us to the next subject assessing risk.
Considering the complexity of U.S. business and tax laws, it is not at all unusual to be confronted with situations where there is no clear answer. A lawyer or accountant may be retained by a client to pick up a matter where another professional has left off. It is not uncommon to discover, for example, that the client has incorrectly chosen the method of accounting for inventory, employee expense reimbursement, or depreciation. The error has gone unnoticed for years, but could, if the client were to be audited, result in substantial, unfavorable adjustments.
What would you do in such a situation? Amend prior returns? Correct the situation on the next returns (without amending prior returns) and hope that the three-year statute of limitations on assessments will expire before the client is audited? Refuse to take the client? Frequently, when faced with such dilemmas, professionals will call us and say something like, "What do we do now?"
Our answer to such questions is often, "There is no clear answer, but here are the risks." Do you want us to research the issues and assess the problems? There are many ways The Tax and Business Professionals can help you. Some of these are discussed in What We Do, the July/August 1998 issue of Tax & Business Insights. Professionals have been calling us since 1987 we hope to hear from you soon.
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