"It is not illegal to arrange your affairs in such a way that you pay less income tax." Judge Learned Hand.
No other tax firm takes the protective measure we take. Our approach, our measures for avoiding audit, our measures for dealing with audit and our understanding of circumstances at the IRS make the difference.
Our Approach
We believe the reason you hire a tax professional is to save on income tax. But, no one want to take unnecessary risk. In fact, in today's environment there is no reason to take risks in taxation. This is the best time there has ever been to be a tax paying small business owner in the United States. For decades Congress has been littering the tax code with tax preferences and tax saving devices aimed squarely at small businesses. Simply taking advantage of those provides better results than other tax practitioners get by bending the rules.
Tax practitioners using risky measures to save on tax are either ignorant or stupid.
We go nowhere near the gray areas around the fringes of the tax code. We stay right smack dab in middle of the tax code, taking advantage of every tax preference and every tax saving device made available to small businesses by the U.S. Congress.
Everything we do, and therefore, everything you do, is completely legal and authorized by the U.S. Congress and the tax authorities.
Avoiding Tax Audit
If there is nothing on your return to audit, you will not get audited. It is as simple as that. We spend identifying audit triggers, and we strip them all off your return. In our experience that makes you 100 times less likely to be audited.
Dealing with Audit
If you do everything we recommend, you will be in the best position possible to deal with a tax audit in the unlikely event it happens. Follow our documentation standards, keep journals, and pay particular attention to the requirements of deductions and you should have no fear of an audit.
However, there is such a thing as auditor competence. And that may come into play. But we have developed a complete scenario for avoiding tax audit, and for dealing with and responding to challenges by tax authorities when they happen. No other firm takes the protective measures we take.
Understanding Circumstances at the IRS
This has become especially important in the present environment. Right now the wheels are coming off at the IRS. Reports are coming from all over the country that individual auditors packing attitude and incompetence are making life miserable for legitimate business owners and tax practitioners. This appears to be the case all over the country.
There are three fundamental reasons for this development, which may not be corrected for decades. (1) The IRS is pushing a harebrained tax gap theory that 20% of income tax goes unpaid. Whenever an incompetent agent finds something they don't understand, which happens commonly, they go hog wild. (2) The government is pushing the IRS hard for collections to offset the economic slow down. (3) Competent agents have been retiring at an increasingly rapid rate. These agents have been replaced with poorly trained, less experienced, and generally incompetent agents packing a bad attitude from reasons 1 and 2 above. That means tax audits are being performed by incompetent auditors with a chip on their shoulders who are supervised by incompetent managers with a chip on their shoulders.
As a result tax professionals in record numbers are taking audits to the IRS Office of Audit Review. That has had the effect of creating a tremendous back log in that office. The last I heard there was a two year back log. But I have had a case in for review for two years already, and the case still has not been scheduled. This is the last step before going to court, so I am sure there is a large back log at tax court also.
The last audit we had in this office, two years ago, was conducted by an inexperienced auditor and reviewed by an inexperienced manager. It was a mind boggling mess. We took submitted it for Review more than a year ago and it still isn't even scheduled. We may be looking at two more years before it is reviewed.
Summary
That is a brief summary of the measures we take to keep risk under control.
Other Services. The other services we provide and how they work together to further you interests.
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