Proactive Tax Planning

Are you wondering what proactive tax planning is?

Let's start with what proactive tax planning IS NOT:

• using aggressive strategies.
• pushing into gray areas.
• crossing lines from legitimate tax avoidance to illegal tax evasion.
• red flagging your tax return for an audit.

"Aggressive" tax planning means pushing limits - stretching deductions, stretching definitions, and pushing into gray areas. Like defining your teenage daughter's summer barbecue as a "client appreciation event" hoping the IRS doesn't question the 100% deduction.  Some people want this sort of service. They think if they don't get audited, you're not trying hard enough. If that's really what they want, that's fine.

 That IS NOT the type of tax planning we provide.

There is no reason to engage in aggressive tax planning.  The tax code is loaded with legal and allowable tax deductions. The only problem is the tax code is quite complicated.

A pretty smart guy named Einstein said

 "The hardest thing in the world to understand is the income tax."

He later remarked about the difficulty of filing a tax return by saying

 "This is too difficult for a mathematician. It takes a philosopher."

The tax code may not be as complicated as the Theory of Relativity.  But, to take advantage of all the benefits offered, you will just need plenty of extra time to research the tax code which changes at least annually.  You will also need to know...

• where to look
• what to look for
• how to apply what you find

But many national chains and self-help software companies are trying to convince you that filing your taxes is really simple.  It is "simple" to file an incomplete return missing deductions you could have legally claimed.  Many people believe a return is complete and correct because they paid a little extra for a guarantee. It may be simple to spend $100 for some software and spend several hours of your free time plugging in some numbers, BUT what if you didn't realize you left off $2,000 of deductions and overpaid your taxes by $700? You would never even know it. But you still would have lost it.

Or, you could recognize that it might be wise to hire someone who does because

that is what a proactive tax planner is trained to do.

Proactive tax planning is not aggressive tax planning.  It is nothing of the sort. Actually, proactive tax planning is the opposite of aggressive tax planning.

Proactive tax planning is...

• HIGHLY CONSERVATIVE
• FACT and CIRCUMSTANCE SPECIFIC
• BASED ON TAX CASE LAW
• CAUTIOUS
• RESERVED

If you can't support a deduction with similar circumstances from another previously upheld tax law case or tax law case analysis, then do not take it.

Merriam-Webster.com defines PROACTIVE

1.      [¹pro-] : relating to, caused by, or being interference between previous learning and the recall or performance of later learning <proactive inhibition of memory>

2.      [²pro- + reactive] : acting in anticipation of future problems, needs, or changes

Synonyms: farseeing, farsighted, forehanded, foreseeing, forethoughtful, forward, forward-looking, prescient, foresighted, provident, visionary

Antonyms: half-baked, half-cocked, improvident, myopic, shortsighted

Related Words: careful, cautious, heedful, discerning, insightful, perceptive, percipient, prudent, sagacious, sage, sapient, wise

Near Antonyms: careless, heedless, incautious

Proactive tax planning means that we carefully scour your circumstances to find every possible black-letter deduction. We give you an insightful and discerning plan full of court-tested, IRS-approved and prudent strategies for minimizing your taxes.  And farsighted planning before year end is the key to beating the IRS - legally! A wise man digs his well before he is thirsty!! We don’t just mention an idea you might explore, we give you the tax courts' opinion of that idea.

Why Planning

What does the tax court say about tax planning?

"There is nothing wrong with a strategy to avoid the payment of taxes. The Internal Revenue Code doesn't prevent that."

William H. Rehnquist, Chief Justice of the United States Supreme Court

"The law also recognizes that a taxpayer may structure a transaction in a manner that minimizes the tax consequences."

Gregory v. Helverinq, (Supreme Court 1935)

"A tax avoidance purpose or motive does not vitiate [i.e. make faulty or defective] a transaction."

 Granite Trust Co. v. United States, (1st Cir. 1956)

"A taxpayer's subjective intent to avoid taxes ...will not by itself determine whether there was a business purpose to a transaction."

IES Industries v. United States, (8th Cir. 2001)

"The court referred to Estate of Strangi v. Commissioner, Knight v. Commissioner, Pasternak v. Commissioner, and Vanderschraaf v. Commissioner, by saying In each case, the issue is whether there was a legitimate business purpose for what the parties did, not whether they may also have had a tax motive for doing it."

Boca Investerings Partnership  v.U.S., (DC District Cir. 2001)

Tax Planning versus Tax Preparation 

Tax planning is not tax preparation!

• A tax preparer is someone who prepares taxes by plugging numbers into the proper blanks after the fact - simply recording history.   It doesn't matter how good your current accountant is with a stack of receipts on April 15. If you haven't planned right, as in by December 31, it is most likely too late for that year.
  
• A tax planner is someone who meets with you ahead of time to develop strategies to alleviate unnecessary tax. He is someone with the experience and more important, the proactive attitude, to give you more than just a history lesson. He takes a holistic view to your tax situation and asks lots of questions.  He makes sure you are taking advantage of all the legitimate deductions, credits, loopholes, and strategies the tax code offers.
  
• A tax preparer is someone whose service model is based upon after-the-fact preparation assistance. Too often, that means outdated information, nasty surprises on April 15, and no feeling of control.
  
• A tax planner is someone who gives valuable ongoing coaching and proactive solutions.  He allows you to have and enjoy the total confidence of knowing you pay the least amount of tax possible while you work to achieve your dreams.
  
• A tax preparer usually offers the same old solutions, year after year. That means paying too much tax!
  
• A tax planner gives you customized strategies. You profit from personalized solutions for your situation that reduce your tax.
  
• A tax preparer offers an important but often incomplete annual compliance service designed to fit most of the circumstances of the masses.
  
• A tax planner gives you flexible planning, researched and supported by the internal revenue code and upheld by the tax courts. You enjoy complete certainty that you’re making the right decisions for your business.
  
• A tax preparer offers you a "see you next year" service, with limited contacts except at tax time. With additional fees for every phone call or email answered.
  
• A tax planner offers you ongoing support. That means year-round contact, support, direction, and accountability as part of the proactive tax plan engagement.
  
• A tax preparer charges you fees based upon how much time spent regardless of the outcome of the return.
  
• A tax planner is compensated based upon the value received of the services rendered. If they don't save you money, they don't expect to get paid. That's called ROI, return on investment.