ARTICLES

Why Use a Tax Attorney?

Knowledge of the Law: Tax Knowledge is Power

At Skjold ▪ Barthel,  we focus on those areas of tax law having the greatest impact on businesses and their owners. We do not compete with bookkeepers or CPA’s – rather, our service is complementary. A Tax Attorney has the training and experience to analyze business and contract law, the tax code, and the business transaction structure in concert. The purpose is not to avoid tax due, but to ensure that you pay no more tax than the tax that is lawfully owed. We believe that by properly apportioning tax burdens, healthy businesses can thrive. We welcome the opportunity to assist your business in assessing your tax situation for your business or clients.

All taxes are founded in law. Attorneys are trained both by education and experience to read, understand and interpret the multiple facets of law. This skill is fundamental whether the tax issue is prospective, where planning may reduce tax liability, or the handling of a dispute with a taxing authority. Statutes, Treasury Regulations, Court cases and Internal Revenue Service rulings create a complex maze of inter-related law with varying degrees of authority. Issue identification, legal research, assessment of legal resources and writing ability are fundamental requirements for a Tax Attorney.

In many areas of tax law, the black letter of the law is only the start. In tax law, even the black letter of the law can mean varying shades of gray. The art and skills of a Tax Attorney are the abilities to apply these nuances of law to a complex factual situation to identify solutions and educate the client.

Tax Planning: Plan Ahead or Pay More Tax Later

Most legal transactions have tax implications and the assistance of a Tax Attorney means that proper business entities are chosen, the purchase and sale of business property is deftly administered and even the sale of a personal residence are correctly structured. Gifts, charitable contributions, titling of property, hiring employees and independent contractors and the purchase of an automobile all have important tax considerations. In most situations, by the time the Tax Return is due, it is too late to change the liability and the time for planning is past.

Tax and business law knowledge allows transactions to be structured and closed to meet the requirements of the law for the maximization of your wealth. Failure to plan is an acceptance of the default rules instituted by the taxing authority – often resulting in heavy tax burdens.

Attorney – Client Privilege: The Privilege to Plan

Often in the course of tax planning, sensitive information is involved. If that information were made known, even through legal action, you may be injured. When planning future transactions, it is often advantageous to brainstorm possible situations. The ability to discuss all options makes it possible to reach the better conclusion. Such conversations and the information provided to the Tax Attorney in the course of planning are confidential, if so intended. Under most circumstances, your Tax Attorney cannot be forced to testify against you (in a criminal case) and the IRS must respect the attorney-client privilege.

Review Tax Returns: The Legal Look

Tax Returns are much more than adding numbers. A business’s Tax Return is the result of a long series of decisions, filings, elections, classifications and business transactions. A Tax Attorney is well suited to review the completed Tax Return, from a legal, rather than an accounting perspective, and determine whether alternative treatments might be beneficial or whether there is a legal solution to a taxation matter. In certain situations, a review could result in filing amended Tax Returns for prior tax years in an attempt to recover refunds or to create planning for tax deferment or reduced future tax costs.

Editor's Note:

Paul G. Christensen is both an attorney and CPA providing counsel to closely-held businesses and their owners in the areas of estate planning, succession planning, and select tax matters. Mr. Christensen has owned and managed businesses in the construction, hospitality, transportation and graphic arts industries. His life-long association with closely-held businesses gives him the background to provide practical legal and tax advice. Mr. Christensen is admitted to practice in Minnesota and Texas and the Federal Tax Court. Mr. Christensen is also licensed as a Certified Public Accountant in Minnesota and Wisconsin.