I’m in the middle of three situations where the different approach to a problem is significant. All of the problems are audits that were referred into us on returns we didn’t complete, and all of the cases involve tax attorneys.
Given the rules of confidentiality, I can only speak in the hypothetical, but the difference in the approach to solve the problem is staggering. And at the end of the day, it all just comes down to business.
Let’s say that we have a retailer who had an awful accountant. The entrepreneur went through an Income Tax Audit, and nothing was handled correctly because the former accountant dropped the ball.
Let’s also say that the fed established a $100K liability. The client doesn’t think that in reality he owes the $100K so he contacts both a tax attorney and an accountant.
The tax attorney listens to the client, hears how angry he is about the liability, and tells him that he’d be willing to take the case into appeals. The attorney asks the client what new evidence he has to prove his innocence, but there really isn’t anything of substance to disprove culpability because the former accountant did such shoddy work.
The attorney thinks nothing of taking the case into appeals to argue it. After all, that’s the job of an attorney. They’re paid to argue. Whether they have a leg to stand on or not is irrelevant because they’re paid to argue.
If the client brings that case to an accountant, the first thing an accountant would ask is whether or not there’s any new evidence to substantiate the claim that the $100K finding was unfair. If there’s nothing of substance to be offered, then the smartest thing would be for the accountant to not take it into appeals.
The best thing for the client would be for the accountant to handle the day-to-day work going forward properly, so that there’s no reason in the future for anyone to come look at that entrepreneur again. And in these hypothetical cases, this is exactly what we’ve done.
Please understand the difference in approach.
Attorneys only make money when there is conflict. That’s how they put their kids through expensive private colleges. If a client comes to them and says that they don’t want to pay an amount and that they want the attorney to go make an argument, then that’s what the lawyer is going to do. That’s their job and how they make their living.
An accountant doesn’t make money off of conflict. We make money by making sure that there is no conflict in the first place. Our job, by definition, is to do what’s best for the client.
Let me leave you with this.
To the client, a dollar is a dollar. Does it matter to them whether they’re paying the state or someone else. They want to get out of the mess for as little money as possible. And at the end of the day, that’s also what’s best for them.
Does it make sense for the client to pay the lawyer $20,000 to argue a case that’s unwinnable so that they can just end up paying the $100K to the Fed anyway? No, it’s wrong, but that’s what happens in so many cases and it all comes down to a difference in approach.
The attorneys need conflict and the accountants don’t. By definition, we’re trained to do what’s for the client.
I can’t tell you how many times I’ve seen this happen, and I’m in the middle of seeing it even more as we speak. The client is angry and doesn’t want to face up to the reality that cutting their losses and moving on is what’s best for their future. And there’s no talking them out of this bad approach.
At the end of the day, it’s the price one pays for bad accounting. I’m hoping you take a step back and comprehend this situation.
Sometimes its best to take a tactical loss, and move on. Paying a bad accountant whatever pittance they ask for, has its costs.
We’re all going to get through this. Let’s get through it together.
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