Na-na, Boo-boo!
There are days I absolutely love my job, and my next-door neighbor gives me the best projects to work on. He got hooked up with this outfit that wanted to sell him a tax scheme, and he asked me for a second opinion. I brushed off my mad tax research skillz, and along with the correspondence with the Iowa Department of Revenue the sales guy himself provided me, I proved that the scheme won't work in Iowa. Although it will cost more in taxes now, I saved my client some fees and a possible reversal of tax position later where he'd have to pay the taxes anyway.
I really shouldn't delight so much in schadenfreude - I make mistakes, too. But so far, this guy is holding stubbornly to his position when I've so obviously punched a hole in his scheme. I do feel sorry for the other Iowans this guy has sold this tax position to. There could even be a case for tax fraud, given that email from the Department of Revenue shows he should have known it wouldn't work. That just makes me grin. Suppose it's my German heritage, or that I just take disproportionate glee in proving other people wrong?
posted by Amanda @ 2:11 PM
4 Antiphon:
Help please. What is a tax position and how do you sell it?
Good For you! This guy is probably just upset that you saw through his scheme. And he was so close to hopping a jet to some place tropical...
As everyone knows, the tax code is complicated. Thus, smart (or in this case, not-so-smart) people can look at certain code provisions and structure business deals in order to skirt around those code provisions to minimize tax. This, in general, is perfectly legal and called "tax planning".
However, if the structuring does not in fact comply with the law, it's less "tax planning" and more "tax avoidance", which the IRS frowns on. People have gotten very rich selling these schemes (you have likely heard them called "tax shelters"), and it's basically like selling an idea: if the idea will save you $20,000 in taxes, you might pay $7,000 to someone to help you do it. Of course, if it doesn't stand up to IRS scrutiny, you're out the fee, the tax, and additional penalties, so it takes a lot of potential tax savings in order for someone to take the risk of an iffy tax position.
The important thing is that you were right on this occasion and that guy was wrong and you helped someone out and therefore have every reason to feel smu- I mean, proud. *cough*
Seriously, I would feel the same way.
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