Santa Monica Accounting Firm

Better Tax Saving Through Research

Shareholder Barbara Rosenbaum and Senior Manager Jill Massey from Gumbiner Savett  – along with other tax experts –  were interviewed by CPA Magazine regarding tax research.  Tax research allows tax professionals to take a proactive approach in helping their clients maximize their tax deferrals and tax savings.

Below is an excerpt of the Q&A:

CPA Magazine: What do you like most about tax research?

Rosenbaum: Tax research allows me to think creatively, to bring all of my experience to bare and to extrapolate my knowledge of the relevant tax authority across a client’s specific situation. The fun places are where there is no bright line, no black or white, no clarity. Those are often the places where there is an opportunity for the tax practitioner to add value.

CPA Magazine: What tools do you need to be proficient in tax research?

Rosenbaum & Massey: A good tax researcher must be familiar with the sources of tax authority, such as the Internal Revenue Code and other statutory provisions, tax treaties, proposed, temporary and final regulations, revenue rulings, court cases, and secondary sources…  The research process requires mechanical skills and critical thinking. The mechanical skills can be gained with experience; critical thinking, on the other hand …

CPA Magazine: How do you help clients with tax research beyond their tax returns?

Rosenbaum & Massey: Often, the most value can be added with proactive planning. Any transaction, such as starting or expanding a business, wealth transfer, refinancing, sale of a business or other assets, can benefit from some forethought. The rules are complex…And, with global commerce, international issues are becoming more and more common.

CPA Magazine: Have you ever had to defend a researched tax position before the IRS? What helps in that situation?

Rosenbaum: Representing a client in front of a tax authority often requires telling that client’s story (not a fable!). By providing history and background direction you are giving the agent, the context in which to evaluate the tax return, supporting documentation and research. As an example, I have a client who develops technical devices who received an audit notice. I immediately called the IRS agent assigned and invited them to visit the taxpayer, knowing it was a required step in a large corporate audit. I had the client set up a number of prototypes and devote time to showing the agent how their device had evolved due to Research and Development (R&D). The audit of the R&D tax credits, an IRS area of focus, was easy, as our work supported what the agent already knew.

CPA Magazine: What advice do you have for a small accounting firm about tax research?

Rosenbaum & Massey: A small firm should always consider the risks involved in giving tax advice that may be beyond its expertise. Consulting with members of their peer group on certain subjects could be helpful. Just knowing when you need help is an important skill!

Read the entire Q&A on the CPA Magazine website.