10 Big Ideas to Change the Way You Think About Your Taxes.

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What if you did not have to worry about your taxes?

This might be the most important page on our website. We listed ten of our big ideas to get you thinking not only about where you are, but what is possible. Imagine a life with financial freedom, peace of mind, and free from government interference. Follow our journey and let us guide you toward to the top of the mountain.

01

The top of the mountain is closer than you think.

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Financial freedom, peace of mind, and living a life free from interference from California and the IRS is possible. If you look at people in our society that have obtained this status, many of them were not born wealthy. Rather the commonality is that they were able to create leverage in their own lives that propelled them forward. We view this as critically important because it allows people to live their best lives and focus on their legacy.

02

Tax optimization is the way you get there.

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The second commonality among those that have reached the top of the mountain is tax optimization. Successful people and companies have winning tax strategies. Regardless of your personal feelings about paying taxes, your yearly expense to the government is not creating any leverage for you. In fact, it detracts from your ability to create leverage by impacting your cash flow. Cash flow is king because it drives profitability, fuels growth, and creates opportunities for management and ownership. On the personal side, cash flow sustains and enhances your personal living situation.

03

Tax optimization is not complicated. Most of us just make it complicated.

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No one expects you to optimize your own taxes or to become an expert on the tax code, just like no one expects you to fix your own car when it breaks down. However, most people believe they are paying too much in taxes and are unhappy about it. The problem is that people often mistake tax reporting (the yearly task of having your accountant prepare your taxes for true tax optimization work). If you do not make the decision to optimize your taxes, no one is going to read your mind and do it for you.

04

Your tax attorney and your certified public accountant (CPA) do different things.

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CPAs get trained or are “certified” in preparing financial statements and/or tax returns. They excel at technical tax reporting and compliance. Tax attorneys go to law school to get trained in advocacy. We advocate on your behalf in order to defend them against the government, but also advocate with respect to the tax positions you are taking to maximize your tax savings. We have knowledge not only about what the law is, but how is in enforced and who does the enforcing. That is not to say that a good CPA cannot save you money on your taxes, but rather that the approach and our perspectives are often fundamentally different.

05

Many business entities are creating massive and unnecessary risk by failing in their multi-state tax compliance.

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We call this the “ticking time bomb.” Many companies view themselves as only operating in their home state vs. being true multi-state entities. Because most CPAs do not focus on multi-state issues (they instead focus on individual and corporate income tax preparation) and most companies do not have a multi-state tax expert in house, businesses fail to keep up with changes with respect to their multi-state tax obligations. The net effect is that a company will do something to trigger nexus in a particular state and not realize it until potentially years later. Over the years, they build up massive amounts of potential tax liability in one or many states, sometimes to the point of insolvency.

06

In the post-coronavirus world, enforcement actions against taxpayers will continue to rise.

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It is politically unpopular to raise taxes and probably untenable in the next few years because of the economic damage caused by the coronavirus. Regardless of the impact on you and your business, the government was massively impacted and now is in the position of needing to raise revenue without raising taxes. Therefore, the government is left with two choices: 1) broaden the tax base, 2) increase enforcement actions (audits and collections) against taxpayers. As such, we strongly believe that there will be a significant rise in audits and more aggressive actions by the government in trying to collect taxes owed over the next few years.

07

Businesses (and business owners) are particularly vulnerable in the current climate.

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This goes back to cash flow. A business, because of its leverage, is usually able to generate more money coming in (revenue) than an individual. The government is aware of this, so there is a disproportionate targeting of businesses and business owners in enforcement activities. Businesses are cash cows, particularly for state tax enforcement, because of their ability to continually generate cash. In pursuit of getting paid, the government also tends to take a “kill the goose that lays the golden eggs approach” than in working with business owners to satisfy their liabilities.

08

The people that work in tax enforcement (examinations, collections, and criminal tax) sometimes do not fight fair because there is no incentive to fight fair.

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We believe in and are thankful for the many good people who dedicate their lives to government service. As a firm, we pride ourselves on our working relationship with the government. However, we are also aware that there are “bad apples” that work for California and the IRS. There is too much individual power and a lack of uniformity in the ways that are tax laws are administered. The lack of simple and appropriate checks and balances in our tax enforcement system yields unfair results for taxpayers causing them to owe large liabilities and irrational penalties. In some cases, California and the IRS cause lifelong harm and financial ruin.

09

A dangerous misconception exists about how are tax enforcement system works.

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The system is designed for administration on the whole and for the state and the federal government to collect revenue. The mistake that many people make is looking at it from their individual perspective. Many people believe that because they have done nothing wrong that they have no risk. Others believe that they can negotiate with the government independently or that the government shares their view of what is reasonable. This is completely untrue and, every year, many people fall into a trap that will cost them tens of thousands, hundreds of thousands, or even millions of dollars.

10

The biggest mistake that a business or business owner makes in dealing with the government is by underestimating their opponent and the risk that tax enforcement presents.

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In an enforcement situation, the government is your adversary. If they are devoting resources toward your audit, collecting what they owe, or criminally investigating you, they do not want to come up empty handed. The proceedings may appear to be polite and non-confrontational, but the government does not do business in the same way as you and I do business. Failing to understand your risk and your rights going into the process go hand in and with failing to have a winning strategy to approach the problem. Do not underestimate your opponent and operate under the false assumption that because you have not done anything wrong that you do not have anything to worry about.

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