What is the profile of the typical firm client?
We offer services to a variety of clients. Though our typical client is an individual with added complexities to their tax and financial profile. For example we work with many people who own small businesses, have multi-state activities, have invested in multi-tier partnerships, etc. Additionally, many of our clients are involved with estates and trusts for which they need tax compliance and planning assistance.
Steve, you're a forensic accountant? What exactly is that?
Forensic accounting is the specialty practice area of accountancy that describes engagements that result from actual or anticipated disputes or litigation. "Forensic" means "suitable for use in a court of law," and it is to that standard and potential outcome that forensic accountants generally have to work.
How do you use technology in your practice?
We use technology for a variety of purposes. For example most tax filings are done electronically these days.
We generally encourage our clients to file electronically - as there are validation checks done by the taxing authorities which helps minimize IRS correspondence. For example, for divorced parents, the IRS verifies on an efile return that a child is only declared as a dependent of one parent. A cross-check of this is made when the tax return is filed - thus reducing the liklihood that both parents will claim the child - resulting in later IRS correspondence questioning dependency exemptions claimed by each parent.
Our clients are generally comfortable with using email, fax and phone. While we love to meet clients face-to-face, use of technology in this manner helps make processes more efficient, and thus helps us control costs and fees.
How do you charge?
Generally we charge by the hour - our billing rates depend on the complexity of the matter involved, as well as the level of expertise needed.
Our goal is to have projects handled by the person with the lowest billing rate possible - with oversight and review by Steve.
We generally bill our continuing clients after performing services. For newer clients, or for situations where collectibility is not certain, we sometimes ask that a retainer be paid initially to establish credit, and services performed against that credit.
What is your typical fee?
Fees can vary widely depending on the matter involved and the time involved. We rarely see fees of less than $600 or so - for a simple individual tax filing. And sometimes projects grow so large in scope (for example for fraud investigations or estate tax matters) that the fees can grow to ten thousand dollars or more.
For example in a fraud investigation, an analysis of one known bank account can lead to the discovery many other bank accounts - such a discovery can cause the scope of an engagement to expand significantly.
It is our goal to never surprise our clients. For smaller projects, we can generally give an up front fee estimate. For projects where the scope has the potential of expanding, we promise to keep our clients informed of what the fees incurred are, as well as to seek approval if we feel that it is prudent to expand the scope and time of a project. We never expand the scope without first discussing the matter with our client and getting their approval up-front.
Do you charge for research time?
In general, yes we do. The tax code itself is approximately 2.3 million words; and there are volumes of Treasury Regulations issued interpreting the tax code. Congress is typically changing laws several times per year - and then the court system as well as the IRS issue pronouncements interpreting the tax laws, often in a manner in which new law is created. The result is that the tax law tends to be fluid thus requiring research to ensure compliance as well as to identify planning opportunities.
While we'd love to claim that we know every facet and nuance in the constantly changing tax law, it is not possible for any competent tax professional to know everything without conducting research at times (any tax professional who claims to be able to do this is not being honest).
Tax research materials and literature can fill a library. So if we are researching a complex matter or transaction, and the $s are high enough to justify it, sometimes we suggest to our clients that we confirm the current state of the law before taking a position on a tax return.
Do you take continuing education courses?
Yes through professional organizations, such as the California Society of CPAs and Hawaii Society of CPAs, as well as through universities (such as Golden Gate University). We take much more continuing education than is required to maintain our professional licenses, simply because we've found that that minimal level of continuing education is not sufficient to be able to serve our clients as well as possible.
Do you carry insurance?
Yes, we carry a comprehensive errors and omissons liability insurance policy. Thankfully we have never had to make a claim on it.
What is your approach to dealing with gray areas of the tax law?
The tax law, besides being fluid and in a constant state of change has many gray areas. This often means that the interpretation of law may or may not be 'black and white.' While we are willing to interpret gray areas of the law agressively (ie, in favor of our client/taxpayer), we always first talk to our client about this.
For example: Gray areas of law can result when one court (say, the U.S. Tax Court) issues a ruling on a matter one way, and another court (say, the Circuit Court of Appeals) comes up with a different interpretation of the same law. In that case we need to analyze the fact pattern of each case and ruling and compare that to our clients' situation. Sometimes this creates opportunity for tax planning, and other times we make a determination that we are bound to follow one courts' ruling, and not the other. It can get complex very fast.
Some of our clients are very conservative, and they prefer that gray areas of law be interpreted in favor of the IRS. Other clients are very agressive, and prefer that all gray areas of law be interpreted in their favor.
We never take a position on a tax return that is contrary to the law. But if we find that we are dealing with a matter involving gray areas of law, we first talk to our client and give advice on what approach we think they should take. As part of a 'team effort' with our client, we will develop an approach and strategy that makes the most sense, and complies with the tax law.
