What is Strategic Tax Planning?
Between the extremes of complete compliance with tax law and the outright tax fraud is a dense fog of uncertainty. Business owners make important decisions about their individual and personal income taxes in a dense fog, unaware of the opportunities or hazards. A misstep in one direction can lead to perilous risk of audits and penalties. A misstep in the other direction can lead to substantial obligation of unnecessary taxes.
This fog is created by our current tax laws and lack of guidance from Congress. Currently five times longer than the Bible (and increasing by one change a day, on average), the Internal Revenue Code relies on vague and confusing language such as “reasonable compensation” and “ordinary and necessary business expense.” With this fog creating by the ever-changing Tax Code, some taxpayers take blind gambles, running substantial risk of audit and penalties. Conversely, another group of taxpayers will not enter the fog and incur far more tax than legally necessary; they considerably pay more than their “fair share”.
Simply stated, Strategic Tax Planning is the process of structuring and conducting business and personal transactions so taxes are reduced to the lowest possible level while protecting business and personal assets in our litigious society. The overall aim of Strategic Tax Planning is to maximize “after tax” income, protect assets, plan for the eventual exit from the business, and minimize estate and inheritance taxes. This is accomplished through the Strategic Tax Planning process, which includes a team of professionals investigating the Tax Laws together with the business owner’s individual facts and circumstances, to develop a customized Strategic Tax Plan.
In other words, a Strategic Tax Plan serves as a map by which to guide business owners to a safe path through the fog of uncertain tax laws. While the hazards in the fog may be fearsome to the inexperienced, the due diligence of a prudent Strategic Tax Planning team of professionals serves as a beacon of light to illuminate the uncertainty and expose the hidden dangers in the fog of the Tax Law, ultimately permitting business owners to safely structure their businesses and transactions within, while protecting their assets and realizing substantial tax savings.