Don’t Like Your Tax Professional’s Answers? Maybe You’re Asking the Wrong Questions.

Early in my tax preparation career I used to get very frustrated in my job.  I would often be asked a question by a client which I did not know the answer to and I would walk down to the owner of the firm and would present him the question as it was posed to me.  I would then promptly go back down to my office and give the client the answer to the question that they had asked.  This would inevitably lead to a follow-up question and I would once again travel down the owner’s office and he would give me an answer which was the complete opposite of the one he had just provided to me just moments before.  Sound familiar?

“Facts and circumstances”, I would come to find out, can completely alter the answers that we give as tax professionals and receive as taxpayers.  This can ultimately lead to a frustrating experience for a client who “just wants the quick answer”, because the correct answer to the question is often not the general answer I would want to give until after discovering the “facts and circumstances” of any given issue.  For example, the U.S. Code: Title 26 – Internal Revenue Code or IRC is where Federal tax law begins.  The IRS themselves state “…, the IRC is complex and its sections must be read in the context of the entire Code and the court decisions that interpret it.

At a minimum, please do not be misled by the false interpretations of the IRC promoted by the purveyors of anti-tax law evasion schemes” (IRS.gov).  The IRC is followed up by Treasury regulations which provide the official interpretation of the IRC by the U.S. Department of the Treasury.  In addition to the IRC and Treasury regulations the IRS publishes other forms of official tax guidance, including revenue rulings, revenue procedures, notices and announcements.

I have read several articles that put the current tax code somewhere between 4 and 10 times the length of the complete works of Shakespeare, depending on who’s counting! I would argue that it is probably safe to say that there is no one living person that knows it all and even if they did that’s only the half of it.  Why you ask?  Well, the saying “knowing is half the battle” is true, it is half the battle.  For tax professionals we have to go to the code, however, we also have to understand the facts and circumstances related to the issue at hand to come up with the right answer for the situation given.

For instance, there are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin (Alaska is and opt-in community property state).  The IRS, states that “Federal law determines how property is taxed, but state law determines whether, and to what extent, a taxpayer has “property” or “rights to property” subject to taxation (IRS.gov).  Accordingly, federal tax is assessed and collected based upon a taxpayer’s state created rights and interest in property.  In English, the IRC was written with common law in mind which has been adopted by the majority 41 of 50 states.  There is a tendency for the common law “view” to be cited and yet could very well be inaccurate when dealing with a community property issue.  Those of us living in a community property state must reread the source information a second time through a “community property lens” to determine if that changes how the law must be interpreted.

So the next time you think you have a “real quick tax question” for your tax professional or think that they are “dodging a question”, please understand they are probably trying to fight the urge to give you their first answer, which very well may end up being wrong, until they have gathered enough facts and circumstances to provide you the right answer.

Joe Webb
Senior Tax Professional

The Molen & Associates Difference

Mike Forsyth

“Super helpful and timely. This is our first year with them and we look forward to trusting them with our taxes and business books for years to come.”

Caitlin Daulong

“Molen & Associates is amazing! They run an incredibly streamlined process, which makes filing taxes a breeze. So impressed with their attention to detail, organization, and swift execution every year. Cannot recommend them enough!”

Sy Sahrai

“I’ve been with Mr. Molen’s company for few years and I felt treated like family respect and dignity. They are caring, professional and honest, which hard to find these days. Love working with them.”

Should I Open an HSA?

Should I Open An HSA Account? Are you considering a Health Savings Account (HSA)? If so, it is vital to understand what exactly an HSA entails. With this guide, you'll learn all about it: the advantages of an HSA and how it can help you manage your medical expenses....

Personal Finance Tips for Young Adults

As someone who has been working for most of their life, I wish there was someone out there who had shown me the correct way to save money for my future. Now that I am in my 30s, I have been getting better at saving money, but there are some personal finance tips that...

How to Track Expenses

There are many different methodologies, tools, tips, and tricks for tracking expenses, and it ultimately depends on your lifestyle and how actively and accurately you want to track them. This is information I’ve pulled from other sources and compiled into a few...

How To Accurately Record Commuting Mileage and Increase Tax Deductions

Increase Tax Deductions With the Business-Mileage Rule Using the Business Mileage tax deduction can be tricky. There are lots of situations that count while others do not. We don’t like commuting mileage. You should dislike it, too. It’s personal. It’s not deductible....

Bookkeeping 101

As a new business owner, you will certainly have some responsibilities you won’t be able to avoid. One of those non-negotiable part of your business is producing financial statements. It can be overwhelming trying to master a topic such as bookkeeping but don’t worry...

Bankruptcy – Everything You Need to Know

Everything you need to know Filing for bankruptcy protection is considered a statement on your ability to repay your debt to your creditors. Filing for bankruptcy will also put a halt to foreclosure or legal actions against you, and it stops creditors from calling and...

Top Tax Tips for 2023

Tax Refunds May Be Smaller This Year Plan now to learn these 2023 tax tips avoid surprises in the future! If you’re expecting a tax refund in 2023, it may be smaller than last year, according to the IRS. Your annual balance is based on taxable income, calculated by...

What is an EA?

Have you ever seen the title EA next to a tax professional’s name and wonder what it means? Or maybe you’re familiar with the title and you’re curious about the differences between an EA and CPA? Either way, in this blog I will be answering these frequently asked...

History of Federal Income Tax Rates: 1913 – 2021

The United States federal government levies taxes on the income of its citizens and legal residents. The Internal Revenue Service (IRS) is the agency responsible for collecting these taxes.  Federal income tax rates have changed several times since 1913, when the...

Familiarize Yourself With Tax Terminology

Yes, I know, tax terminology feels like a whole new language. For most people all of tax forms can be even more confusing than a foreign language. What’s the difference between itemized deduction and standard deduction? What’s Income tax?  These words and more tax...

Request an Appointment Today

6 + 4 =

Call us at

Pin It on Pinterest

Share This