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Retirement Tax Planning – Work for All Seasons of Life
The single best skincare tip for avoiding wrinkles is to stay out of the sun. What does this have to do with retirement tax planning? Well, much as skincare shouldn’t stop when the first wrinkle appears, tax planning for retirement shouldn’t stop at retirement. Tax planning for retirement is an ongoing balancing act that, in a perfect world, begins with the first earned income and continues for the remainder of the taxpayer’s life. The trick is to balance tax strategies that help while a client is working with tax strategies that are going to benefit the client once they retire all without having a crystal ball as to how tax laws may change in the short- or long-term future. This article is the first in a four-part series that explores tax planning strategies both before and during retirement and discusses the importance of pro-active planning before and during retirement. Keep reading to learn more…
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CURRENT EDITION
Editor’s Pick: Tax Planner Faces Malpractice Claims Over Decades-Old Tax Advice—What Went Wrong?
In a case that every tax professional should take note of, the prominent law firm Sidley Austin LLP finds itself defending against claims that it provided faulty tax advice over two decades ago, leading to massive IRS liabilities for a family. The plaintiffs, the Cáceres family, are seeking to recover $7 million after settling with the IRS, claiming Sidley’s advice on a complex asset liquidation set them up for disaster. The kicker? The lawsuit was filed over 25 years after the advice was given. So, how are the plaintiffs still able to pursue the case? It all boils down to a claim of fraud—and how that could toll the statute of limitations.
Navigating IRS Penalty Relief and Forgiveness
Yes, the IRS does forgive some tax penalties. The IRS refers to this forgiveness as penalty abatement. Abatement is the act or process of reducing or removing something. In this case it is removing or reducing a penalty. But penalty forgiveness is not a blanket offer that everyone qualifies for the way the radio ads make it seem. There is a process that the IRS has for requesting and granting abatement. It is up to the taxpayer to prove that they qualify for abatement. That’s where you come in.
From The Government And Not There To Help You
The story of James J. Maggard has some interesting and possibly valuable lessons. The one that strikes me as particularly important is that it makes it crystal clear that disproportionate distributions contrary to a corporation’s governing documents will not blow its S election. That does not mean that disproportionate distributions are just fine and that you don’t need to address them. There is a practical lesson about being careful who you take on as fellow shareholders. And there is another slightly odd lesson, that almost makes me want to create a new law of tax planning: Don’t deliberately involve the IRS in your business disputes. Their job is not to help you.
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