Yesterday, I left the comfortable confines of TMN world headquarters to travel to cold and snowy Chicago. A TMN member invited me to deliver a continuing education program on “Tax Planning for Non-Tax Lawyers” to an audience of about 100 members of the Kane County Bar Association. Not a bad turnout, considering the snow and the cold!

After years of speaking mostly to tax professionals and financial advisors, it felt good to be back among the lawyers. (Some of you who are new to the network may not be familiar with my personal background. Just as Peter Parker was bitten by a radioactive spider and wound up with the power of Spiderman, I was bitten by a radioactive lawyer and found myself with the power of attorney.)

I talked about some of the “usual suspect” strategies like S corporations, medical expense reimbursement plans, and automobile expenses. And I mentioned some fun “tax bait” strategies like the Augusta Rule. But my real goal wasn’t to teach specific strategies. It was to convey a general attitude towards taxes: that planning is the key to paying less, and if you wait until April 15 and just record the last year’s history, you miss out on the opportunity to plan for savings.

The audience was generally receptive. Some of the stodgier members scoffed at the specific strategies. One guy didn’t believe that attorneys could use S corps to save on employment tax, and brought a printed copy of the Radtke decision (authorizing the IRS to recharacterize K1 distributions as salary in cases where the business pays no reasonable compensation) to challenge me, loudly, in front of everyone else. (That was fun . . . we talked after the presentation, and he turned out to be a good guy.) Another guy thought the Augusta Rule was silly, until I acknowledged that it wouldn’t be making anyone rich . . . but it still beat sending the money to the government.

Introducing tax planning ought to be an easy thing to do. After all, who wouldn’t want to pay less tax? Unfortunately, it’s not that simple. People, including accountants and attorneys, usually have a pretty firm impression in their mind when they hear the word “taxes.” And sometimes it’s harder than we think to dislodge their existing impression of taxes as unchangeable, and cast in stone. That makes it hard to replace their current paradigm with something that lets us help them pay less.

Put simply, people tend to think inside their existing boxes. And why not? It makes life easier when you already know what to think about something. Introducing the concept of proactive tax planning usually means asking them to think outside their usual boxes.

Thinking outside the box like that is easy for some people. It’s a little harder for others, and darn near impossible for some people. (That last group includes people you spend an hour with, showing them line-by-line on their returns why they’re paying more than they have to, and still fail to convince them. Usually, at least in my experience, they’re engineers or engineering types.)

I wish I had an easy strategy for getting people to think outside the box. (Ugh . . . I know it’s an awful clich�. But work with me here.) If I did, I could probably change the course of human history. But you’ll be most effective with those sorts of conversations if you just understand going in that you’re challenging your listener to change the way they think, and then make it as easy for them as possible. Acknowledge up front that it’s OK to start out in their comfortable little box. Warn them that you’re asking them to take a scary step outside. Reassure them that you’ll be there to hold their hand for the journey. And paint a picture of a wonderful new destination that justifies the whole trip.

Will that work all the time? Of course not. But it will work some of the time, and make the process easier when it does. It may even help smoke out the prospects who just won’t ever step outside, earlier in the process. Just remember, the next time you’re asking someone to change the way they’re thinking, that it might be harder for them than for you, or for most prospects. Respect that roadblock and you’ll find it a lot easier to get around!

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