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10 J. Mo. B. 1 (1954)

handle is hein.barjournals/jrmobar0010 and id is 1 raw text is: JOURNAL OF THE MISSOURI BAR OFFICIAL ORGANIZATION OF ALL MISSOURI LAWYERS January. 1954 Responsibility to Your Client Regarding Taxes By Darrell D. Wiles, of the St. Louis Bar Address at Missouri Bar Tax Institute, Kansas City, December 4, 1953. Darrell D. Wiles AT THE OUTSEr5 may I state that I am certainly not so naive as to think that you are gathered here this noon to listen to any comments which your Vice-Chair- man may make. Especially is that not :rue when we have such distinguished uests from the Internal Revenue Serv- le of the Treasury Department as are with us today, and whom we are all justly anxious to hear from. Your Chairman, however, did request :hat I discuss with you briefly at this .ime the subject Responsibility to Your ,lient Regarding Taxes. None of us need be reminded, and par- ;icularly our clients, that taxes today are oo great a part of our business life to se treated lightly. Intelligent tax plan- sing will give a taxpayer a competitive Ldvantage over his neighbor and may nore than offset the greater production and efficiency of a competitor. The popular, uninformed concept of tax practitioner today is that of one saving a bag of tricks that greatly re- luces our client's taxes and probably gets .as out altogether. Too often the lay- man visualizes us as perhaps animal-like :reatures hovered over our desk develop- ng our literary style by dictating glow- ng minutes depicting reasons for not 3aying out dividends and writing long instruments setting forth tricky trusts so that those who come to us would not stand their full share of the tax burden. Of course every lawyer having an active tax practice knows that this conception is not the true picture-that actually he spends a considerable portion of his time in killing schemes believed by proponents to be new but which were actually dead and buried many revenue acts and many icisions ago. Let us then consider the various re- sponsibilities one owes to his client re- garding taxes. Probably each of the spe- cific points to be mentioned hereinafter could well be the subject of a lengthy discussion, but obviously the limited time we have here will only permit a very perfunctory statement of the items. Also, as a warning, it should be stated that if any one has come here this noon expecting salty revelations on this sub- ject, then he is doomed to disappointment. Now what are these responsibilities? In the first place, and perhaps some of you may wonder why this is even mentioned, but it seems to-me to be very important, and that is to know your client. The tax adviser must have a great deal more knowledge regarding the client than may be acquired at one sit- ting, including information as to phases of the client's activities and background which initially appear little related to the immediate tax problem. In a sense this is merely another aspect of Justice Brandeis' belief voiced as a practicing lawyer in Boston-that one who desires to advise a client as to particular busi- ness problems should try to know more about all of the client's business than does the client himself. Secondly, educate your clients to seek tax advice before acting. This, we would undoubtedly all agree, is a real chal- lenge. But tax advice after the transac- tion has been half negotiated, half con- summated or fully arranged is often too late, or at least not as effective. After intent is established, revisions or other indirect paths to reach the same end are precarious. As one writer so aptly ob- served, Where the cloth of the transac- tion has been improperly cut, not even the best tax tailor can make the suit fit. In the third place, make certain that your client gets the full rights and bene. fits that the tax laws allow him. In other words, you owe a responsibility to your client to minimize his taxes by what- ever means are legally available and log- ically advisable in the light of all of the facts and circumstances. Some clients have a horror of over- paying taxes almost akin to a fear of being buried alive. Eventually they may develop a loop-hole complex which feeds on club groups and luncheon table rumors as to what the other fellow is getting away with. His tax adviser necessarily acts as a buffer between such clients and a potential chain of events terminating in prosecution under the fraud sections of the income tax statute. Therefore, no greater service can be rendered the client than to impress upon him that taxes are not minimized by schemes and tricks. His neighbors and competitors do not escape taxes by some secret clever plan. If they pay less taxes, it is because they have been in. telligently and wisely advised. The Gov- ernment expects the individual to con- duct his affairs in a manner which will save him the most taxes. It only de- mands of the taxpayer that he conduct his affairs honestly. In this connection, a word of caution should prehaps be given against advis- ing a client that the chances are it won't be picked up. Minimizing taxes is not a game of chance. If you win once, the client will try again and again until you lose. And then he will lose faith in your judgment. He is likely to say: You should not have let nie do it. To bet against the keenness of the revenue agent or intelligence agent, trained specially in picking up omis- sions, is dangerous. In view of what has just been said, I perhaps should make it clear that, on the other hand, it is certainly not recom- mended that you walk into the Bureau with your hat in your hand. If you do, they'll take it away from you-and should. Now in order to make certain that your client gets the full rights and bene- fits that the tax laws allow him, you are t REMINDER Pay 1954 Enrollment Fee To Clerk of Your Circuit Court Fee $15, plus $1.00 penalty after January 20th. Vol. 10 No. 1 No. I

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