No one has a patriotic duty to pay more taxes than are legally owed. That was established in 1934 in a precedent-setting case, Helvering v. Gregory. Judge Learned Hand ruled that, “Anyone may so arrange his affairs so that his taxes shall be as low as possible.” Since then, this ruling has been upheld by many courts, emphasizing that everyone has the right to take legal steps that will allow them to pay as little tax as possible. There is nothing unethical about doing so.
Of course, the IRS does not inform anyone about tax reduction strategies. Many tax advisers are also unaware of many of the tax-saving strategies that would benefit their clients. As a result, people who believe that they are paying too much in taxes are probably absolutely correct.
The IRS and the Tax Code
The U.S. tax code is incredibly complex, and advice from the IRS is often wrong. It’s estimated that 8.5 million Americans receive the wrong answer when they call the IRS for answers to even the simplest tax questions. The IRS sent out 10 million correction notices, and about half of those are estimated to be wrong. When taxpayers challenge penalties imposed by the IRS, about 40% of those assessments are abated.
Careful Planning is Key
Planning and implementing legal tax saving strategies are key for anyone who doesn’t want pay more taxes than required. In order to effectively provide clients with legal tax savings, it’s necessary to continually study the laws, searching for ways to minimize taxes. This research must be ongoing throughout the year, not just at tax time. Money saved on taxes can be used to grow and preserve assets.
Some effective tax saving strategies include:
- Deferring income
- Splitting income among family members so that more income is taxed at a lower rate
- Reducing estate, investment and gift taxes
- Reducing taxes on retirement distributions.
The TaxAdvocate Group is a full-service accounting firm providing Tax Reduction Services in Brooklyn to individuals and small businesses. For more than 20 years, they have focused their Tax Reduction Services in Brooklyn on reducing their clients’ tax liabilities with detailed planning and legal tax strategies. It is important to note that they are enrolled agents, meaning that they are allowed to represent clients before the IRS and state tax authorities, unlike many other tax advisers. Visit their website to look at more info about their tax planning service.