We supposedly have entered the age of the kinder and gentler Internal Revenue Service. My tax attorney friends tell me this is true. But having watched some of them this last month wrangle with the 10,000 page Tax Code and finding nothing easy about Form 1040EZ, I can’t help but wonder if there is anything kind and gentle about paying taxes.
But this is the time to salute our overworked tax attorney co-workers. We salute them as the often overlooked cogs in the law firm machine. That may be because tax law generally attracts the introverts among the legal profession. Maybe that’s because tax lawyers can explain all of their actions with only two words. They can look at their client apologetically upon announcing a steep tax bite, shrug their shoulders and explain, “the Code.” They can justify virtually any argument with an overzealous IRS agent by pointing to the book, nodding confidently and stating, “the Code.”
But tax attorneys have the most expressive language of all lawyers. They speak the French of legal dialects. “Recapture” is sexy. “Realization” sounds enlightening. So does “like-kind exchange.” The adept tax attorney can turn a lousy year into a “loss carryforward,” which sounds almost sympathetic. Tax shelters sound cozy. If your gross income is gross, tax attorneys adjust it. They offer you personal exemptions, which we all know are better than standard deductions. Presumably everybody gets those.
Other lawyers rely heavily on tax attorneys. Every real estate deal, every lawsuit settlement has “tax consequences.” Clients always want to know the “tax ramifications.” It doesn’t appear that we’ll ever be able to do without the tax lawyer’s service. Once we get comfortable with 10 tax brackets and the various means for wealthy people to legally avoid payment, the government passes a tax reform act that changes all the rules — except the ones that affect the politicians of course. Tax attorneys must have a powerful Washington lobby.
Most non-tax attorneys rarely, if ever, have occasion to read the IRS Tax Code. Many think that ESOP wrote great fables. In order to confirm the soundness of staying away from the Code, I offer you the following Tax Code explanation regarding your Individual Retirement Account:
“Paragraph (1) does not apply to any amount paid or distributed out of an individual retirement account or individual retirement annuity to the individual for whose benefit the account or annuity is maintained if the entire amount received (including money and any other property) is paid into an individual retirement account or individual retirement annuity (other than an endowment contract) for the benefit of such individual not later than the 60th day after the day on which he receives payment or distribution . . .”
Obviously, a lot is left to the individual.
We non-tax attorneys don’t often think about all of the different types of taxes tax attorneys handle. Of course there’s the income tax, property tax and sales tax. But there’s also a unitary tax, crude oil windfall profit tax and a tax on non-resident aliens. (Isn’t “resident alien” an oxymoron?)
All we know is we don’t like paying taxes. But tax attorneys and their lobby have come up with a solution for that problem, too. Taxes are now being given names that sound irresistible. Who wouldn’t be in favor of the Hazardous Waste Clean-Up Tax or the Foreign Business Tax? How much can an Alternative Minimum Tax hurt anyway?
— Mitch Margo is an attorney in St. Louis and a member of The Levison Group, which provides columns for this newspaper.
He may be reached at [email protected].