THREE TAX GUYS – AN ILLUSTRATION

Some time ago I published a post explaining that businesses (or individuals for that matter) may well need three tax guys depending on the circumstances.  The first two were their CPA and, depending on the complexity of some matters, perhaps a tax-compliance attorney.  The third professional came into play if the IRS or state Department of Revenue (DOR) disagreed.  A professional litigator is needed to pursue the matter in court, to pursue what is, in effect, a tax appeal.  The appeal there is taken from the IRS’ or DOR’s decision. The Roth Law Firm is happy to serve as your tax SWAT team, stepping through the courtroom doors.

The following example may illustrate the point at which appellate attorneys or litigators will step in.  A Midwestern state has a provision in its tax code exempting material for repair of agricultural machinery from sales tax – a tax break for farmers no uncommon in the central swath of the country.  CPAs or compliance attorneys, who know way too much of the tax code by heart for any human being, are those who will know about this provision ahead of time and may advise a farmer to take advantage of it.

But when an agricultural operation replaced its silos’ roofs and called that material for repair of agricultural machinery, the DOR disagreed and demanded that sales taxes be paid.  That disagreement was resolved in court.  Once the appeal was at hand, the question was no longer what provision of the tax code might exist that might help a client – a CPA’s specialty.  The question became what one particular clause of the code, already at the center of a dispute, actually meant.  Was a silo roof a part for repair? Was a silo agricultural machinery? What constitutes a repair (by opposition to, say, maintenance)?  This is what lawyers call a question of statutory interpretation, and this is a matter best handled by litigators and appellate attorneys.