duffy financial services
Attorney Support
a win-win business relationship
Your Clients’ Tax Questions Answered
Many counselors feel unprepared to answer questions clients have about tax law or selling their business. Having a relationship with an accounting firm in place allows immediate help for your client. Additionally, the referral work can be a great resource and growth opportunity for both the lawyer and the accountant.
There are many basic strategies that can be employed to save the business owner and seller money while reducing risk. A common first decision is an asset sale or stock sale. In considering how the sales price will be allocated, there are varied and different tax impacts on each category: assets, consulting agreements, covenants not to compete, trademarks, and good will.
Additionally, there can be legal situations involving underreporting by a taxpayer that they now want to make right. An accountant retained by the client does not have client-attorney privilege, but if the accountant is retained by the attorney he is covered by client-attorney privilege. Giving the client the right data on what the impact will be of the proposed adjustment, and their options on how to pay it, can be invaluable.
War Stories
How We Helped Attorneys Solve Client Problems
Related to Tax & Finance
An accountant can help counsel tremendously in situations of great difficulty — when the tax concepts involved are complicated or extreme, or the personalities are hostile. Divorce finances can be messy, but there are ways to operate that promote fairness and protect everyone in difficult situations.
Difficult situation – Hostile clients
Messy Divorce Between Business Owners
A husband and wife were divorcing who had been working together in a dry cleaning business. It was a hostile situation. The wife, uncomfortable with the alimony she was offered, was asserting that the husband made a lot more money than he was reporting.
The huband admitted there were some funds that were “overlooked” on the tax reporting. As a hostile negotiating tactic, he wanted to remove this weapon from her arsenal — he felt it was much better to pay IRS than to pay her. The judge did not want this issue in his courtroom. If there was tax underreporting he wanted correct returns filed immediately.
Counsel retained Duffy Financial Services so that any discussions and source data would be covered under client-attorney privilege. Counsel made contact with the IRS revenue agent and arranged for voluntary disclosure with no criminal charges. We were visited by 2 revenue agents afterward, both with guns! We negotiated an installment payment agreement.
It was an ironic mistake in strategy by the soon-to-be ex-wife. Rather than get more alimony from her ex-husband, she implicated herself because she worked at the store during this period and had filed a joint return. Subsequently, she wound up forced to pay her half of the additional tax due on the amended returns.
financial issues after a death
Widow Leaves Tax and Business Issues Unhandled for 10 Years
Duffy Financial Services had counsel refer to us the surviving spouse of a business owner with 4 teenage children. For the many years since her husband’s death she had left numerous issues related to his business and to her personal finances completely unhandled.
The attorney involved knew we would take real responsibility for this person and sort out the business and personal finance issues. The first step was to deal with the unopened mail. We found $40,000 of uncashed Social Security checks which had accumulated in the 10 years since her husband’s death.
We had unfiled tax returns, business and personal, with tax due on those years. We put the wife on payroll to handle her individual taxes. We managed the IRS on the subtotal debt that was owed on the old tax returns, and collected debts that unscrupulous people had obtained from the widow.
The husband’s business was not active but he owned real estate through the corporations, and had tenants in the building who were severely behind on rent. We negotiated with the tenant to pay the back rent. We found a new tenant and handled the overdue real estate taxes. We even had to handle a family member who was living in a property the widow owned, rent free, for 8 years. We eventually sold the property and used the money to pay the IRS.
In dealing with this extreme and complex set of tax and business-related issues, the lawyer realized that this was the job for an accountant. Duffy Financial Service worked as a team with the law firm to fully resolve all of the client’s situations. The attorney handled the real estate transactions and lease negotiations; we handled all of the financial and tax-related issues.
Nobody likes a bully. And working with one can be impossible.
Duffy Financial Services has worked with many attorneys over the years, developing trusting professional relationships that benefit our mutual clients. As such, we have resources we can recommend to our clients for situations in which legal counsel and services are also needed.
putting the right resources together
Bullying Attorney Impedes Business Sale Negotiations
We had an individual whose business was acquired by a large company. The larger company was primarily owned by one person who was getting older. This older business owner was encouraging his junior executives to buy him out of the business in a systematic plan. Duffy Financial Services was hired to represent one of the junior executives personally.
The attorney for the older, primary business owner had a bullying style. He was difficult to handle in negotiations, insisting things be his way or no way. As can be easily imagined, this tactic impeded the buy-out process.
We suggested that he and his partners talk to an attorney that we thought would be perfect for this situation. They ended up working with the attorney we proposed to conclude the deal. The “opposition” felt so highly of this attorney that in future business matters, they hired him to represent them.
Referrals Are a Two-Way Street. Let’s Work Together.
Let's Talk About Collaboration
Call us today or reach out via our Contact Form to discuss how we can help you with client tax and finance issues.
908.889.4604
