“You’re about to take the bar exam. Here’s a multiple choice – the difference between tax avoidance and tax evasion is:
A. Whatever the IRS says,
B. A smart lawyer,
C. ten years in prison, and
D. all of the above.
Being a tax lawyer's got nothing to do with the law. It's a game. We teach the rich how to play it so they can stay rich. The IRS keeps changing the rules so we can keep getting rich teaching them. It's a game.”
– Scene from The Firm
It’s the tax filing deadline for most individuals here in the US. Most of our clientele, being institutional, have their own fiscal schedules to worry about, but we will take this opportunity to remind you to keep up to date with the legal requirements – institutional and personal.
If you think about it, taxes are reasonably straightforward. If you have a simple situation (say, an individual with one job and no dependents), then you can perfectly quantify your legal duty to the government. The systematic nature of taxes means two accountants, working independently, should calculate the same dollar amount you owe the government. By comparison, fiduciary duty is sometimes less clear and it is inevitable that two perfectly well-trained fiduciary experts will use slightly different language to describe the same ultimate principles. In other words, figuring out your tax liability should be easy, especially with professional assistance. Figuring out your fiduciary liability requires more effort.
So here’s our question: Are you paying as much attention on your fiduciary liability as your tax liability?