TaxCoach Briefs:    May 28, 2009

Volume 4, Number 24

• Marketing Minute: Keepin' It Real
• New Resource: Section 105 Mini-Seminar
• Member Opportunity: TaxCoach "MVP"
• Member Q & A: Section 105 Questions

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MARKETING MINUTE (EAL)
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KEEPIN' IT REAL

Keith and I talk about tax planning all the time with you. We can do that because we know you "get it" -- you understand the value of the service we talk about marketing to your clients.

But clients don't always see things the way we do. Last week, we took an example from a book on relationships to illustrate how you are not your client -- and why understanding exactly what value your client wants out of your service is so important to keeping them happy. (We even invited Oprah to review the article, seeing as how it fell into her specialty. Turns out she's too busy working to pay off her tax bill to get back to us.)

Today I want to extend that discussion by talking about how to make tax planning real and tangible for them. It's fine to talk about "tax planning" -- but that can be a real abstraction. (When I first met with Ed to do planning for my consulting business, before TaxCoach, I had no idea what Ed was talking about --Keith.)

So how can you put tax issues in an everyday context? How can you help prospects and clients realize just how important tax planning is? Here's a story about a tax court decision to illustrate just how far taxes penetrate into our daily lives.

When clients think of "tax litigation," they probably picture solemn judges pondering weighty questions like "fairness" and "equity." Of course, most tax disputes are resolved directly with the IRS or in Tax Court, and very few make it to "real" courts. When they do, billions of dollars can turn on the outcome.

And sometimes, tax litigation turns on less profound issues. A British court just gave us a great example to use with clients when it ruled that Pringles are potato chips.

You may not like Pringles yourself -- but you've certainly tried the uniformly-shaped chips from the tube-shaped can. Pringles start life as baked dough, with just 42% actual potato content. They come packed in a tubular can with foil-lined interior and resealable plastic cap. (That packaging is so distinctive that when its inventor died, his children honored his wishes to actually bury his cremated ashes in one of those cans!)

The issue reached court because Britain levies a 15% value-added tax on "products made from the potato, or from potato flour, or from potato starch." The tax naturally makes potato chips more expensive. So Proctor & Gamble, the chips' manufacturer, argued that Pringles don't look like chips, don't feel like chips, and don't taste like chips.

A lower court agreed with Proctor & Gamble. However, a Court of Appeals panel ruled last week that it wasn't the lower court's job to look into scientific or technical questions about the chips' composition, and that a child could give a "more relevant and sensible answer" than a food scientist. The court's decision could cost Pringles $31 million in tax per year.

This Memorial Day weekend marks the unofficial start of "summer." At least some of your clients will probably spend at least some time at the business end of a can of Pringles. See how you can use this example to give them a "real world" perspective on tax planning that makes your value immediate and real!

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NEW RESOURCE (EAL)
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SECTION 105 PLAN MINI-SEMINAR

Two weeks ago, we announced that we're creating a series of "mini-seminars" on specific tax topics based on those we created for the Obama election and stimulus package. We don't really see them being used for large groups, but we do see them as useful resources for walking individual clients through specific strategies, at your desk or in your conference room.

Last week we rolled out an S Corporation presentation that walks clients through the ins and outs of S corporations: how to establish and maintain them, how they minimize employment tax, how they lower audit odds, and even how they affect future Social Security benefits.

This week, we're rolling out a second presentation. This one covers Medical Expense Reimbursement Plans ("MERPs"), also called Section 105 plans. These are by far the most popular tax strategy TaxCoach offers, especially for married sole proprietors who can hire their spouse and deduct their families' medical bills as business expenses. We're confident you'll find the new presentation to be a valuable tool for presenting the strategy to your clients.

You'll find the new mini-seminar in the Playbook section, under "Seminar Kits."

We're planning to roll out similar presentations on meal and entertainment deductions, car and truck expenses, and home office expenses. We trust you'll find these to be helpful as well. That's because they'll help you look good by giving clients the money-saving concepts and strategies they really want from a true tax professional.

And we're looking for your suggestions too! What specific concepts and strategies can we help you deliver to your clients?

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MEMBER OPPORTUNITY (EAL)
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TAXCOACH "MVP"

Last year, right around this time, we announced that we would be raising membership fees by $10 per month. At the same time, we gave you an opportunity to beat that price increase by joining our "MVP" program. Specifically, we offered annual subscriptions at a special, bargain rate: 12 months for the price of 10. Even better, we priced those 10 months at last year's rate!

You'll be pleased to learn that we're not raising fees this year. However, we know the economy is tough, and many of you are looking for savings wherever you can find them. So we're still offering the special "MVP" rates to all members.

Here's the deal. Take care of your next 12 months of TaxCoach now and get two months free. That includes unlimited use of the planning system, full use of all the marketing tools and resources, and everything we add to the system over the next 12 months. We'll even add a free "annual review" consultation with me personally!

If you're interested, call Catherine at 513-321-2820 and she'll set you up. It takes just one new client to pay for the entire year and more. But you'll still get the two months free!

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MEMBER Q & A (KAV)
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Q: In the MERP module, you recommend that when the client's primary business is an S-corporation [and the client and their spouse can't participate in a plan], you consider segregating some of their income to a C-corp and pay benefits through that entity. How much income is appropriate? Too little is a concern and too much = more SE tax.

Also, when is the deadline to set up the plan for tax year 2009? April 15, 2010? Is there a template form for creating the plan?

A: The segregation generally shouldn't be an arbitrary amount -- it should reflect a bona fide business rationale, such as distinct lines of business or income sources. One example might be an HVAC contractor who segregates out his wholesale parts desk business from his retail service company.

The deadline to set up the plan for 2009 was December 31, 2009. Unfortunately, the MERP is a "going-forward-only" strategy. And the law specifically states that a MERP cannot reimburse expenses that were incurred before the plan's start date.

Your TaxCoach membership includes unlimited use of our MERP document template and implementation guide. You'll find them in the TaxCoach system in the Forms & Templates folder. You'll also find a "Medical Benefit Comparison Grid" outlining the MERP and comparing it to the HSA, which will help clients understand the differences between those two strategies.

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We're happy to answer your questions on TaxCoach content, features, or marketing. While we give first priority to our All-Star and Hall of Fame members, we work to answer all questions. For best response, email support@taxcoachsoftware.com. If we think the answer will be useful to all of our members, we'll publish it (anonymously) here in the 'Member Q & A' section of TaxCoach Briefs.

Regards,

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