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BUSINESS BASICS CHANNELS 
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Cons of Tax Groups There is an old saying that nothing is certain except death and taxes. There is a lot of money to be made from both of them. And I freely admit that is how I make my living (helping people with taxes but NOT death. Ewww.) But I feel most CPAs give solid value for the money you pay us. Whether we prepare your taxes or just give you business advice, most people walk away thinking they got something worthwhile for their money. However, there are some groups popping up all over trying to apply the old multi-level marketing schemes to the tax business. Now I won't name names here, but when I get done, hopefully you will be able to recognize some of their traits. I will leave it up to you to decide the merits of signing up or NOT signing up with one of these. My goal is merely to educate. The concept with most of these companies is to sign you up, have you pay a fee for joining (either annually or monthly) and then talking all your friends into signing up under you. Sounds just like Amway, or any other multi-level marketing scheme. You don't have to have any expertise in taxes or business to sign up. Just bring your checkbook. Once you sign up, these companies make incredible claims as to how much money they can save you. "Give yourself an instant pay raise" they shout. "Start a home based business and you can save thousands of dollars. Guaranteed". Now let me get this into the open right here and now. Much of the advice these groups give is good reputable tax advice. Ideas like hiring your kids to work for you and others have validity if properly executed. It is the marketing of these programs that bothers me the most. I have problem with ANYONE who GUARANTEES to save you money on your taxes. Especially when they guarantee you a large dollar figure. And then they charge you a monthly fee to belong to their group. Well, let's look at what your $100 a month buys you. In some cases, these companies will represent you in the event you are selected for audit. But the IRS just isn't doing many audits these days. Their resources are being drawn into other directions. So the chances of being audited are fairly slim anyway and if you ARE audited, $1200 a year can buy a lot of a CPA's time. These groups also claim that THEIR specialists will represent you in the event of an audit. But when it comes down to it, if you are going to have to endure an audit, would you rather have a trusted advisor who knows you and understands your business represent you or some faceless person in another city who has no real stake in your affairs? I know I fight hard for my clients because I want to make them happy and keep them coming back. These groups make money from their own members. One of the groups sells a book written about the group itself and how great they are and how all of the people in the book saved so much money. Guess who they sell this book to? You got it--their own members. They have books, sales aids, taped courses, etc. to sell their own members. Hmmm. Who is making the real money here? There are even groups who challenge the whole constitutionality of the tax system. For $2500 or more they will show you how to not file returns with the IRS and stop paying taxes. Well, if it sounds too good to be true, it probably is. And I would almost wager that the people selling you these programs report all of THEIR income on proper tax forms. Now, I can respect the people who challenge the income tax system and are willing to fight for what they believe in. If they are willing to go to jail or face loss of their property to stand up for these beliefs, more power to them. But sometimes it is smarter to work within the system than to try to abolish it--and you can sleep at night. So let me wrap things up here. Am I saying you shouldn't study the tax laws and arrange your affairs to pay the least amount of taxes possible? Of course not. You have a duty and a right to do these things. But is signing up under a multi-level marketing group that makes incredible claims the best way to do this? Is it worth risking your freedom and your assets to play games with the IRS? The Internal Revenue Service may be kinder and gentler these days, but they can still deal quite severely with people who flaunt the system. So my advice is to study hard, find every loophole you can, find a good CPA (you just knew I was going to say that, didn't you?) and do everything legal you can to save taxes. And you really want to spend that $100 a month, I can think of any number of charitable organizations that desperately need your help. See you next month. |
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