M2A1

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Memoandclientletter.ppt
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ASSIGNMENT

TAX MEMORANDUM

Based on assigned fact situation

Assignment specifics:

  • Prepare a near final file memo on your problem for class discussion on September 18

  • Submit final revised memo in D2L drop box by Sunday September 22

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Communications & the Tax Professional

  • What Makes Tax Research Communication Effective ?
  • Requires it be fully developed and delivered in a manner that is accepted & understood by the audience
  • Preparation for Effective Communication requires:
  • Thorough application of research techniques
  • Thorough research of expectations of the audience
  • Identification of factors that interfere with the message
  • Feedback & corrective measures to the communication

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Communications & the Tax Professional

  • The researched File Memo, followed by

  • Communication to the client

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Structure of Technical Tax Communications

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Purpose of the File Memo

  • Organize facts, tax issues, relevant law & conclusions
  • Creates document for a review of research activities by the practitioner’s supervisors or colleagues
  • Allows for documentation of matter for later review
  • Occurs when the client , an auditor or a successor CPA involved with the client wants to understand the rationale for the recommendation
  • Facilitates a later review of the recommendations to the client without having to recreate the underlying research

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The File Memo: Format and Content

  • Facts
  • Brief summary of relevant facts and issues
  • Issues
  • A list of tax issues being researched
  • Conclusions
  • Quickly determine whether each issue is “pro” or “con” for taxpayer
  • Support
  • Detailed review and evaluation of controlling laws
  • Full citations
  • Strengths and weaknesses of both sides of tax argument
  • Actions to Be Taken
  • Recommend subsequent actions for client
  • Identify other strategies for tax return or audit positions

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Tax memo assignment

  • 2-4 page memo to a partner in an accounting firm who provided you with the facts
  • Take the facts as given, state factual assumptions if necessary
  • Grade evaluation?
  • Research is the point
  • CCH AnswerConnect is a major tool
  • Must cite the IRC section(s) being evaluated with (limited) quotes of important language that relate to your facts
  • Recommended to cite a decision by the IRS or a court that supports your position (this is recommended for this memo, and required for the final project)
  • Importance of grammar and vocabulary

The File Memo: Facts

  • Taxpayer will not always provide all relevant facts
  • Taxpayer may forget (potentially detrimental) facts
  • Taxpayer does not always know which documents are important
  • Must rely on taxpayer’s memory which may not be sufficient
  • Loss of records/witnesses may occur
  • The researcher must use professional judgment and experience to obtain all the relevant facts from the taxpayer
  • The research must recognize that tax research may produce a need to gather additional facts if new tax issues are identified in the research process.

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The File Memo,
Links and Attachments (not part of your assignment)

  • File Memo most often used by other tax professionals
  • Language should be clear, yet can be more technical
  • Reference primary & secondary authority with citation format
  • Attach for file documentation only most important documents which can include:
  • Case briefs
  • Highlighted copies of primary sources of law
  • Highlighted copies of explanatory material
  • Related in-house memos
  • Various IRS rulings
  • Journal articles
  • Above documents should highlight important sections
  • NOTE that file documentation is not part of current assignment

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Evaluating Sources of Tax Law

  • Court case opinions written well contain a wealth of information on tax issues:
  • Identifies evolution of pertinent tax law
  • States competing interpretations of the law
  • Identifies critical facts and issues
  • Often includes lengthy concurring and dissenting opinions
  • Identifies additional relevant facts or issues to argue against opinion
  • Rationale can be helpful for appeal of case

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Evaluating Sources of Tax Law

  • Revenue Rulings and Revenue Procedures frequently modified or held invalid
  • To successfully negate an unfavorable pronouncement often takes litigation for the weight of competing arguments to be considered
  • District Court opinions in your client’s jurisdiction are likely precedent to follow
  • If enough similarity exists in the facts or tax issues of those cases to your client’s scenario
  • Tax Court decisions for taxpayers in your client’s jurisdiction on similar facts & tax issues are precedent to follow
  • Tax Court decisions for taxpayers NOT in your client’s jurisdiction on similar facts & tax issues may or may not be precedent to follow
  • It depends on whether the appellate circuit for your client has taken a different position on the issue which is comparable to a Tax Court decision for another taxpayer in a different geographic circuit

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Evaluating Sources of Tax Law

  • Appellate court decisions (outside Supreme Court)carry highest precedential weight as follows:
  • From client’s geographic Circuit unless distinguishable
  • From the U.S. Court of Appeals Federal Circuit if any taxpayer chooses to litigate the matter in the U.S. Court of Federal Claims.
  • Important circuit decisions
  • 2nd Circuit (includes New York)
  • 7th Circuit (includes Chicago)
  • 9th Circuit (includes California)
  • Federal Circuit
  • Older cases
  • Geometrically declining importance, except for
  • Supreme Court cases
  • Cases continually cited for rationale in current decisions
  • 2nd, 9th, and Federal Circuit cases
  • Where it is the only precedent available

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Evaluating Sources of Tax Law

  • Tax treatises and journals
  • Identify current, critical tax issues
  • Can include comprehensive summary of controlling law
  • Court decisions are never completely predictable
  • Yet, on more complex issues, careful review of court decisions is essential for effective posturing to support a position

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Client Letters

  • Telephone calls and e-mails to clients are prevalent
  • Should be followed up with a detailed letter
  • Letter should be brief: No more than two pages
  • Often easier explaining complicated issues face-to face

Format & Content:

  • Salutation/social graces/general conclusion
  • Summary of results
  • Objective of research
  • Statement of facts/disclaimer
  • Summary of critical sources

  • Implications of the results
  • Assumptions/limitations
  • Closing/reference to follow-up meeting/ social graces
  • Attachments

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Sample Client Letter -Sophisticated Client

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Sample Client Letter – Less Sophisticated Client

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Effective Written Business Communications

  • Main point(s) in first paragraph
  • State well-defined purpose, and stick to it
  • Avoid “filler” language, clichés, and trendy jargon
  • Revise several times for clarity
  • Use social amenities
  • Spell Names CORRECTLY – Know recipient’s current titles – Add short handwritten messages for added personal touch where appropriate
  • Review carefully using editing and proofreading aids

Use the KPMG info for your reference

https://www.kpmguniversityconnection.com/University/view/curriculum/?module_id=96

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