Talking to CPAs about tax and fiscal responsibility is kind of like telling a carpenter what kind of wood to use for his next project. However, all of us have to pay taxes, so if you are a tax advisor, you’ll not only want to know about the tax law itself, but how it also applies to our everyday lives. On the other hand, if you work in another part of the accounting profession, knowing more about tax makes good business sense for you and your employer.
“As CPAs we should be in a position to assist our clients in finding appropriate business-related avenues to express their frustrations and concerns to allow them to become involved in the policy debate at a level they desire,” says Gary Voth, CPA, JD, a Tax director for PKF Texas in Houston, Texas. “Our objective should also be to keep them on track and focused on making the business changes needed for their continued success in the event the tax policy doesn’t change to their liking.”
While it’s true that an extremely high percentage of business entrepreneurs and executives understand and appreciate that government cannot run on zero revenues and taxes are a necessary part of our country’s economic system, they will certainly have varying opinions on the role, and size of, government.
“The individual’s personal ideology with respect to the size of government and its role will directly impact what they deem to be a fair amount of taxes their business ought to shoulder in order to fund their ideological size of government,” says Voth. “When their views are widely different than those of the current policy makers, they will have a high level of frustration.”
CPAs can do quite a bit to educate themselves, clients, and their employers on how to effect change at the local, state, and national levels. For example, many associations and information bureaus print articles on Washington updates; some of these articles can be forwarded directly to clients without having to worry about copyright infringement or other distribution restrictions. Here is where you can demonstrate value through intellectual capital, says Voth; simply forwarding the article to a client probably won’t resonate.
“A three- to four-bullet introduction to the article on how the Washington chatter directly impacts their business or their personal tax situation, including some dollar figures that they can relate to, will get their attention and they will be more appreciative of your concern and knowledge of their circumstances,” he says.
By educating your client in matters of tax policy, Voth says they will also be armed with more accurate information when they attend industry association meetings. These associations usually have political action committees (PACs) or access to lobbyist to help drive policy in one direction or another.
“Clients care about tax policy and they are in business to succeed and drive value through their organization, whatever type of business it is,” he says. “It makes no difference as to how a particular client views the political world; I’ve never had a client that doesn’t want to achieve the lowest tax rate possible under the law. The lower the tax rate, the more resources the business will have to grow.
“A client has a basic expectation that their accountant will lower their tax liability and is capable of reviewing their return,” continues Voth. “Your more emotionally grounded client realizes the accountant’s ability to lower their tax bill is limited to the confines of the law; to achieve a lower liability, tax law and tax policy will need to change.”
Self-education is key and getting more involved locally is important, but Voth believes it’s often tough to figure out what is happening in your own backyard.
“There are association PACs to get involved in, but on a more local level, being involved in business chambers and economic development associations would likely provide more access to people in the local market that have political influence, or at least a more direct line of communication with lobbyists with existing relationships with policy makers.”
An additional action step CPAs can take is to be an active respondent to proposed tax regulations when the comment periods are open or work within your local chapters, the state CPA society, and the AICPA and other organizations.
“The bottom line is to formulate a response that can be put into the hands of others CPAs or clients that can be easily forwarded to the appropriate people so the Treasury Department at least hears our voice,” says Voth.
For More Information: Advocacy and Education
The AICPA has created a number of interactive resources on a special Advocacy page to help its members understand our nation’s fiscal health. These include:
- What’s at Stake? A CPA’s Insights into the Federal Government’s Finances. This video with AICPA Chairman Gregory Anton, CPA, CGMA, AICPA offers guidance for policy makers and the public on how the U.S. government’s financial statements can be used for greater understanding of the nation’s fiscal health.
- Tools for starting a dialogue in your community, including a PowerPoint presentation, talking points and background information.
- State of the Union’s Finances: A Citizen’s Guide. This guide from the Peter G. Peterson Foundation explains fiscal challenges we face, based on the official financial statements of the U.S. government.