Thursday, March 8, 2012

Seven Reasons Why I Love Tax Law

Photo credit: John Bristowe
Let's face it, tax law is just plain unpopular. And unpopular not just among the taxpayers, but also somewhat unpopular among the lawyers. It's considered by some lawyers to be too dry, too esoteric, and too risky in the way it worms itself into other practice areas to take non-tax lawyers by surprise: "What do you mean I didn't take the tax consequences of my advice into account? I wasn't giving anyone advice on tax law! I'm a ____________ lawyer, not a tax lawyer."

For me, it was one of those surprise loves of law school. Like getting to know the quirky, quiet girl, who turns out to be really attractive and fascinating. So, why am I so into tax?

1. The rules are all written down in one well organized book (at least for federal income tax) crafted fairly recently by legislators, rather than being spread over dozens of statutes and thousands of cases stretching back over hundreds of years like some areas of the common law.

2. You can easily measure case success and legal value for client money: saving the client more money in taxes than the cost in legal fees will be a modest success, saving the client lots of money as compared to fees will be a great success.

3. Tax law applies to almost everyone, not just to a select few who choose to engage in a particular business or activity as with many other areas of law. In fact, it's now pretty much a set of global interacting laws which have spawned a host of treaties of necessity between states who have had to figure out who should get taxed where and for what.

4. You have lots of options open to you in resolving disputes of tax interpretation, from informal negotiations with tax authorities, to fairness appeals within a tax administrative organization, to full-blown litigation in courts external to an organization like the Tax Court of Canada. And contrary to popular opinion, you definitely can reason with tax authorities; trust me on this one, I've worked on both sides of the fence. The key is an appropriate level of engagement combining both negotiation and litigation, backed by well researched and reasoned arguments.

5. There is lots of room for creativity in resolving tax disputes. The circumstances behind every person's tax situation are unique, thus there is always scope for trying unique resolutions.

6. There are clear yes and no, right and wrong, black and white answers in tax law. Lots of them in fact, because the legislation is so detailed and has been tested so often leading to lots of judicial elaboration over how it should be interpreted. Don't get caught up in the growing number of "tax myths" quite properly debunked by the CRA, like that paying income tax is voluntary in Canada, or that only corporations and not "natural persons" need to pay tax. There are lots of legitimate ways to reduce or dispute your tax bill. Some other areas of law are far fuller of greys, because legislators or administrators haven't provided enough written guidance, or that guidance isn't tested often enough in court.

7. Tax law is a living, constantly evolving beast, changing with each passing year. Some areas of law rarely change, but one of the great challenges and benefits of tax law is its constant changes. While this poses challenges to lawyers and accountants, for taxpayers it means there are constantly new legal opportunities to explore.

So whether you've got income tax, HST/GST, excise, provincial or international tax problems, there are solutions - other than complete denial or total surrender - which your tax lawyer, tax accountant (who can't offer legal advice or go to court for you, but could still be quite helpful in giving you legal information or talking to the CRA), or you personally can pursue.

3 comments:

  1. I'm betting some "natural person", somewhere, is gonna read this!

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  2. I don't know if I'm a "natural person" but I read it. And I'm showing it to my son who is coming, this Saturday, to do my income tax. The more you know about sharing your money with your country the better you feel

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  3. All I can say is I'm glad some people love it.

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