Economic uncertainty, coupled with the possibility of higher tax rates, has driven taxpayers to seek more face time with their accountants.

“My clients are looking to do more than just drop off information as they have in past years,” said Scott Van de Ven, a Cape Girardeau, Mo.-based CPA.

“Whether they’re a business or an individual client, they want to meet with me in person,” he said. “They’re very concerned about which way the economy, and tax rates, are headed.”

Steven Eliach, principal-in-charge of the tax group at New York City-based Marks Paneth & Shron agreed.

Eliach and Solomon Packer, a senior consultant at Marks Paneth & Shron, have weighed in on the advice they are giving to clients.

“Those who have made it through the last 18 months have probably gotten leaner and meaner,” said Eliach. “That’s a good stance for a more successful 2010. But the challenge, and it’s a significant one, is not to be sloppy when growth starts. It’s true that you can hire better people and get equipment for less. You can get a leg up. However, given the slow improvement of the economy, and the fragile state of many businesses, decisions require more analysis and thought than they ever have.

“While federal income taxes are unlikely to go up significantly during 2010, they probably will in 2011,” he added. “Accordingly, the generally accepted approach of deferring income and accelerating expenses as a tax-mitigation strategy may need to be rethought. Some companies and individuals might be better off doing the opposite. This, more than ever, is a case-by-case call. While I don’t have any secret knowledge, based on the fact that we have to fund all the money we’re spending it appears there will be tax increases on the horizon.”

When it comes to offshore money, taxpayers should come clean now, and get some help doing it, he advised. “Even though the Oct. 15, 2009, deadline for the IRS Voluntary Disclosure program has passed, the government’s ongoing revenue drive, plus an apparent willingness on the part of overseas banks to reveal the names of U.S. account holders, means proactive disclosure is, in almost every case, the smart approach,” said Eliach. “Those with offshore money should seek experienced legal and accounting help to steer clear of fraud, penalties, even criminal charges, and to maintain legitimate tax minimization strategies.”

The trend toward increased government enforcement in this area will only get worse, according to Eliach. “The government is tightening its grip on offshore money and unreported overseas income, so this is something they should be seeking to remedy,” he said.

Low valuations present a rare opportunity to pass along assets, he observed. “Estate planning is really about transferring that will appreciate over time,” he said. “A lot of the estate-planning techniques are a function of valuation and interest rates, and both are low right now.”

The question for new international businesses is where the entity should be located, according to Packer. “Now more than ever, the question can make a big difference in terms of tax liability for companies that will have overseas operations,” he said. “In fact, U.S. entrepreneurs may want to consider forming their new corporations offshore at the outset in order to minimize tightened deferral and transfer penalties.”

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access