Larry Jacobson
The Tax Professional As a Coach

What in the world does this mean?

February 11, 2010
by Larry Jacobson, CPA, JD

As we are in the beginning of the so-called “tax return season,” now is an appropriate time to reflect on the skill-set that makes a person an excellent tax preparer. Some skills are rather obvious. First, the tax preparer needs to be highly knowledgeable in the area of tax law. All tax preparers must have a strong background in general tax accounting, the rules involving disclosure of uncertain tax positions and the penalties associated with taking aggressive tax return positions. Beyond that, the preparer needs strong technical skills depending on the type of tax returns he or she prepares. In particular, many tax preparers must know the rules involving most individual income tax areas of income, deductions and credits. Those tax preparers who prepare business returns need to be very familiar with partnership taxation, the taxation of S corporations and the taxation of C corporations and their shareholders. As for those tax preparers who prepare returns that involve international tax issues, well that is the subject for another article!

Another important skill set for tax preparers is general knowledge in accounting and business. Many of the tax rules involving income exclusions or tax deductions require that the taxpayer have a nontax purpose for undertaking a certain transaction. Failure of the tax advisor or preparer to adequately understand the motivation behind a transaction may put the client in a potential penalty situation if the tax treatment of such transaction is not imbued with the proper “economic substance.” A highly competent tax preparer will work closely with a client (preferably during the tax planning stage) to ensure that a transaction meets the letter and the spirit of the tax law when it comes time to preparing a tax return that reflects the transaction.

A third type of skill-set involves basic interpersonal relationships. Most clients have little background in tax and find the annual preparation of tax returns as a fate worse than going to the dentist. They find tax rules confusing and, without any prompting, are scared of what the Internal Revenue Service (IRS) might do if it ever conducts an audit of their tax return. An important and seriously overlooked skill of the highly competent tax preparer or advisor is the ability to put the client at ease so that both the preparer and client can work together in a collaborative manner in putting together a tax return that properly reflects the client’s tax situation. A really good tax advisor is not only technically competent but finds a way to soothe a client’s anxiety during the tax planning and preparation process.

The Tax Professional As a Coach

What in the world does this mean? Coaching is a hot area right now and there are many definitions as to what a “coach” does for his or her clients. In my view, the job of a coach is to help the client define goals and objectives in order to improve on some important aspect of the client’s life. Although many people equate coaching with changes in some form of interpersonal behavior, I believe that a tax professional can engage in meaningful coaching of their clients. But in order to be a good coach, the tax professional must understand that, subject to insisting that the client’s tax return be prepared in a manner consistent with legal requirements, the client (and not the professional) ultimately makes the important decisions involved in the tax planning of a client’s affairs and preparation of their tax return.

In the tax advice and preparation area, the most important coaching techniques involve four different areas:

  1. Get the client to understand and then act upon their risk preferences in the area of taxation. As tax practitioners, you understand that tax law involves many shades of gray and that not all positions taken on a tax return are black and white. As a “coach,” the tax advisor should spend time with the client and ask many open-ended questions in order to get the client to articulate in their own words how aggressive or risk adverse they want to be in terms of their tax-return positions. While the advisor must guide the client to take positions that are legally defensible and properly disclosed, the client’s risk preferences (and not the tax preparer’s) should guide the tax planning and preparation process.
  2. Must coach the client to maintain adequate records. Where the client is a business entity, this requirement is generally met. However, even with business enterprises, the client may sometimes be forgetful or inexperienced in certain discrete areas, such as maintenance of depreciation records, compensation arrangements, travel and entertainment and the uniform capitalization rules. In the area of individual tax clients, the knowledge base of clients in the area of records maintenance is even less. The tax preparer, as coach, must work closely with clients, especially disorganized clients, to ensure that they understand the importance of maintaining adequate records. In this regard, the preparer can show the client how maintaining adequate records is not only important in preparing tax returns, but equally important in terms of understanding their business and financial position, facilitating estate and in the case of a business, succession planning.
  3. Must coach the client, in some cases, to take responsibility for his or her tax filing and payment obligations. While most clients pay their taxes on time and file returns on a timely basis, many procrastinate. Moreover, among those who ultimately pay their taxes, many are subject to penalties for failure to timely pay estimated taxes or deposit withholding taxes. The tax law severely penalizes those who fall behind on their payment and filing obligations. The advisor/preparer must coach his or her more delinquent clients on the importance of meeting tax deadlines. Of course, the failure to heed the advisor’s advice lies with the client, but that should not stop the preparer from frequently “coaching” the client as to the importance of paying taxes on a timely basis.
  4. Get the client to relax during the tax planning/preparation process. This involves the advisor moving from the technical professional who makes decisions on behalf of the client to a professional that imparts technical knowledge on the client and, in a relaxed setting, gives the client the various options (when the tax law allows) to choose from in terms of making the final tax planning call. The tax professional as coach is self confident in his or her knowledge of tax law and views it as vital to educate the client to make intelligent tax decisions. In the present environment, taxpayers want to feel in control of their tax planning. It is the role of the tax advisor to use his or her knowledge to empower clients to make legally justifiable decisions that are discussed thoroughly in a calm and collected manner.


The tax professional can learn many solid techniques from effective coaches that can assist clients in better taking control over their personal or business tax planning.

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Larry JacobsonCPA, JD, is an attorney and CPA, is a senior partner in the Chicago office of the law firm of Schiff Hardin LLP. He holds a BA from Washington University, an MBA from the University of Chicago, an MSOD from the University of Pennsylvania and a JD from the Georgetown University Law Center.