The Portland Business Journal recently reported that Tony and Micaela Dutson were sentenced to 10 years for a tax-avoidance scheme. I represented clients that were sucked in by the Dutsons, so I am unfortunately familiar with their scheme.
The Dutsons made quite a bit of money selling abusive tax trusts. Not only did my clients pay these fees, they paid quite a bit more in penalties, interest, and attorney fees to unwind what the Dutsons had done to them.
You may be thinking that the old adage, “if it sounds too good to be true, it probably is,” may apply here. However, there are many sophisticated tax planning ideas that my clients could have used that are perfectly legitimate to avoid paying more than their share of taxes as required under the law. Some of these ideas do sound too good to be true, but they work nonetheless.
The trick is finding competent counsel who will not lead you astray. Micaela Dutson was an attorney, and had her certificate hung on the wall of her office showing she was a member of the Oregon State Bar. So what is a client to do?
A client should not rely on any one professional when dealing with sophisticated tax planning. If your attorney has an idea for you, run it by your CPA. If your CPA thinks you should set up a trust, or move money offshore, ask your tax lawyer his or her opinion.
You may think this is just a ruse to get you to pay more fees by asking two professionals rather than just one, but I can tell you that as a matter of fact, I make much more money on cleaning up the messes others get into than on putting my clients into the tax planning strategies that I come up with.