Just when we thought we’d put 2002 behind us, along comes April 15 to remind us of it all over again. And worse yet, to make us pay for having been through it.
With tax time piling more pressure on top of the anxiety many people are already carrying around, it won’t be surprising if some of us act a little dysfunctionally this month. However, there are ways to make tax stress less toxic to yourself and your clients. Here are some ideas:
I’ve just met with a new client who is about to be married for the second time. Several years ago, he neglected to pay taxes while his business was failing. The IRS caught him, and he is still paying penalties and back taxes. He intends to be honest with his fianc?e about this, but I’m the one he wants to break the news to her! Should I agree? Though I understand your client’s desire to have you do his dirty work, this won’t serve his marriage well–it positions him as a child, rather than as a responsible adult who’s cleaning up his act and moving forward. He’d be better off broaching this delicate subject privately with his fianc?e before they see you together.
Urge him to find an relaxed time to talk with her. He might open the conversation with something like this: “Honey, I want us to have a marriage based on trust and open communication. There’s something I did in the past that I feel ashamed about, even though I’m making up for that mistake. I need to tell you about it, and I hope you won’t judge me too harshly.”
Having set the stage, he can then tell her about his tax debt. When they subsequently meet with you, she will have had some time to grapple with her feelings and reactions, and they can talk to you about the best way to move forward.
Yesterday a longtime client ranted at me for half an hour about his IRA, his stock portfolio, and his estate plan–all of which will need to be revisited if the President’s proposed tax changes go through. I didn’t know what to tell him, except that I’m just as frustrated as he is by the constant changes in tax law. How should I handle this? I think it’s a good idea to validate his feelings of frustration and confusion, just as you have. It’s extremely hard to plan for a future that holds so many unknowns, but remind him that he chose you to help him chart the best course amid all these uncertainties.
Once he feels calmer about the situation, you can counsel him about his choices. Some people feel more in control if they focus on a single possibility, while others prefer to consider all the alternatives and then prepare for the worst case.
So if you have a good idea of his personality type, consider tailoring your response to whatever will best calm his stressed reaction. For example, you might run several scenarios for him, and suggest how he would want to reposition his assets in each case. If you think the law isn’t likely to change anytime soon, advise him accordingly.
My client, a retired professor I’ve known for years, is so angry at the government’s plans for military action in Iraq that he wants to protest by not paying his taxes this year. As a planner with CPA certification, I’m not comfortable with this choice. He knows I don’t agree, but how can I dissuade him? I would begin by giving him time to vent his feelings of alienation. After listening empathetically, see if you can support some of his perceptions so he feels he is not alone. Even if you don’t agree with his views, you may be able to say something like “I know you’re not the only one who feels this way. I’ve heard other people say similar things.”
Once you have supported his stance to the extent that you can, you might brainstorm with him about more proactive ways to express his opinions. For example, he could join organizations of like-minded folks, write letters to major publications, call his Congressional representatives, and write the President.
Whether or not he elects to take positive action of this kind, I think you should make sure he understands the eventual cost, complications, and other repercussions of tax evasion. If his decision was made impulsively, remind him that hastily made choices rarely prove to be the best ones over the longer term.
Ideally, the combination of empathy, brainstorming about activist alternatives, and more consideration of the real-life cost of evading taxes will help him choose a less thorny path. But if he persists in being a refusenik, make sure you keep a record of your advice to protect yourself from being implicated in his choices.