There’s an amazing story making the rounds of newsrooms right now that you can harness to grow your tax-planning business. No, it’s not The National Enquirer’s bombshell claim of Senator Ted Cruz’s five affairs (although they were right about John Edwards). No, it’s not widespread rumors that one of the current presidential candidates will turn up in the D.C. Madam’s “little black book” (although they were right about Senator David Vitter).
I’m talking, of course, about the Panama Papers – 11.5 million leaked documents spilling the beans on 14,000 clients who used a Panamanian law firm called Mossack Fonseca to set up over 214,000 shell companies across the globe. The list includes world leaders like Russian strongman Vladimir Putin, celebrity athletes like soccer star Lionel Messi, and garden-variety tax cheats like American billionaire Igor Olenicoff (who’s already been convicted of failing to declare income on $200 million stashed in offshore accounts).
I realize the timing isn’t great for most of you to dig down deep into any of this. But it’s a big story. I’ve done a dozen or so radio interviews this week, and people, including your clients and prospects, want to know what it’s all about. So it’s important to at least be conversant on the subject – and there may even be some business-building opportunity in it as well.
Here’s the gist of it: Mossack Fonseca used their network of 40 offices to help clients establish and maintain corporations to hold title to real estate and investment assets in locations throughout the world. There’s nothing illegal about that, and there are perfectly legitimate business and investment reasons to use those entities. But they also let clients own assets anonymously – and some of those clients used that anonymity to evade taxes, launder money, and hide proceeds from illegal activity.
Most of the talk centers on political leaders exposed in the leak. Apparently Vladimir Putin thinks it wouldn’t be sporting to let the Russian people know how much he’s stolen from them, so he hid assets in his cronies’ names. The King of Saudi Arabia used companies to hold mortgages on his houses in London, as well as his yacht. The radio hosts I’ve talked to have almost uniformly asked if the story doesn’t prove how “the rich” have rigged the system to their benefit.
But clients here may want to know if they’re missing out on something by not having the same sort of arrangements. We know they’re not – as U.S. citizens, they’re subject to U.S. tax on all their worldwide income. So how can we tell them that, in a way that intrigues them to engage us for tax planning?
The answer, and you should tattoo this on the inside of your eyelids, is to tell them they don’t need secret offshore companies if they’ll just engage you for a plan to take advantage of all the domestic deductions, credits, loopholes, and strategies that are already ripe for the taking.
Here’s how that conversation might go:
Prospect: “Hey, what do you think about this Panama Papers story? Those guys are getting away with murder, right? I wish I could get in on that action!”
You: “I’ve been following the story, sure. But it sounds like a lot of people are missing the point.”
Prospect: “What do you mean, missing the point? It looks like that guy in Iceland figured out how to work the system!”
You: “And look where he is now! Resigned!
Look, I know nobody likes paying taxes. And everyone wants to believe there’s some sort of secret offshore strategy that can make them go away. But there’s a reason you don’t hear more about those sorts of accounts, and it’s because the only way they work is by helping you cheat.
Here’s the real news. You don’t have to go offshore to pay less. Our tax code has hundreds of deductions, credits, loopholes, and strategies to pay less. You just need a plan to take advantage of them. Most tax professionals don’t do that. They put the right numbers in the right boxes on the right forms, but then they call it a day. They record the history you give them, but they don’t look forward to see how to pay less tomorrow. But you and I can put together a roadmap to do just that.”
It’s as simple as that, really. You’ve baited the hook. Now get their number and tell them you’ll call on April 19.
We’ve acknowledged for years that it can be hard to start a conversation about tax planning if taxes aren’t already on a prospect’s mind. The Panama Papers story gives you a golden opportunity to join the conversation they’re already having, and turn it to your benefit. It would be a shame to miss that opportunity. So get out there and take it!