4 Questions to Assess a Tax Lawyer’S Knowledge of Your Industry
Lawyer Magazine
4 Questions to Assess a Tax Lawyer’S Knowledge of Your Industry
Navigating the complex world of industry-specific tax law can be daunting. This article demystifies the process, offering clear insights from seasoned tax lawyers on key areas like overlooked deductions and compliance strategies. Equip yourself with the expert knowledge needed to make informed decisions for your business.
- Ask About Overlooked Industry-Specific Tax Deductions
- Navigate Tax Compliance for User-Generated Content
- Handle Tax for Marketing and Digital Services
- Structure Assignment Fees in Real Estate Wholesaling
Ask About Overlooked Industry-Specific Tax Deductions
Question: "What industry-specific tax deductions or credits do businesses in my field often overlook, and how can I structure my expenses to maximize them legally?"
What I'd Look for in Their Response:
1. Depth of Industry Knowledge - A strong tax lawyer should immediately reference niche-specific deductions, whether it's R&D tax credits for tech startups, home office deductions for digital entrepreneurs, or Section 179 benefits for equipment-heavy businesses. If they're vague or generic, they may not have real expertise in my industry.
2. Strategic Thinking, Not Just Compliance - I'd want them to go beyond basic deductions and discuss proactive tax strategies, like entity structuring (LLC vs. S-Corp), deferred income tactics, or ways to legally minimize self-employment tax.
3. Real-World Case Examples - The best tax lawyers back up their advice with specific client scenarios that show they've helped businesses like mine save money without raising red flags with the IRS. If they can't provide industry-relevant examples, they might not be the right fit.
This question forces them to demonstrate deep expertise, not just recite tax code. If their answer is generic, I'd move on.
Navigate Tax Compliance for User-Generated Content
As a Senior Software Engineer at LinkedIn with over a decade of experience scaling systems for 800M+ users, I'd ask: *"How would you navigate tax compliance for user-generated content monetization across 30+ countries with varying digital service taxes and VAT thresholds?"* I'd assess their grasp of OECD guidelines, localization laws (e.g., EU's DAC7), and how they'd structure agreements for creators/employers to avoid double taxation. The ideal response would tie technical infrastructure (like geo-tagging transactions) to tax strategies, showing they understand both code and compliance. Deep expertise isn't just citing regulations-it's mapping how data flows (e.g., ad revenue splits, API partnerships) intersect with evolving tax regimes. If they can't articulate nexus risks or automation levers (e.g., withholding at the edge), they're not ready for platform-scale challenges.
Handle Tax for Marketing and Digital Services
If I were talking to a tax lawyer, I'd ask: 'How do you handle tax compliance and planning for businesses in the marketing and digital services industry?' From their response, I'd be looking for a deep understanding of the unique challenges that come with our industry-like managing freelance contractors, handling complex revenue streams, or navigating multi-state tax rules. We've worked with many tax law firms on marketing campaigns and have seen firsthand how important it is to find a lawyer who truly understands the specifics of our industry. The right lawyer will not only know the laws but also understand how to apply them in practical, business-savvy ways.
Structure Assignment Fees in Real Estate Wholesaling
One key question I'd ask a tax lawyer is: "How do you structure assignment fees in real estate wholesaling to minimize tax liability while remaining compliant with IRS regulations?" I'd be looking for a response that demonstrates a deep understanding of how sales tax applies to assignment deals, the best entity structure for tax efficiency, and potential deductions related to wholesaling activities. A strong answer would also touch on strategies like proper invoicing, leveraging corporate tax rates, and how to handle income splitting if applicable. If they can clearly explain these concepts and provide real-world examples, it shows they understand my business model and can offer practical, strategic advice.
