Archive for August, 2010

Deep Blue Ocean

Ah summer vacation!  A great American tradition for sure.  

My family decided that we would spend our hard earned vacation at one of the East Coast’s most popular beach destinations.  So dear old Dad saluted and made the requisite arrangements.  We rented a condo at the beach, packed the kids into the van and drove south.  

We had a great time playing in the surf, eating seafood and just hanging around each other.  

One day as my wife went to give the baby a nap, I was tasked with standing on the shore and watching my other kids playing in the surf and boogie boarding.  As I called out surfing advice to them, I took a look around the beach.  

Rich golden sand spread out from the water’s edge and extended to the right and the left as far as the eyes could see.  Carpeting this summer playground were all kinds of people.  

The most impressive to watch were the young adults.  In the full bloom of youth they strutted down the beach.  These were young men and women, with very limited amounts of fat, seemingly consumed with themselves and what they considered “big problems.”  Being discussed were such Gordian quandaries as: 

“I’m not getting out of work until 10!  “I mean like, how am I supposed to meet him at the marina at 10:30?” 

Nonetheless, it does make one happy to be around such young people and I even silently cheered them on, hoping they were enjoying every last minute of this time in their lives.  

Turning toward the kids playing in the surf my eyes were drawn upwards towards the horizon.  

The Deep Blue Ocean.   

Immense, unfathomable and permanent it was there before anyone on the beach existed and it will continue to draw the attention of onlookers long after everyone on the beach has turned to dust.  

The ocean is really two things.  Those playing in surf think they understand the ocean, but their experience is a simulacrum of the real thing.  For although the surf seems like a part of the ocean, its behavior and characteristics are quite different. 

The surf mainly consists of the waves swelling up and crashing ashore with much fanfare.  It’s quite impressive to watch, as the white water froths and bubbles as it races toward the shore.  Then quite suddenly the water recedes leaving nothing but bare sand in its wake.  

I contrasted this with the much calmer waters of the Deep Blue Ocean.  To the casual observer the Ocean is dull and boring as the surf is where all the action seems to be.  Scientifically; however, we know that the deep ocean is a self sustaining and complex environment that contains much of the maritime life.  Indeed, we are told that life itself began in the deep ocean. 

My thoughts were briefly interrupted by someone passing in front of me who mistakenly believed they were still in the “full bloom of youth” when clearly they were not.  

“Poor choice of beach apparel”, I thought.  I also wondered if public eyesore ordinances were still in effect.  

Anyway, being on vacation with the family at such an idyllic place, and watching others on the beach interacting with one another, made one thing crystal clear to me.  

Contrary to what we are lead to believe every day back in the “working world” it is not the possession of “things”, or the attainment of organizational power, or even fame that brings contentment in life.  

No my friends, it’s the bond that we have with each other, with other human beings, that brings true contentment and happiness.  In fact, to the extent those bonds are deep, wide and permanent, determines the degree of happiness.  

For some, relationships are like the surf, quickly formed with much hoopla and then instantly dissolved and retracted, while others prefer relationships more like the Deep Blue Ocean, solid, understated and not easily moved.    

It is often said that our dear business of consulting is a “relationship business” and we must admit that this is true.  Consultants generally do business with those clients that they have established some degree of rapport.  

Not to criticize our compatriots, but we find that many in the business specialize in building the kind of relationships that are akin to the surf.  They show up at the client’s office with loads of cheap kitschy promotional items and while showering the clients with the pens, calendars and stress balls, they layer on syrupy sweet platitudes about their “commitment.”  

And when the chips are down? 

Receding quicker than the surf, most will sell out the client’s interest like a cheap beach souvenir in favor of siding with a regulatory agency or chasing the latest industry fad.  

A choice few of us; however, remain as the Deep Blue Ocean.  Unflappable in the face of those challenging the client and unimpressed with industry fads.  For a true relationship with the client is not built upon logo items and endless business lunches, but rather an understanding by all that the consultant may not always be right, but will always act in the client’s best interests.  

As the kids came roaring ashore with the surf chasing them, I suddenly found the other half of the family next to me.  Back from the nap my wife and the baby settling next to me we began chatting about where tonight’s dinner festivities were to be held.  

As my wife was saying something about shrimp, the kids came rushing in and cut into our conversation to tell us about a wave that had just crashed ashore.  We took this opportunity to ask them about dinner.  They both looked at us as if we had asked them about Calculus and they quickly made it clear they were amicable with whatever we decided.  

As they turned and ran back toward the beach, my son stopped halfway, turned around and with a very serious look said, “Thanks Dad.” 

Have a great week, 

Michael Bechara, CPA

Managing Director

Granite Consulting Group Inc.

mbechara@consultgranite.com

www.consultgranite.com

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International Affairs

Please enjoy another guest post from our friend out West ….Karla Dennis!

 Ronald Reagan once stated that the nine most terrifying words a taxpayer can hear are: “I’m from the government and I’m here to help.”

There are certain government buzz words that always make the hair on the back of your neck stand up. Here is the lead paragraph from the latest IRS letter: “As part of a continuing effort to improve global tax administration efforts, Internal Revenue Service officials announced today the realignment of the Large and Mid-Size Business division to create a more centralized organization dedicated to improving international tax compliance.”

It is now going to be called the Large Business and International division (LB&I).

“Executing our international strategy is a top priority, and our work continues to intensify in this area,” said IRS Commissioner Doug Shulman. “Every day, we are moving forward in our international compliance efforts. Bringing together our top international personnel in this new group will help us advance our global tax administration efforts and ensure focus and fairness in a critical area for our nation.”

The existing division had 600 agents.  The new and improved division will add an additional  875  agents in order to “enhance” the program. Hmmm…that’s more taxpayer dollars. Any idea how the cost will be paid? (Good Guess)

 The realignment will bolster the IRS is gathering international taxes from individuals and corporations in several ways, including (in their words):

  • Identifying emerging international compliance issues more quickly.
  • Removing geographic barriers, allowing for the dedication of IRS experts to the most pressing international issues.
  • Increasing international specialization among IRS staff by creating economies of scale and improving IRS international coordination.
  • Ensuring the right compliance resources are allocated to the right cases.
  • Consolidating oversight of international information reporting and implementing new programs, such as the Foreign Account Tax Compliance Act (FATCA).
  • Coordinating the Competent Authority more closely with field staff that originate cases, especially those dealing with transfer pricing.
  • Otherwise centralizing and enhancing the IRS’s focus on transfer pricing.

The new international unit will include a transfer pricing director, who will continue piloting the new transfer pricing practice, and a chief economist, who will oversee the IRS’s economic positions pertaining to transfer pricing.

Today’s announcement marks the latest in a number of efforts the IRS has made to increase international tax compliance. The IRS has taken major steps to address offshore tax evasion, including the investigation of the misuse of undisclosed offshore accounts by U.S. taxpayers. Last fall, the IRS created a unit to better monitor tax compliance by individuals and their related enterprises.

LB&I is also charged with overseeing the implementation of the recently enacted Foreign Account Tax Compliance Act (FATCA). Signed into law in March, FATCA will substantially improve international information reporting, increasing international transparency and compliance.

The bottom line is the IRS seeks to make it more difficult for taxpayers to evade taxes by crossing international borders. I advise my clients that tax evasion is never an option when tax strategy is truly the answer.

You saw the new buzz word, transfer prices, highlighted in a number of places. Transfer prices are significant for taxpayers because it allows tax administrations to determine in large part the income and expenses, and therefore taxable profits, of associated enterprises in different tax jurisdictions.

So, even if you are in a foreign land, the IRS is coming for you.  It is a Global Tax Storm.

Contact a qualified tax strategist now so that you can weather the storm. 

To Your Success…

Karla Dennis – America’s Tax Diva

Cohesive.

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