Tax controversy? You need a franchise QB

Love him or hate him: Either way, there's little doubt New England Patriot Tom Brady ranks as a "franchise QB."

With Super Bowl LI upon us, we have a great matchup between the Atlanta Falcons and the New England Patriots. One thing these two teams share in common is their superb quarterback play, featuring presumptive 2016 NFL MVP Matt Ryan and Tom Brady, who is already a four-time Super Bowl champion.

Each of these players is currently playing to the level of a “franchise quarterback.” While the exact definition of a franchise quarterback is not cut and dry, it’s generally used in the context of a player who is a superstar, a player whose team wins because of him, rather than simply with him. A player who can ultimately lead his team to victory.

Every team would love to have a franchise quarterback. Alas, they are few and far between.

The next tier of quarterbacks is generally referred to as “game managers,” players who won’t necessarily lose the game for their teams, but probably won’t go out and carry them to victory. Franchise quarterbacks are often the pilots and leaders of their teams, taking risks and making things happen; game managers rely more heavily on others than their own abilities.

IRS audits and tax-controversy defense, much like football, is a team effort. When looking at the team providing these services to you or your business, is its leader a “franchise quarterback” or a “game manager?”

Tim McHale: Who’s calling the signals on your tax team?

Peyton Manning, recently retired quarterback of the Broncos and Colts, was legendary for his film study and preparation prior to games. He was a master of creating game plans and understanding defenses, allowing him to adjust accordingly.

Game managers often only have a strict, narrow plan that fits their skills, rather than adapting to the situation at hand. They’re not mobile, often stuck in the pocket. They often lack the insight to effectively change plays at the line of scrimmage when they see the defense changing.

A franchise-quarterback tax professional, during planning, will be able to identify positions of strength and relative weakness and plan accordingly on how to tackle these areas with the taxing authority. He will be able to adjust his plan and strategies based on the auditor assigned and how the auditor is examining the issues.

Every auditor is a person with different strengths and weaknesses, and will have a different view of the major issues at hand. Being able to identify these potential issues, develop and execute a plan and adapt to new information is clutch in dealing with tax examinations.

Along with knowing down and distance, knowing how much time is left on the game clock and the play clock are important to successful quarterback play. Franchise quarterbacks are masters of this, knowing always how much time is left and how best to use it, avoiding penalties and wasted timeouts. Game managers have been known to fall victim to the clock, forcing them to burn valuable timeouts, accept penalties or ultimately lose the game.

One of the protections afforded by tax law is the statute of limitations to assess taxes and the right for a taxpayer to a timely and efficient audit. Knowing how to use these powerful protections for their client’s benefit – knowing when the clock is moving, how this may potentially impact their client and mitigating these circumstances – is one of the many valuable skills for a franchise-quarterback tax professional. A game manager might know these exist, but knowing how to use them to their client’s advantage is a skill they often lack.

Green Bay Packers quarterback Aaron Rodgers is the NFL’s all-time leader in touchdown-to-interception ratio, with more than four career passing touchdowns per interception. A franchise quarterback must be able to lead the offense and score touchdowns while still avoiding costly turnovers. Game managers often are known for their general ability to minimize turnovers, but not their ability to lead their team to successful scoring drives.

In tax examinations, one of the keys to a favorable outcome is controlling the flow of information given to the taxing authority. Minimizing “interceptions” (presenting negative or unfavorable information) is only half the battle in a successful controversy defense. Scoring touchdowns (closing out open items presented on an information request or tax authorities agreeing with positions) is a must-do if you want to win the game. Game managers focus on safe passes and not losing the game; franchise quarterbacks know an opportunity to score and don’t miss.

Joe Namath made famous a guarantee before Super Bowl III, that his Jets would beat the heavily favored Baltimore Colts, inspiring confidence in his teammates that they could in fact win this game. Joe was a franchise quarterback in every sense of the term, displaying one of the role’s most vital traits: confidence.

But talking a great game and playing a great game are two different things. Game managers often will speak with confidence, but it doesn’t translate on the field.

One of the biggest keys in successful tax-controversy defenses is the confidence you have in your position and the ability to relay that confidence to the taxing authority. Confidence in positions can come in many different forms, but most often comes from the knowledge that you have of the tax law backing your position and the ability to properly relay and explain this position to the taxing authority.

This confidence can lead to a more efficient audit, allowing you as a business owner or individual to remove this burden from your life. A lack of confidence from a game manager – where they just state their position without conviction or belief, and without the proper understanding of the underlying code – can drag out audits, and at times lead to cases were an incorrect determination is made by the taxing authority.

When drafting your team to protect your interests against taxing authorities, much like an NFL team you want the best and brightest players. Having a franchise quarterback who can develop, execute and modify a game plan, understands the timing of the examinations, knows how to score without turning the ball over and has confidence is crucial to your successful defense in a tax-controversy case.

A franchise quarterback can elevate the play of the team. While a game manager may get you a favorable outcome, a franchise quarterback will get you the best outcome possible.

Mr. McHale is a certified public account and partner at Bohemia-based accounting firm Cerini & Associates LLP.