Being a Good Tax Attorney without a CPA License with Henrick Haeckel (Part 2)

CPA Podcasts

Phil sits down with Henrick Haeckel to discuss his unique path into his current role as a tax attorney. Henrick gives a look behind what it actually looks like to work in the tax arena and how difficult it can be but how rewarding it can be as well. As complicated and cold-hearted taxes can be, Henrick emphasises that as long as you work hard, keep your head up, and your ear to the ground, the rewards and enjoyable and meaningful.

Transcript:

Narrator [00:00:00] This is the second part of the conversation between Phil and Henrik Haeckel about being a good tax attorney without a CPA license, if you haven't listened to the first part of this episode. Check your podcast feed.

Narrator [00:00:13] Hello and thank you for tuning in to another episode of CPA Review and more. We are pleased to bring you the number one podcast for CPAs and CPA candidates. If you'd like to learn more about how Yaeger CPA review can help you find us on our Web site at Yaeger CPA Review dot com. Now here's your host, Phil Yaeger.

Henrik Haeckel [00:00:38] Back to your point. Who pays? I can't force this guy to pay for the time that I spend trying to fix this, and I'm working with a collective of attorneys at the ABA who are all doing this for free to try to advocate on behalf of the clients that we have and similarly situated circumstances, because I'm not one of those people that sits there and says this is on taxes, unfair generally speaking, fees. Tax, by its definition, is unfair. To some extent.

Phil Yaeger [00:01:14] Well, you've got to pay to run the country.

Henrik Haeckel [00:01:16] Right. It's going to, it isn't. It is what it is at the end of the day. But where there are inequities or things are just patently being done wrong, that I feel an ethical responsibility to try to be part of a solution and to help my client.

Phil Yaeger [00:01:35] So when I graduate in nineteen sixty seven, actually working for the IRS was not a bad job at all.

Henrik Haeckel [00:01:44] And still isn't actually.

Phil Yaeger [00:01:46] And my mother wanted me to work there because I would learn more and death taxes than if I went to H&R Block. Right. And I just said I don't want to work for the government. I ended up in a corporate job. Now I then, you know, I did tax returns. I had a tax practice that I built up and I enjoyed it. I really because I really got involved with the clients. I mean, to the point that they felt that they knew me, they could trust me. And I just say one interesting. I was in Denver at the time with this practice and this gentleman that worked for a bank, and this was during the oil crisis in Denver. I guess it was the 80s, the 80s, the oil prices started coming down and I would really get to know a client and this gentleman comes in who is a vice president of a bank. Everyone is the vice president. And then he had his little daughter. She was the cutest little thing, red hair, you know, and I don't remember her name, but I. I said, do you have a good Christmas? And she said, no, daddy lost his job at the bank. So I said, oh, she says and we had a really we couldn't buy anything really expensive. And we just really watched. And I'm listening to this story and I'm telling you, this could be a story. You start crying like crazy. And I felt terrible listening to this. And all I could really do was say, yeah, your dad is come in here so many years, I can't charge you. I don't get what it is. I can't charge you and just let it go. I felt so bad and I saw that all those years bankruptcy's going on. Maybe I'm not meant to be in business, OK? I think in a lot of cases you have to be sort of cold hearted, but yet you have to remember you have a business right now.

Henrik Haeckel [00:03:46] I mean, it's a balancing act in that you have an obligation to your employees and to your business to be a good steward of it. At the same time, you know, I've recently come to do more of the tax preparation work and my most recent role.

Phil Yaeger [00:04:02] But actually, it's fun to do it. I like doing it.

Henrik Haeckel [00:04:06] I think this is going back to our conversation about being a lawyer versus being a CPA. I think that, first of all, lawyers sometimes are thought of as being somehow better at tax because they have a legal foundation and that somehow gives them magical, mystical abilities to read the code differently than a normal human being. As you can tell from my sarcasm, I don't believe that to be true. In fact, I have a funny story. One of the partners from became a former partner while I was there at Ernst and Young was he was great at what he did and he was like what I call these dinosaurs that knew a bit of everything or knew everything or most everything because they've been around so long. They'd seen so many different things. And those are kind of my heroes professionally. And the New York Bar Association, which is one of the most taxed bar association tax section of the New York Bar Association, which is one of the most prestigious tax bars in US yearly, gives an award to the best tax lawyer. And so they nominated this this gentleman only to find out he was a CPA and not a JD.

Phil Yaeger [00:05:32] So then they took him out back.

Henrik Haeckel [00:05:37] And so all of this is to say that you don't have to have a JD, nor do you have to have an all to be good at tax. You could be an enrolled agent. You could be a CPA, you can be a JD, you can be JDLLM. Any of those doesn't define whether you're good or not good at it, defines whether you are successful or not in this area is your desire to learn the material. Some material is difficult and complicated. And secondly, to work hard. This is not something that comes easily. And the last point to tie to the tax return preparation versus the law side, which is criticism of lawyers these days, is that a lot of things that happen in tax don't crystallize until you have to put the numbers to paper. And then issues that weren't quite so clear suddenly become much clearer. And my impression is that in those late into the eighties, law firms would assist in the tax compliance component for their clients. They weren't as big and they weren't as expensive per hour, and they viewed their role in a different, more holistic sense. And then as CPA firms gained the ability to render certain tax advice and began to move more heavily into the tax base, the law firms ceded that crown. And the byproduct of that is that lawyers don't deal with the forms generally and so they don't understand the consequences. And the problem is that when you're drafting legal documents, and you don't know really what the consequences you're probably providing bad advice to your client and a lot of these agreements are put together by very smart people can be flawed because they don't get it. And in order to do that, you have to have your familiarity with what's being reported and you have to get into the numbers ultimately because you can't really give good advice to a client until you have all those facts. And so the migration of how tax expertize has flowed is generally a lot more of the tax planning is now done by CPA firms and the legal drafting is done by the law firms. In my opinion, that isn't ideal because as I said, you have people drafting things they don't really get necessarily. Some people do, but very few people, in my opinion.

Phil Yaeger [00:08:37] I would think one thing that bothers me is that we should have a privileged relationship with our clients, OK, versus the confidential. And I actually I think that would make us more competitive because people say, you know, if I tell you something, all right, you have to tell it to the IRS, I said, well, may depend. Right. But if you go to a lawyer, you can avoid that. All right.

Henrik Haeckel [00:09:02] So that's a competitive advantage that I have.

Phil Yaeger [00:09:05] Gotta get rid of that law. But they never will.

Henrik Haeckel [00:09:10] We already seated are one of our competitive advantage is by allowing CPAs to render tax opinions. So the Bar Association are already gave up some of the monopoly that I pay to your house mortgage on for my JD degree.

Phil Yaeger [00:09:34] I'm glad I could help.

Henrik Haeckel [00:09:35] If you paid, if you paid it the check still hasn't arrived.

Phil Yaeger [00:09:39] That's something I probably won't.

Henrik Haeckel [00:09:41] I'm not holding my breath.

Phil Yaeger [00:09:43] OK, well don't do that.

Henrik Haeckel [00:09:43] I might asphyxiate my my five year old son will find me passed out. But I think it's important for CPAs to understand in general that tax, to your accounting audience don't forget about tax, it matters and it can matter a hell of a lot. You need to have people involved, your tax, people involved and in your controls process. And in particular, what I would flag for them is that I have a reasonable understanding of who your client is. If your client doesn't do transactions on a regular basis, chances are that when you have an acquisition, the tax reporting is going to have some issues with it. You're going to be dealing with purchase price accounting potentially at the same time, you've got to get everything lined up and it's a an opportunity to cross-sell services. My approach was always to my detriment. If you're not going to have me do it, at least have somebody do it. So it's not wrong because I'm going to have to deal with it. Otherwise, it's good advice. And I had that happen on audits. One audit review I had a client had purchased form for business and for US tax purposes. It was treated as an asset acquisition. And we call those Section three thirty eight transactions where you step up the basis. And if you buy a foreign corporation, generally, that's OK because of the gain isn't recognized in the US and isn't taxable. It just so happened as I was reading the financials for the acquired company that all their management was in California. Which means that they created US tax liability, not by yes. You're being facetious, but that's my point, is that you get when you have an Aquis and these people and this company, in fairness, it was a large company, had another big four do a tax due diligence report, and they hadn't caught it. And that's one of the issues with the big four that I would say is out there, is that. If because the space is so complicated, people tend to get micro targeted to specific things, but if you don't have a broader knowledge set, then you're going to miss things unless those people are also involved and you might not know to get them involved. So I'm an advocate for having more of a general understanding, at least on your plate, as you develop as a tax practitioner to develop a broader understanding and then you can specialize, but at least you'll have that advantage of being able to raise your hand in those cases. The other thing I would say for the auditing audience is that if you don't have a sophisticated tax department, you're dealing with, let's say that one person or a few people and they have international operations, chances are they're not doing it right. You know, know who you're dealing with and know what they're doing. If it involves international, if it involves partnerships, if it involves consolidation, if it involves funky debt, get experts involved because you're going to have material misstatements and then you're going to have uncomfortable. Do I deal with this? And I'm going to have an unhappy audit client where testing is something that I'm not fully covered.

Phil Yaeger [00:13:49] It'll just be a royal mess.

Henrik Haeckel [00:13:51] It ends badly and it's better, in my opinion, to nip those things, so to speak, in the bud early than having them fester for a period of time. I.

Phil Yaeger [00:14:04] That's great advice. No, it's good advice.

Henrik Haeckel [00:14:07] And I hope that, as we said, I'm not a CPA, but I hope that there's that.

Phil Yaeger [00:14:15] I wouldn't know whether you're a CPA or not with your knowledge. No, really, I mean that sincerely.

Henrik Haeckel [00:14:21] Thank you. So those are the two things I really wanted to hit home for your accounting audience is that you may not be in the details about taxes. Maybe it's not interesting to you. It will matter to you no matter what, if you're attesting to these financials and if you don't know what's going on or you have questions. I know budgets are tight. I know audits are viewed as a commodity products, but it's your professional integrity license on the line. Do the right thing, get the right people involved. If you're a small shop, reach out to people. If you're worried about competition coming in and sabotaging you and always go to lawyers like me because I'm not an accountant,.

Phil Yaeger [00:15:13] I'll put that down.

Henrik Haeckel [00:15:17] And so the the people that are contemplating careers in tax, that are CPAs, I think several things. I think, first of all, if you want job security, it is a great place for job security because there there aren't enough people that know how to do it well, be it for if you decide to be solely a tax preparation person or something different than that, then it just really is a dearth of people that are good at it.

Phil Yaeger [00:15:48] It's really it's a niche.

Henrik Haeckel [00:15:50] It's a niche, but it's a it's a niche that exists for everything. Like everybody's got to pay their taxes. And so if you develop a skill set, you will have a place in this world no matter what. And then beyond that, for those people early in their careers, don't go rogue. Don't try to be smarter than you are. A sign of intelligence is knowing what you don't know and want to be clear about what I'm trying to say, which is my impression on the tax preparation side at the larger firms, is they just want people and they have them put on trial balanced data into the software. There isn't a ton of critical thinking or training going on necessarily.

Phil Yaeger [00:16:45] Well, that's what the AICPA's position is now. The students taking the exam don't know anything about critical thinking, you know, and they're trying to get the material, the exam itself up to a level of you shouldn't pass unless you can think things out. So, you know, that's the AICPA's position and.

Henrik Haeckel [00:17:07] It extends beyond that. Like just because I sat for the bar exam doesn't mean that I am qualified to represent somebody on anything. When I talk to my clients and they have questions about corporate law, about litigation, about anything I say. I know my lane. That's kind of the message here is, I know my lane. My lane is these things and tax. That's what I know. If you need help with something outside of that, I'm going to get you in touch with that person.

Phil Yaeger [00:17:38] That's important. You got to know who to send the people to.

Henrik Haeckel [00:17:41] Right. And or you say, I don't know, I can try to find that.

Phil Yaeger [00:17:47] And there's nothing wrong with that, is there.

Henrik Haeckel [00:17:47] I'm not a salesman by nature. I don't know how I sound over the audio. Probably less charming than I might look in video. But my approach with clients has always been to tell them a my job is to get you to pay the least amount of taxes that you can without getting in trouble on a headline in jail or something like that. B, I'm going to tell you what the risks and pros and cons are, and it may be more information than you want. And if that's the case and you don't care, then I'm probably not the person you want to render that advice for those clients that care and want to know and want the detail. What I don't want to have happen is have somebody else come in after me and say he missed this.

Phil Yaeger [00:18:44] He's easy to blame. Blame him.

Henrik Haeckel [00:18:46] Well, it's also just the way the sales culture happens now. I nearly did one of the biggest transactional deals in transactional history, and I can't say for sure, but one member of our group provided advice that didn't cover off certain other options and another competitor came in and sold them this thing. And my point and I had I probably got in trouble for it. But what I believe my job to be is we got to tell them what this is and we got to tell them why we don't think it's a good idea. So that way, when the next guy comes in, they already know about it. So we don't look like schmucks. We didn't mention this thing. And B, they are already listening to it with our gloss on it. We are we have the benefit of being the first impression. And it's easy to lose then. And we lost that transaction. Was I disappointed? In some ways, yes. I had just done another mega transaction that I consumed a year or so of my life, and this one would have consumed several more, but. I'm competitive and I take pride in what I do, and I don't like losing, and I felt like we we lost because we didn't do what we should have done. So be honest with your clients. Give them the best picture you can and know your limits. And so for the young people getting into the field, no, you're guardrails and raise your hand when you don't know, to be clear, not to have somebody else do it for you, but to have them help you learn it. If you have them do it for you, you're never going to learn if they teach you.

Phil Yaeger [00:20:46] I like you. You're honest. You say the way it is. And I think that's important, really. And you are a mensch. OK, by the way, for those who do not know the translation of schmuck, OK, you can contact Henrik if you want and he'll spell it out for you. OK, but anyway. Henrik, I have we have to go now. Time is up. Did you enjoy it?

Henrik Haeckel [00:21:13] I had a great time. Thank you for having me on. I appreciate it.

Phil Yaeger [00:21:16] My pleasure. I really appreciate it. OK, you're a bright guy. There's no doubt about it. Are you in Mensa or anything like that?

Henrik Haeckel [00:21:24] Hell no, I'm not that smart, but my son thinks he's that smart, so.

Phil Yaeger [00:21:33] Listen you don't have to be stupid to tell you're a very bright guy, you know. I mean, how many people own the Columbia University Library? Not too many people I know. All right. But anyway, I want to thank Henrik. All right. For being on the show. And please remember, if you have any questions, you can contact me. I can get those questions to Henrik, and I'm sure you are willing to answer a reasonable number of questions. OK, also, you have a questions about being a tax attorney, accountant, whatever. This is the man who can give you the advice. He'll give you advice. You can take it, leave it, or just get the information. Take in as much information as you can about a person's profession to see if it's maybe a match for you or not. There's plenty out there to become. You know, you'd be a tax attorney. You can be in financial planning, give you all types of areas. So anyway, Henrik. Take care. Stay well. All right. And stay warm in Chicago.

Henrik Haeckel [00:22:32] I'm in I'm in Virginia, but it's still got some.

Phil Yaeger [00:22:38] Did you tell me that?

Henrik Haeckel [00:22:39] Yeah, I did. I'm I'm in McLean, so we're not too far.

Phil Yaeger [00:22:41] Oh, I don't think you told me you were in McLean.

Henrik Haeckel [00:22:42] I did it in one of our emails.

Phil Yaeger [00:22:45] I missed that email, you know. Got lost in the mail.

Henrik Haeckel [00:22:50] Just like the check.

Phil Yaeger [00:22:52] And you're in Tyson's Corner.

Henrik Haeckel [00:22:55] Yep, yep, yep.

Phil Yaeger [00:22:57] You know what I will do? All right. After this thing slows down at the beginning of the year, I'll give you a call. You don't have to go with me to lunch. I'll take you lunch. I'd love to meet you one on one.

Henrik Haeckel [00:23:07] Absolutely. I appreciate it. All right.

Phil Yaeger [00:23:08] So take care. A happy, healthy New Year. Please tell your wife not to be angry with me, OK? And this was Yaeger CPA review and more. I hope we furnished you real good information. And by the way, we have a new show every Tuesday. And if you want a specific area for us to talk about or get an expert on, please call me at my number three oh one eight seven four forty nine hundred ext five. That's three oh one eight seven four forty seven hundred. Extension five. I think it's forty nine hundred. I don't remember. All right. But anyway, just go on my website. YaegerCPAreview.com the phone numbers there you can reach me seven days a week, whatever. I'm always try to be available for the students or anybody in accounting because there really is no advocate for the students. I try to be the advocate for the students so that they can get ideas of what to do. And also a lot of students get really shafted, especially by a competitive review courses. And I try to tell them the truth. I have nothing to lose by telling the truth. So anyway, everyone stay well. And when you can get that injection of the vaccine, right. And also, please wear a mask. If they tell you you are not a doctor, you may be a doctor. Listen to the experts out there. Some people, as we know, did not listen to the experts and we won't mention that person's name. So anyway, take care. And anything you want to say? Go ahead.

Henrik Haeckel [00:24:38] Happy new year to everyone, and stay safe.

Phil Yaeger [00:24:40] And stay being a mensch, I don't think you'll have any problem with that. All right. Take care. I'll give you a call. Definitely. OK, thank you.

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