Because of my extensive exposure on the Internet and various articles I've written, I get a lot of phone calls or email from people who are seeking free advice about how to save some taxes. Because I'm a professional tax consultant, I have no incentive to offer people free tax advice. In fact, there is a huge disincentive because a person to whom I provide free personal tax advice could sue me for causing him or her to lose money. It's a lot like the problem of a doctor who provides free help to someone who is injured, but the doctor isn't able to fix the problem nd gets sued for his trouble. Many states now protect doctors from being sued for trying to help in such cases, but no such laws exist for those who provide tax  advice.

An obvious but overlooked fact is that when I spend time on the phone (or via email) answering someone's questions without a fee, I am likely to be losing time that I could be providing to a client who is willing to pay for my advice.

When someone offers free advice, they have little or no motivation to seek additional information about you that might be critical to determine if a particular tax strategy is suitable for you.

Even if you could find someone who would give you some free advice, it's not always beneficial to you.

If the free advice is from someone who is not a tax professional, the risk should be obvious that this person probably doesn't know enough about the tax law. But even if the person does have a substantial knowledge of the tax law, they also need to have an intimate familiarity about your financial and tax circumstances. A tax strategy that is effective for one taxpayer may be a disaster for another.

For example, tax exempt bonds may sound like a good idea, but they can backfire if you have any interest deductions or if you are receiving social security benefits.

A tax deferred annuity may sound like a good idea -- unless you are in a high estate tax bracket or may need access to the money on short notice. An early withdrawal from an annuity can be subject to a 10% penalty tax in addition to some withdrawal penalties imposed by the insurance company. For those with a large estate, the annuity will be subject to both income taxes and estate taxes at the time of their death. The combined income and estate tax could take as much as 70% of the annuity for taxes.

Low income housing investments may appear to be attractive -- but the investor should be able to safely expect to have a substantial income for at least ten to fifteen years in order to fully benefit from the investment.

These are just three examples of the need to fit the tax strategy with the taxpayer. Virtually every tax avoidance device involves some suitability issues that are unique to each taxpayer. It's not a good idea to use someone else's' medical prescription and it's also not a good idea to use a tax avoidance device because some one else is using it.

What benefit is there for a tax professional to spend the time to make a diligent inquiry into the intimate details of your financial, family and tax situation in order to give you proper advice -- without any compensation?

The odds are very high that when someone offers to give you an hour or more of free advice, they are trying to sell you on some kind of pre-packaged tax arrangement that may or may not be suitable for you. When any professional advisor is willing to give you a free hour of time, they are very likely to be expecting to sell something to at least one out of five or ten prospects. In order to make up for that much lost time, they must be able to generate a very high profit from the ones they do sell.

People who offer pre-packaged off-the-shelf solutions to tax problems rarely are concerned about whether you can really benefit from their product. They just want to sell another one and move on to the next customer.

The VernonJacobs web site includes more than 50 articles I have written about legal ways to save taxes. You are welcome to read them and there is no charge. But if you call me to request advice that is specific to you, I will ask you to pay for the time. 

If you have a burning question about some aspect of tax law and want some clarification, I offer phone consultations for $250 per hour, with a half hour minimum fee.  However, I require a signed waiver of liability for this type of service.  If you need more extensive or personal advice, we will need to establish a client relationship.

Vern Jacobs