An Alliance of Tax Firms Available To All

Tim LennemanAn Alliance of Tax Firms Available To All

Presented by Tim Lenneman, of Global Tax Network

Tuesday, October 16, 2001

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Summary

Have you ever explored membership opportunities in one of the typical accounting firm alliances, only to find your geographic area already taken, or the fees too high to justify? Is your practice focused on individual tax matters and financial planning? Are you looking for a key differentiation point or marketing strategy for your practice? Are you intrigued by the opportunity to start-up an expatriate and/or individual tax practice? Are you looking for a solid foundation and essential resources to help get you started? All of these issues were addressed in Tim Lenneman's workshop.

You can read the complete transcript of this workshop.

Mr. Lenneman discussed how the Global Tax Network (GTN) can provide you with:

  • A “tax hotline” getting your foot in the door on major corporate accounts, providing employees of the corporate client with a direct link to your services.
  • An online tax organizer, differentiating your practice and increasing your efficiencies.
  • Technical tax support from GTN tax professionals.
  • Global reach, through a network of international tax firms to partner with in servicing your clients.
  • Joint marketing initiatives for expatriate, foreign national, and other employee programs
  • Training and practice support for special expertise areas such as expatriates, foreign nationals, and domestic relocations.


Workshop Transcript

Session Moderator: Welcome everyone, and thank you for joining us in this AccountingWEB workshop! I'm Gail Perry, the managing editor of AccountingWEB, and I'll be your workshop moderator today. I'm pleased to introduce Tim Lenneman, who will be presenting a workshop on An Alliance of Tax Firms Available to All.

Tim Lenneman founded Relocation Tax Services, LLC (RTS) and Global Tax Network (GTN) in 1998. Prior to starting RTS and GTN, Tim worked for Arthur Andersen, LLP for ten years as a tax manager in the expatriate and corporate international tax practices.

Tim left Arthur Andersen to accept the position of Tax Director at Quark, Inc., a desktop publishing software company, where he was in charge of corporate and shareholder tax matters.

Tim's vision for GTN is to create an alliance of independent tax firms that pool their resources, technology, and expertise to create a brand that competes in the middle and upper market individual tax and financial planning market segments. Creating a relationship with employers and creating a strong expatriate tax group is a vital part of the vision and focus that differentiates GTN from the rest.

Welcome Tim, and thank you for taking the time to join us today!

Tim Lenneman: Good afternoon everyone and thanks for taking the time to be part of this discussion. Today we are going to discuss a new type of tax firm alliance and the various tools and aspects of the alliance.

We are going to cover the following topics that are components of the GTN alliance of tax firms:

  • Geographic Exclusivity/Experience/Expertise
  • Online Tax Organizer
  • Employer Tax Hotline
  • Tax Specialty Groups/Product Development
  • Tax Support
  • Training and Seminar

Tim Lenneman: Before we discuss these topics, I think it would be a good idea to give you some background to let you know how we arrived at this point.

We started a company named Relocation Tax Services, LLC (RTS) in 1998. The founders of RTS came out of Big Five expatriate and international tax practices and were looking to start a firm that provided tax services to domestic and international relocations. We focused mostly on small expatriate and foreign national programs and domestic relocation.

One of the technology matters that the RTS founders decided to build in-house was an online tax organizer. After our first tax season, we received favorable feedback from clients and were approached by several tax firms to allow them to use the online tax organizer within their tax practices. This idea blossomed into the Global Tax Network, LLC (GTN) that provided online tax organizers to independent tax firms.

GTN has provided online tax organizers to 200 tax firms for the last 2 tax seasons. Our experience with online tax organizers combined with our experience with our own tax practice (RTS) has brought us to this point. We realize that online tax organizers are not a viable business on its own and that we need to provide additional value to tax firms.

We also realize that many small tax firms and specialty practices need more technology and technical support than what is generally offered. Tax practices need technical support from foreign affiliates, help on marketing and proposals, and help on specialty tax matters.

GTN has the technology (online tax organizers and employer tax hotline) and tax resources (tax booklets, expertise) to help independent tax firms compete on more equal footing with larger firms.

By creating an alliance of tax firms working together, all the member tax firms will benefit from the resources, expertise, and contacts of other member firms.

We have investigated traditional accounting firm alliances and franchises, but we believe we can offer something that offers some of the benefits of each without firms giving up their identity and independence.

We believe there is a large middle market for individual tax and financial services (between H&R Block and the Big Five) that is largely undeveloped and unbranded.
Tim Lenneman: Other than the Big Five, who provides expatriate and foreign national services that is known in the marketplace? Other than H&R Block, what tax firms are commonly known by name?

When individual's tax situations become more complex, are there brand name sources that individuals go to for advice? The CPA profession tries to generally market CPAs, but we are looking at a specific niche (middle market individual tax and financial planning) and the profession is not going to help us much. American Express has developed some name recognition in this niche, but they don't seem focused on the core tax practice.

Sure, our independent tax firms get a lot of our work through referrals, but we are missing opportunities that go to firms that are not any more qualified than us. By working together, we will make our independent firms stronger and ultimately more valuable. By not working together, we will have more fee pressures, be more susceptible to competition, and we will miss opportunities.

None of these things will happen overnight. It will take time and effort from all of the member firms to develop a strong alliance and ultimately a brand. GTN will provide the tools to help create an alliance of tax firms that can work together to provide tax services and products to the marketplace.

Geographic Exclusivity/Experience/Expertise

Tim Lenneman: Most accounting firm alliances provide that a single firm is given the rights to a State, Region, or a major metropolitan area. We believe that there is room within GTN for many more tax firms to work together. We will accept one member tax firm per zip code.

If a firm has more than one office, each office will have to have its own membership. We believe that member tax firms will benefit from GTN based on the effort that they put forth regardless of the size of the exclusive territory.

Referrals within a zip code will generally go directly to the tax firm within that designated zip code. However, there may be exceptions to this rule. Potential clients searching for a specific expertise such as expatriate expertise will be directed to the nearest expatriate provider.

In addition, employers that subscribe to the tax hotline will have the option to create their own list of preferred tax providers that may not match zip code referrals.

In regard to experience and expertise, we would like to create a diversity of tax firms. Not everyone can do everything or appeal to all clients. We will accept large firms, sole practitioners, and medium size firms. We will accept enrolled agents, CPAs, and tax attorneys.

However, we would like member firms to have 5 years of tax experience or more. If a firm has professional liability insurance, we are willing to provide for reasonable exceptions to this rule.

We would like to encourage cross referrals to other member firms. If you need a tax firm in another city or country, then GTN will provide you with a quick and reliable format to make a referral or find a partner. We probably already do this locally, but we need to do it nationally, internationally, and across lines of expertise and experience.

As we grow, we will create a forum for member firms to let other member firms know about their unique offerings.

Online Tax Organizer

Tim Lenneman: As part of each membership, each member firm or office will have unlimited use of the GTN online tax organizer for their individual tax clients. Your clients will have a secure account on our web site that will allow them to transmit their tax information to you.

You can then import their tax data into one of our supported tax software packages. We currently support GoSystem, ProSystem fx, and Lacerte. You and your client can also print a report of the tax information that was input.

Both you and your clients can print a report of the data that was input. There are also plenty of places for notes.

Once your client has used the online organizer, we can rollover their information to the next tax year. The online tax organizers can be tailored to your firm by adding your logo and contact information. You can create a link from your web site to our online tax organizers so that your clients have easy access.

The online tax organizers tailor themselves to your client's specific situation. The client goes through an interview process that determines the information that needs to be completed by the client. The online tax organizer supports even the most complex situations - rental properties, K-1s, expatriates, foreign nationals, Schedule Cs, and more.

If a client comes to you through our web site, it is likely that they will use our online tax organizers to submit their tax information to you regardless of whether you use the online tax organizer for your other clients.

Our online tax organizers are secure. We use Secure Sockets Layer (SSL) encryption. This is a well-established Internet security standard. We have multiple firewalls and redundant servers so your data is well protected. We do not share your client data with anyone except your firm.

The benefits of using online tax organizers are that clients generally enjoy using computers for tax purposes and their use of the online organizers can save you time. Your clients get the feeling that you are on the cutting-edge of technology even when they don't use the online tax organizer.

The tax firms that have used the online tax organizers have generally found that 20% to 30% of their clients will switch to an online tax organizer without you having to mandate use. Firms that have more or less mandated use of the online organizer have a higher percentage of use.

I did a presentation for Accountingweb last year that discussed online tax organizers in detail. If you would like to know more, please contact me and I can send you the presentation. I can also arrange for a demonstration of the online organizers.

Tax Hotline

Tim Lenneman: The employer tax hotline is a new product of GTN for the 2001 tax season. The tax hotline is generally designed to provide tax information to employees of corporations and a source of tax expertise. Employers can subscribe to the tax hotline and allow their employees online access to tax information that is tailored to the company's benefit plans and tax policies.

As part of the program, employees can also search our list of tax firms and submit their tax information to our member tax firms via our online tax organizer.

As part of the customization for the employer, the employer may designate one or more member tax firms as preferred tax providers to groups of employees. As such, an employer that wants to limit the tax firms that are allowed access to their employees may do so.

We anticipate that employers will create preferred provider networks for certain groups of employees such as expatriates or foreign nationals when the employees need a specific expertise or location.

The tax hotline has 2 basic versions that can be purchased by an employer:

  • Tax content only
  • Tax content with limited tax consulting provided by GTN

The tax content only version provides employees with tax information to help employees answer basic tax questions and alert employees to common tax issues. The employee also has access to GTN and our member firms to obtain additional tax preparation or tax consulting services.

GTN will not provide tax preparation or detailed tax consulting to the employees. Instead, this work will be sent to our member tax firms.

The employer may also decide to pay GTN for limited tax consulting. Generally, an employer will pay for GTN to answer specific types of tax questions asked by the employee throughout the year so that major mistakes by employees are avoided.

The tax hotline is provided to employers so that their employees have the opportunity to understand the tax impact of the various benefit and compensation plans of the employer. For instance, we help employees understand the tax implications of an employer-sponsored relocation.

The tax hotline contains booklets, FAQs, checklists, links, an online bulletin board, and other useful information. The content also includes federal, state, and international tax libraries so users can easily obtain tax information in layman terms. Currently, the tax hotline content and usage is limited to domestic and international relocations.

The tax hotline content is being expanded to apply to most all employees by the end of January 2002.

Several large employers have signed-up for the tax hotline, and many additional employers will be signed-up by yearend. With the marketing assistance of our member firms, we expect the tax hotline will expand rapidly in 2002.

Member firms benefit from the tax hotline in the following ways:

  • If your firm helps us sell the tax hotline to an employer, you earn an ongoing marketing fee of 10 to 20% of our revenue from the tax hotline (depending on your involvement and type of plan sold).
  • As the number of employees with access to the tax hotline grows, so grows the need for tax professionals needed by the employees. You can solidify your spot on preferred provider lists by bringing in employers with facilities near your offices.
  • You can use the tax hotline within your own tax practice. Your firm will be able to demonstrate the resources of a multi-national firm! This has been especially popular with firms that provide services to expatriates and foreign nationals.
  • We will offer discount programs and tax preparation and financial planning services through the tax hotline in the future. Your firm can become an integral part of these programs.

Tim Lenneman: If you would like to see a sample of an employer tax hotline account, please contact me.

Tim Lenneman: The fundamental issues solved by the tax hotline are providing employers and employees with better information about tax and financial matters and it provides them with sources of knowledge and service (member firms).

We are also creating an employer tax hotline that will allow HR and payroll professionals to ask questions and obtain tax information to help them do their jobs better.

Specialty Groups and Products.

Tim Lenneman: Since GTN is somewhat of a loose affiliation of tax firms, we are encouraging member firms to create separate specialty groups within GTN. We will help you create these groups, arrange meetings, and set guidelines.

One of these specialty groups is separate affiliation of expatriate tax firms. GTN provides expatriate firms with a global reach, sharing of resources such as our expatriate tax booklets and expertise, and our technology (tax hotline and tax organizers). However, some of our member firms would like to take this a step further and create an alliance that will go further in selling and providing expatriate tax services to larger corporate programs. There may be additional fees to support the specialty groups.

We encourage member firms to work together on proposals and developing products and services.

Similar groups can be formed for other specialty groups such as stock option experts, small business, or financial planning experts. We are open to helping any group of tax firms that would like to create a specialty group as long as we see the need for such service in our target audiences.

Also, some firms or groups of firms may want to reach other tax firms, employees, or employers with tax services or products that are unique or that may benefit other member tax firms. We are open to helping communicate and develop tax products that can benefit our member firms.

We also plan on taking the lead on developing tax products that can be sold to target audiences and member firms will participate in the benefits derived from these products.

Technical Tax Support for Your Firm

Tim Lenneman: Occasionally, we all need help on tax issues or understanding company tax policies. If you don't work in a specialty area, you might just need a sounding board to feel confident taking a position on a tax return.

GTN will provide limited technical tax support for your firm. We can also help you with establishing contacts with other tax firms for joint proposals/fee sharing arrangements.

You can ask us questions by e-mail and phone and we will provide you with guidance and information. We are also going to implement a bulletin board that can be accessed and searched by member tax firms.

GTN has its own staff of CPAs that work in a variety of tax matters (individual, corporate, expatriates, foreign nationals, international). We also subscribe to a full library of tax information via BNA and Checkpoint by RIA that we can use to help you with technical tax issues.

We will provide up to 2 hours of tax support per year per member firm. You may pay for additional tax support at discounted rates.

Training/Seminars

Tim Lenneman: We will have an annual seminar with tax training in specialty areas and discussions about joint marketing and product development. Our first seminar will be held in Denver on December 4 through 6th of this year. Our first seminar will focus on domestic and international relocations. Future seminars will add specialty areas such as stock options, deferred compensation plans, financial planning, and other topics.

There will be extra charges for the seminars. However, we believe these seminars are a fundamental part of creating an alliance of tax firms that promote common tax and financial services.

We will also host an annual conference for HR professionals to teach them about tax issues related to their benefit plans, domestic and international relocations, stock options, deferred compensation plans, and related tax issues.

We will use this conference as a way to network with HR professionals, educate HR professionals, and let them know about our tax services and products. Our first conference for HR professionals will be held in September of 2002.

Summary

Tim Lenneman: In summary, GTN is a new kind of tax alliance. It is focused only on individual and small business tax and financial services. GTN provides technology and resources that will help differentiate your practice.

Our goal is to build a brand that will be recognized in the marketplace so that your practices can grow and become more valuable.

We believe that creating a brand is dependent on owning relationships with employers, financial service companies, and business organizations. As such, we are creating products that appeal to these organizations as well as their employees and members.

The GTN technology and business concepts are currently in the process of being patented. As such, we believe that we have a unique platform that will benefit GTN and our member firms for years to come.

GTN can help you expand existing tax practices or provide you with a tremendous head start if you are looking at starting your own firm (especially in the expatriate and foreign national tax practice markets).

GTN is also somewhat of a grass-roots effort and we are looking for member firms that want to actively participate in marketing and growing with GTN.

Tim Lenneman: That about wraps it up as far as my presentation. Any questions?
Session Moderator: Tim - please provide your e-mail address as well for those who might have questions later!
Tim Lenneman: My e-mail is tlenneman@globaltaxnetwork.com and my phone number is 303-894-3811.

Tim Lenneman: You can also contact us at help@globaltaxnetwork.com or 1-888-915-7670.

Session Moderator: I'm sure Tim will be glad to remain in the workshop if there are any questions - meanwhile, thank you all again for your time and participation today. And thank you Tim for an excellent presentation!
Tim Lenneman: Thank you.


Biography

Tim Lenneman is the founder and President of Relocation Tax Services, LLC (RTS) and GTN. Prior to starting RTS and GTN, Tim worked for Arthur Andersen, LLP for ten years as a tax manager in the expatriate and corporate international tax practices. Tim left Arthur Andersen to accept the position of Tax Director at Quark, Inc., a desktop publishing software company, where he was in charge of corporate and shareholder tax matters.

Since forming RTS and GTN in 1998, Tim has been quoted by CPA Software News, National Public Radio, Fortune, Business Week, Expatexchange.com, and Reader’s Digest regarding expatriate tax and technology solutions available to CPA firms.

Tim’s vision for GTN is to create an alliance of independent tax firms that pool their resources, technology, and expertise to create a brand that competes in the middle and upper market individual tax and financial planning market segments. Creating a relationship with employers and creating a strong expatriate tax group is a vital part of the vision and focus that differentiates GTN from the rest.

Tim is a graduate of Texas Tech University and a member of the Colorado Society of Certified Public Accountants.

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