Tax Warrior Case Histories
The following stories are representative of the powerful protection and client-success driven strategies that The Tax Warriors® offer, illustrating Drucker & Scaccetti’s longstanding commitment to providing strategic tax solutions for individuals, entrepreneurs, corporations and family-run businesses.
The Three Brothers
A client of ours referred three brothers to The Tax Warriors® . They were students when their father passed away suddenly, leaving them to run the family value-fitting manufacturing business. Shortly after leaving school and taking the company reins, the three brothers quickly realized that this small manufacturing operation they’d inherited was in serious trouble. As a result of soaring energy prices and mounting debt, it soon became clear that the family business would have to be shut down.
In a moment of savvy business strategy, the brothers salvaged their father’s valuable customer contact lists, closed the company doors and became independent brokers for larger manufacturers. Starting out on extremely slim margins, they focused their efforts on growing sales. Having encountered firsthand the pitfalls of high overhead costs, they positioned themselves as drop-shipping distributors, forgoing the need for a physical warehouse location.
Right away, they encountered their first hurdle: even before they became cash-flow profitable, they were already faced with a substantial tax burden. The Tax Warriors® took up their cause. We suggested a strategic change in their tax accounting approach that lightened their tax load and drove them to profitability. We then helped them find a good midsize audit firm and hire a highly qualified CFO.
Over the course of the next 30 years, The Tax Warriors® acted as a key member of their planning team, guiding them through multiple acquisitions toward strong sustainable growth. We met with the brothers regularly to track this growth and prepare all of their business, individual and family tax returns on an annual basis.
Today, we are happy to report that the brothers we met back in 1981 have built a team of 50 employees with sales exceeding $300,000,000 and an EBITDA of almost $30 million. Of course, The Tax Warriors’ work is never done. Recently, we assisted them with a private equity sale of a majority interest in their business. We continue, post sale, to provide tax services to the company and brothers personally.
The Family Restaurant
A restaurant consultant familiar with The Tax Warriors® and our unique services referred a family-owned restaurant to us. This client had managed their diner-style business for over 30 years. In that time, the neighborhood had changed drastically around them and they were now competing with multiple new restaurants, which hired illegal immigrants and paid many employees off the books. Tax audits and compliance reviews were coming more often, and their bank debt was growing. It was time to sell and retire. The Tax Warriors® helped this family-owned business find a buyer for the diner, assisted in negotiations and closed the transaction using our affiliated law firm. After the sale, we further assisted family members with the estate planning process.
The Privileged Communications Business
Referred to D&S by a large law firm, this client required ongoing tax advice, an in-depth understanding of tax law and a practical hands-on approach. Due to the nature of their business, they did not feel they could discuss these issues with their national “independent” CPA auditors. They needed law firm privileged communications. After taking advantage of our valuable tax consulting services for about a year, they moved to a Big Four auditing firm and asked The Tax Warriors® to assume their business and personal tax return preparation and compliance consulting function. During the first year of this expanded engagement, we were challenged to prepare 1,400 returns, which included many prior year state and local returns that had never been filed. We now prepare 800 to 1,000 federal, state and local returns annually on their behalf and consult on numerous complex tax issues as needed.
The Tax Warriors® were introduced to the CEO of a public company subsidiary in the project management business. With Tax Warrior guidance and consultation, this entrepreneur bought the subsidiary business from its public parent, grew it 20-fold over the next 25 years and recently sold it to another public company.
Over the years, The Tax Warriors® assisted with all tax return preparation for the various corporate entities that became part of this larger organization. Along with a team of attorneys, we were involved in numerous acquisitions and expansion projects as well. In addition, we designed and implemented the senior management team executive incentive compensation packages and acted as the trusted financial planning and tax advisors of the senior team and their families. This strategic relationship continues to this day with the individuals and some of the related companies still owned and controlled by our entrepreneur client.
The Health Care Executive
A well-known executive in the health care industry became a Tax Warrior client when he was about to sell his family's hospital management company. This executive needed tax consulting relative to the sale and additional family estate planning. He was wise to see that he needed advice independent from those advising the business entity. The Tax Warriors® suggested a structure that worked under the laws at that time. Subsequent to the sale, our client became the CEO of two public companies. His personal wealth continued to grow. Later, as he neared retirement, he became CEO of a nonprofit organization, which we provided tax consulting services for until it was merged into a larger nonprofit. Though now retired, he remains an active investor and board member of various organizations, and The Tax Warriors® continue to provide this client with individual tax services and valued consulting services.
The Husband and Wife Specialty Newsletter Publisher
We were initially introduced to this client after a business group speech given by Drucker & Scaccetti. We initially assisted with this client’s tax planning services when it became clear that their current CPA was not providing adequate defensive tax planning. This trusted relationship grew steadily as the client’s business expanded. Ultimately, a need arose for very unusual services when a relative of the client committed a white-collar crime. The Tax Warriors® assignment was to eliminate or reduce the chance of prosecution by communicating and negotiating with those parties harmed. Working independently from the criminal attorney, whose services were never required, we negotiated a settlement that avoided prosecution. Later in the relationship, we assisted this client in the process of selling their business to a national publisher for over 12 times EBITDA. To this day, we continue to provide tax, financial and legal consultation to the couple and periodically assist with difficult family issues of a sensitive nature.
The Family Business Special Assignment
This well-known branded specialty food manufacturer was family owned and managed with two mature children heavily involved in the business. The parent owner was ready to retire and had expressed concern about potential conflicts between the children and the declining profitability of the business. Large domestic and foreign competitors kept prices below desired levels. After consulting with all family members, The Tax Warriors® helped to create a professional Board of Advisors so business decisions would be made in a more objective and thoughtful manner. We networked for the client to create a Board made up of well-known and respected business leaders in food manufacturing, retail packaging, retail food marketing, finance and distribution. The Board of Advisors became a valuable resource for the parent and the children while a plan was developed for possible sale of the business.