You might be liable for tax advice, even if you didn’t mean to give it

Let’s clear something up that too many advisors are still brushing aside. You might think you’re safe because you “don’t give tax advice”. But here’s the reality: if a client takes action based on your recommendation, and that action has tax consequences, you could still be on the hook. Even if you never intended it as tax advice. Even if you never said the word “tax”.

Intent doesn’t protect you. Impact is what matters. The line between tax planning and tax advice is blurry, and when things go sideways, it’s not about what you thought you said; it’s about how the client interpreted it. And if that interpretation leads to a tax bill or an IRS surprise, guess who might be getting the call?

Like anything, we like reality, not theory. We like learning from and partnering with experts who do something day in and day out and can speak from firsthand experience. That’s why, when multiple advisors told me about the great work that the team at Golsan Scruggs does around E&O insurance for financial advisors, I immediately had Cameron Norris on the RTS podcast to talk all about it. Cameron shared great insight and stories that might surprise you about financial advisors in the real world.

The stories aren’t inherently meant to be scary, but they do raise questions about what you would do in a similar situation. Golsan Scruggs has generously offered to answer those questions for our audience, so you know where you can go to learn more. Insurance is one of those things we all need and hope to never use, but learning more before it’s needed is a great step for any advisor or business owner.

Happy Tax Planning,

Steven Jarvis, CPA