Case Illustrates When Reliance on Professional Advice is Not Reasonable

Abstract

An individual, with others, organized and operated a for‐profit business by the name of Cash Management Systems. CMS sold and promoted “tool plans”—arrangements by which employers reclassify some of their employees' pay as “reimbursements” for tools the employees own and use on the job. The purpose of these plans is to enable employers to avoid substantial employment taxes. Pursuant to these plans, employers divide employee pay between wages and reimbursements, according to a proprietary formula owned by CMS. CMS charged fees to administer tool plans on behalf of its employer/clients.