Mastering revenue and non-revenue strategic partnerships

In today’s competitive landscape, tax professionals face increasing demands, not only from clients but from evolving regulations, market shifts, and technology. One of the most effective ways to scale a practice, improve client service, and boost revenue is through strategic partnerships. These alliances, whether revenue-­generating or non-revenue, can expand your service offerings, strengthen client relationships, and increase firm efficiency.

However, when forming these partnerships, it’s essential to prioritize ethical considerations, maintain transparency, and comply with Circular 230. Here’s how tax professionals can master strategic partnerships, while safeguarding their practice and reputation.

Why strategic partnerships matter 

Strategic partnerships are collaborative relationships with professionals or firms that complement your core services. For tax professionals, potential partners include the following:

• Financial advisors.
• Estate planning attorneys.
• Bookkeepers and payroll providers.
• Specialty tax firms that work, for example, in R&D credits and cost segregation.
• Insurance brokers and legal advisors.

The goal? Enhance client outcomes, while focusing on your core competencies. By leveraging trusted partners, you can offer holistic solutions without overextending your expertise. For instance, a CPA or EA can concentrate on tax compliance, while partnering with a financial advisor for wealth management.

Revenue vs. non-revenue partnerships 

Not all partnerships result in direct income, but all can add value.

1. Revenue-generating partnerships. These partnerships provide compensation to the referring tax professional. Examples include: 

• Referral fees from specialty tax firms.
• Commission sharing with financial advisors or insurance brokers, where legally permitted.
• Affiliate programs with software providers.

Circular 230 reminder: When entering revenue-generating partnerships, tax professionals must disclose any compensation or potential conflicts of interest to clients. Transparency isn’t just ethical; it’s required. Non-disclosure can lead to penalties or disbarment from IRS practice.

2. Non-revenue partnerships. These focus on client value rather than direct income. Examples include: 

• Referring clients to estate attorneys or valuation experts without a fee.
• Collaborating with real estate professionals for 1031 exchanges.
• Partnering with tech providers to offer discounted accounting software.

While these partnerships don’t produce immediate revenue, they enhance client experience and often lead to referrals and goodwill. 

Building ethical and compliant partnerships

Forming strategic partnerships requires careful planning to balance growth with professional integrity. 

1. Focus on core competencies. Stick to what you do best. Tax professionals should avoid venturing into areas outside their expertise. Instead of stretching yourself thin, use partnerships to fill gaps in your service offerings. 

Example: A CPA or EA specializing in real estate taxation might partner with a 1031 exchange facilitator, rather than managing the process in-house.

2. Adhere to circular 230 guidelines. Circular 230 outlines ethical standards for tax practitioners. When forming partnerships: 

• Disclose all financial interests.
• Avoid conflicts of interest.
• Clearly communicate third-party involvement.

Best practice: Include written disclosures in client engagement letters when referring clients to revenue­-sharing partners.

3. Be transparent with clients. Clients trust tax professionals to act in their best interest. Always be upfront about: 

• Why you are referring them to a specific partner.
• Whether you’re receiving compensation for the referral.
• The value the partnership adds.

Transparency builds trust and ensures compliance with professional standards.