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November 8, 2024
Welcome to our series Meet the Experts at Escalon, where we introduce you to the professionals driving results for our clients. In this edition, we’re spotlighting Hugh Alexander, Head of Tax & Compliance at Escalon. With over 27 years of experience as a seasoned tax executive and licensed attorney, Hugh specializes in tax solutions for startups and small businesses across a range of industries, guiding them through complex tax strategies and compliance.
Read on to learn more about Hugh and how he can help your startup or small business.
Hugh: In law school, I was drawn to tax because of its transactional nature. After passing the Bar, I joined a professional services firm, focusing initially on estate planning. Over time, I took on more compliance work, enjoying the blend of legal and tax challenges.
What I realized along the way is that I thrive in the role of a trusted business advisor. By understanding not only the technical side of taxes but also my clients’ businesses, industries, and personal needs, I’ve been able to offer tailored solutions. Building strong, long-term relationships has been key to earning their trust and becoming the trusted advisor I aim to be.
Today, my focus is on helping clients uncover tax opportunities, navigate risks, and stay on top of legislative changes. Balancing technical expertise with a deep understanding of their goals and challenges keeps me both engaged and motivated.
Hugh: One example that stands out was with a multinational client who had a foreign subsidiary using an incorrect accounting method. The subsidiary had been using this method for years, but from a regulatory standpoint, it needed to be corrected. The challenge was that the client didn’t see the value in making the change because it wouldn’t have any immediate tax impact—due to their negative earnings and profits.
As both the tax advisor and risk partner, I had to navigate the technical and practical sides of the situation. I worked closely with our general counsel and national tax team to explain the situation to the client and make sure we met our regulatory obligations. Ultimately, we reached a solution where the client agreed to change the accounting method if the subsidiary’s earnings turned positive in the future, and we included that commitment in their tax return filing.
This approach allowed us to satisfy both our internal policies and the client’s practical needs. It was a win-win. We kept the client in compliance, minimized their costs, and strengthened our relationship by advocating for their best interests. This experience really highlighted the value of understanding both the technical requirements and the client’s business realities.
Hugh: Many of our clients are startups or small businesses experiencing growth, not just in products and services, but also in their distribution and sales. As they expand, they often unknowingly create “nexus” in new states, triggering tax filing obligations or even liabilities. This can be a surprising and costly issue.
To help, our team conducts nexus studies to assess a client’s state and local tax footprint. We evaluate how their business growth may have created tax obligations in different states, both from an income tax and sales/use tax perspective. Each state has its own thresholds for determining nexus, so we help clients understand where they stand and what their next steps should be to stay compliant and avoid unexpected tax liabilities.
Hugh: Customizing tax strategies starts with building a strong relationship and truly understanding each client, both as a business and as individuals. It’s not a one-size-fits-all approach. While there may be similarities between clients in the same industry, each one has unique circumstances—whether it’s financial challenges, investor dynamics, or growth goals.
I make it a priority to understand not just the technical details, but the broader context of their business and personal objectives. This requires regular touchpoints, not just annual tax filings. By staying engaged throughout the year, I can better anticipate their needs, address potential issues, and offer more tailored, meaningful advice. Building that ongoing relationship is key to creating tax strategies that truly align with each client’s goals.
Hugh: One key area to focus on is the growing emphasis on informational reporting. For clients with foreign parents or subsidiaries, there’s been a sharp increase in penalties for failing to file certain forms, like Form 5471 or 5472. The fine for errors used to be $10,000, but it’s now $25,000—a significant jump.
Additionally, there are other reporting requirements, like the FBAR for foreign bank accounts and the new Beneficial Ownership Interest Reporting through FinCEN. These regulations are part of a broader push for transparency, often tied to anti-money laundering efforts.
Small businesses might underestimate the impact, but the reality is that penalties can quickly add up—$25,000 per violation per year could easily put a new business out of operation. It’s important to stay on top of these requirements to avoid costly compliance issues down the road.
Hugh: To me, tax services go beyond technical expertise. While it’s important to understand the statutes and regulations, a key part of our role as tax advisors is truly knowing our clients, understanding their goals, and empathizing with their unique situations.
It’s not just about being technically correct. It’s about using good judgment to provide practical, tailored solutions. This approach helps build trust and satisfaction, ensuring clients feel supported not only with compliance but with strategic, real-world advice.
Hugh: I emphasize that no one should be working in a silo. Each of us brings unique skills and experiences to the table, from diverse backgrounds that add real value to our relationships and solutions.
Sometimes people fall into siloed thinking, where they try to solve everything on their own. But I believe strongly in teamwork. There’s a saying—all boats are lifted with a rising tide—and I think that’s true here. When we work together, we provide better solutions for our clients, which makes them happier and, ultimately, makes us more successful as a team.
I encourage everyone to leverage the strengths of others on our team because we can deliver far greater value collectively than we could individually. Operating effectively as a team is essential.
Hugh: I served on the board of Working Wardrobes, an organization that helps people, particularly from the military community, re-enter the job market. They focus on career transition, resume building, and interview skills, while also providing professional clothing donations to help individuals present themselves confidently. The feedback we received from those we helped was incredibly positive.
I’m passionate about the organization’s mission because I believe in the adage, “Give a man a fish, and you feed him for a day; teach him to fish, and you feed him for a lifetime.” Helping someone gain the skills to support themselves and their families is truly rewarding.
Hugh: You’ll often find me spending time with my kids. My daughter is involved in volleyball and swimming, and my son is into wrestling, so weekends are usually filled with their activities.
I also love fishing, which is something I’ve enjoyed since I was a kid. My dad and I would fish together, often at my grandparents’ house.
Hugh Alexander’s expertise and commitment to client success reflect the core values of Escalon. With a blend of technical skill, strategic insight, and a personal approach, Hugh continues to provide solutions that keep our clients compliant and ready for growth. Whether you’re navigating complex tax regulations or looking for proactive strategies, Hugh and the Escalon team are here to support your journey every step of the way.
Stay tuned for features spotlighting our professionals in Meet the Experts at Escalon.
The Escalon team provides expert insights on finance, accounting, taxes, and HR for startups and small businesses. With decades of collective experience across diverse industries, our team delivers practical advice and tailored solutions to help businesses thrive. We're here to simplify your back-office tasks so you can focus on growth.
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