Workload compression is a ubiquitous drain on our energies. From my calls, it appears that staff tax season hours still increase every year. Maybe 2020 is not a good year to measure anything, but my sense is this is a growing problem and not something that is being tamed.
I’ve suggested solutions in columns here in two of the last three years, and in many tax season management programs. While I know some readers and attendees have followed my suggestions, most did not. I also believe the busy season hours are the single greatest reason why young staffers leave the profession. It is a destroyer of the work-life balance most firms brag about while they provide shallow support for changes.
I do not have a magic sauce to wipe out the problem, but I can suggest some simple things that can be done to not only alleviate some of the pressures but that can also generate additional revenue for things that you would have done anyway and likely would not have charged much extra for doing.
My simple solution is to try to get some of the tax season work done before tax season. I know you cannot do tax returns, but there are many complicated transactions that have to be reported on the tax return that do not have to be done during tax season. Every complicated transaction took place during 2020. They are reported on the returns prepared in 2021, but they all occurred in 2020. So why not find out about them now and work on them in December? This is not work that can be avoided. At best, if you do nothing now, you might push it forward by filing an extension, but why not just get it done now?
Here is a list of procedures to find out about these transactions:
- Call your clients now who have complicated tax returns and ask them if there have been any unusual transactions during the year that might need to be reported on their tax returns.
- Also call clients that have the type of activities that might result in added taxable events.
- Then call as many of your other tax clients as you can. Someone with a relatively easy return could have inherited a house that was subsequently sold, or they could have sold a vacation home, or got divorced and need to file separately and need an allocation of carried forward amounts, or became an executor of a loved one’s estate. Things happen to everyone, not just high-income clients. Find out!
- You should be aware of the activities of your business clients so it should be easy to get the needed information now, if you haven’t as yet taken care of it.
- I posted a list last year of over 20 types of transactions that could be worked on by Dec. 31. You do not really need the list. Just ask your clients what happened during the year. However, if you want the list, here is a link to that column. That column also has some suggestions you can give clients that they could do now to simplify their financial situation and also reduce tax preparation time in 2022, such as getting out of publicly traded partnerships with dozen-page K-1s where they have relatively insignificant investments.
- Some of the transactions might not be available to be worked on, but the knowledge of them could factor into the calculation of the extension payment or an early alert of the tax payment that will be due on April 15.
- There is a residual benefit to these calls. It shows your clients that you care, are available and are a head’s up person. Also, every person you call will have you on their mind, and that could lead to a referral by them.
This is not rocket science. Just make the calls, get the information in, work on it, discuss it with the client during an unrushed period, have it reviewed, and bill now for its value (instead of lumping it into the tax preparation fee). Then, when the tax return is prepared, this info just has to be plugged into the tax return. Hooray! Some tax season work will be reduced! Just make the call!
Do not hesitate to contact me at email@example.com with your practice management questions or about engagements you might not be able to perform.
Edward Mendlowitz, CPA, is partner at WithumSmith+Brown, PC, CPAs. He is on the Accounting Today Top 100 Influential People list. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz, and “Managing Your Tax Season, Third Edition.” Ed also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com along with the Pay-Less-Tax Man blog for Bottom Line. Ed is an adjunct professor in the MBA program at Fairleigh Dickinson University teaching end user applications of financial statements. Art of Accounting is a continuing series where Ed shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. Ed welcomes practice management questions and can be reached at (732) 743-4582 or firstname.lastname@example.org.