Are Last-Minute Changes the New Normal?
Tax season. The good – it is our livelihood. The bad – long hours, little sleep and constantly dreaming of April 15. Regardless of the emotions that get stirred up when you think of busy season, it comes year after year, and we must effectively prepare. By Dec. 31, staff should have attended an annual tax update course and firms should have their procedures nailed down, forms stocked, software up-to-date and organizers ready to deploy. But there is one more thing you’ll need to consider: last-minute training in January. And this isn’t unique for this filing season. Last-minute changes are becoming more and more routine.
During the government shutdown, the IRS lost 16 critical days for programming, preparation and systems testing, which resulted in another delayed start to filing season. This means the IRS won’t begin processing returns or accepting e-filed returns until January 31. If you count Jan. 1 as the first day of filing season, it would be 105 days long. Last year, it lasted only 75 days. And that is what it will be again this year: 75 days. One way to make use of this delay is to conduct last-minute training before the start date to review any late guidance, changes or developments.
By now, staff should be familiar with all the new changes that will impact filing season, such as the new .9% Medicare surtax, implications of the final repair regulations, the continuing rollout of new health care reform provisions and many other changes. However, one area where forms, instructions and guidance was issued so late that it requires attention in January is the new 3.8% net investment income tax (NIIT). It will be reported on Form 8960, for which a draft was only issued in early August. The IRS issued final regulations on November 26, along with some new proposed regulations. The final form hasn’t been issued yet, but the IRS did release draft instructions on Jan. 6, 2014. That is a lot of new, last-minute guidance for practitioners to assimilate – particularly for such a significant new tax. If you haven’t already done so, you’ll need to carve out some time this month to get caught up on the NIIT. The AICPA Tax Section is hosting four webinars this month for all AICPA members to help you do just that – each focused on a particular taxpayer. If you can’t make the original event, each will be rebroadcast at least once and archives will be available on demand on the Tax Season resources page for all AICPA members throughout filing season.
Going forward, practitioners should anticipate these types of last-minute guidance and technical changes. If the political gridlock continues, this could become the new normal. Practitioners will need to actually plan last-minute training as a final step in their busy season planning.
By Jina Etienne, CPA, CGMA, Director – Taxation, AICPA
Last tax season was difficult. The last minute passage of the American Taxpayer Relief Act (ATRA) resulted in a delayed start to filing season with many forms not being available until early March. Can you say workload compression? In May, the AICPA Tax Section hosted a Tax Season Town Hall and asked participants to compare the 2013 filing season to the year before. Over half said it was either worse or it was the worst ever! However, 9% said it was better. That got me curious. Why did some practitioners merely survive last tax season while others thrived? So, I decided to investigate. It turns out, the answer was surprisingly simple: business process improvement, simple (but significant) changes to managing staff, or a combination of both.
So, here are a few dos and don’ts based on my informal, unscientific investigation (highly influenced by my 17 years in private practice):
- DO focus on process and technological improvements. Time is money in our profession. The notion that any business should keep doing something the same way, simply because it has always been done that way, is a mistake and is antiquated. Strategically analyze your processes. Think outside of the box. Identify bottlenecks and inefficiencies, then work on improving those issues. Talk to your staff. They probably already know where those inefficiencies are; and, if you are open to change, your staff can provide valuable insights on where you can make small, but significant process improvements.
- DON’T make Saturday hours mandatory just because it is busy season. The notion that your staff must work Saturdays or the work won’t get finished isn’t entirely accurate in today’s world. Consider giving your staff production goals or workload goals, not timesheet goals or Saturday attendance requirements. Staff shouldn’t come into the office on Saturday just because it’s busy season. They should just do whatever it takes to hit their goals, and come into the office because specific assignments mandate them to be there. Consider allowing staff to telecommute or determine their own work schedule. Many firms that have done this report that staff productivity goes up as a result, as does employee satisfaction and retention.
- DO consider new and creative billing strategies. If you bill by the hour and wait until the return is finished before any money changes hands (which may not be until October if the client’s tax return goes on extension), you are minimizing your value. Your service starts when clients drop off their information. Consider asking clients to pay a retainer with their organizer. For other clients where you provide more than just tax services (e.g., you also provide monthly write-up services or process payroll), consider a single annual engagement that includes a specific mix of services for a pre-determined fee. Then, ask for monthly payments against the annual fee. Small businesses actually appreciate the certainty of the monthly payment over the uncertainty of the tax return invoice, and would be more likely to tolerate a fee increase under this type of an arrangement.
- DON’T get buried in administrative duties. Time sheets, client reminders for document requests, restocking forms, ordering supplies, etc., are all important activities – but they don’t necessarily need to be done by you. Automate (e.g., automatic renewals) and delegate (e.g., client reminder emails). Trust your systems and your people to help you manage the load. (Hint, hint: see “DO focus on process and technological improvements” above.)
Adapting to change can be challenging for anyone, but the practitioners who are thriving despite increases in workload compression and marketplace competition are doing so because they have stopped fighting the inevitable and are learning to roll with the punches. They no longer just do whatever they did last year. Instead, they focus on running a better, smarter, more modern business, making do with less, and proactively looking for ways to improve.
Finally, I have one last recommendation. DO maintain your sense of humor and perspective. Busy season is long and stressful. Sometimes you just need to put your pencil down and step away from the computer. Crack a joke. Make a coffee run. Do some yoga. Watch a funny YouTube video. Your staff and clients will appreciate you more and (more importantly) you’ll make it to April 15 with your sanity intact.