Lessons Learned from a Compressed Tax Season

June 30, 2017

Hopefully you and your colleagues have taken a well-deserved break from the stress of Tax Season 2017. By this time, you have likely gathered with your tax team to debrief, discuss and identify areas for improvement going forward. If you have done this, bravo! What a wonderful way to advance your practice. This month’s Feature Focus is dedicated to such a conversation. Inside you will find insight from practitioners across the country, including members of the AICPA’s Tax Section. What’s more, you will learn about practical tips and tools you can put to work inside your own firm.

How Was Tax Season 2017?
So how was your tax season? Let’s take a look at what members of the AICPA Tax Section had to say.

Overall, How Challenging Was this Filing Season in Comparison to Last Year?

  • 58.74%   More challenging
  • 24.16%  No different than last year
  • 16.36%  Less challenging
  • .74%  Not sure/no opinion

What Were Your Top Three Major Pain Points During Tax Season?

  • 65%  Workload compression
  • 35%  Change in tax return due dates
  • 33%  Staffing
  • 31%  Managing client expectations
  • 30%   Additional due diligence requirements
  • 23%  Technology
  • 16%  Confusion related to ACA requirements
  • 15%  Keeping up to date on changing tax laws
  • 14%  Dealing with client anxiety
  • 13%  Cybersecurity/identity theft
  • 10%  IRS Service Center issues
How did your firm stack up? Did other issues cause pain for you and your colleagues? If you didn’t yet hold a tax season debrief, consider using the above stats as a starting point for conversation.

Did Your Firm Feel the Squeeze?
Since 65% of Tax Section member firms mentioned workload compression atop their list of major pain points, if your firm also felt the squeeze, you were not alone. It seems that recent compression is caused by:

  • No such thing as an easy return
  • Client aversion to going on extension
  • Tax law uncertainty which prevents planning
  • Highly variable work in a fixed timeframe
  • Nearly fixed resources

With no quick fixes on the horizon, look for new strategies to improve efficiencies, while keeping focused and motivated along the way. Consider the below tips and be sure to check out the PCPS/CPAFMA Workload Compression Survey to identify strategies firms are using to mitigate the impact of seasonality and workload compression.

  • Keep Staff Motivated
    Your staff is the key driver that makes tax season tick. It is critical to keep them refreshed, refueled and motivated along the way.
    • Encourage exercise and regular breaks
    • Provide healthy snacks and meals regularly
    • Offer perks such as yoga classes or massages
    • Say ‘thanks’ often
    • Consider using the PCPS Busy Season Calendar
  • Proactively use Extensions
    Manage client expectations regarding extensions. Explain the extension process and what it means to them. Set deadlines for information and file an extension if the necessary information isn’t received by the deadline.
  • Encourage Everyone to Share Their Ideas for Improvement Before and During Tax Season
    Get your staff involved in identifying ways to relieve the pressures of compression.
    • Carefully consider new ways to operate
    • Listen to what each person has to say
    • Make changes as appropriate 
    • Reward those whose ideas are selected (gift cards, prime parking places)

Change in Tax Return Due Dates
The change in tax return due dates was the second highest ranking pain point according to members of the AICPA’s Tax Section. Below they state how the change in tax return due dates affected their practice.

Please Rate Your Experience with the Change in Tax Return Due Dates 

  • 39.1%  Somewhat challenging
  • 37.3%  Not much of an issue
  • 10.5%  Very challenging 
  • 9%  Changes improved our workflow and client service
  • 4.2%  Not sure/no opinion
Consider these tips to effectively deal with due date changes:

  • Communicate Clearly with Clients
    When changes such as due dates occur, communicate them to your clients. Include notices of these changes in your tax updates, client newsletters, website and other client correspondence. Be mindful that like you, clients are busy and don’t always take note of such important changes even when they are outlined in your firm’s correspondence. So it’s a good idea to mention these changes directly in an email and when you meet with them face to face. Let them know what you need from them and when you need it. 
  • Evaluate Cutoff Dates for Client Information
    When changes in due dates occur, it is important to reconsider the cutoff dates for clients to submit information. Make sure you give your team time to prepare the returns for each filing date during the year. Having the needed client information for an extra week or so can make your life much easier, enable your firm to run smoother and allow your team to better serve your clients. 
  • Revisit Your Firm’s Tax Workflow
    Changes in due dates can put a big kink in your tax workflow. Be conscious of backlogs and what is causing them. Careful monitoring during tax season is critical. Are additional employees needed or are new processes best to remove added pressure?

It’s no secret that staffing is on the minds of all practitioners these days as this issue also ranked high on the pain points for this recent tax season. Members of the AICPA Tax Section had the below to stay regarding staffing:

What Are the Biggest Issues You/Your Firm Face with Regard to Staffing?

  • 48.70%   Finding qualified staff
  • 27.14%   Training of current staff
  • 24.91%  Not sure/no issues with staffing
  • 22.49%  Retention of key staff
  • 20.26%  Motivating staff
  • 7.99%   Other
Are these findings in line with your firm? If not, what are the differences? Shore up staffing so your firm has a clear commitment to hiring, retaining and engaging its tax team.

  • Consider Experienced Talent Seasonally
    More concentrated timeframes lend themselves to more seasonal staff. Look for experienced talent both inside your firm and outside, too. Consider tax partners and experienced practitioners nearing retirement age who want to begin cutting back on their hours during the year. Tap into parents of young children who want to work but are not interested in working full-time throughout the year.
  • Add Interns to Your Tax Team
    College interns can be a perfect fit for your firm’s tax department during busy season. Not sure how to get started? Contact placement offices at local colleges. Let them know about the openings in your firm. Talk with them about the types of candidates you want to fill these openings. Help them understand your firm’s culture so they can help match the right candidates to your firm. Not only are intern programs a good way to fill staffing needs during tax season, they are an effective recruiting tool for permanent placements. Consider using the PCPS Internship Program Quick Start Guide to get started.
  • Tap Audit Staff to Fill Gaps
    Since audit deadlines differ somewhat from tax deadlines, be on the lookout for situations where audit staff can fill gaps in your tax department. What’s more, this hands-on experience provides your employees with new learning opportunities while working in another part of your practice.
  • Look to High Performing High Schoolers
    In addition to college interns, look to top performing high school students for repetitive tasks such as scanning and mailing. Contact high school placement directors in your area. Let them know the types of students you are looking for to fill specific roles. 

Hot Topics
Each tax season brings a new set of hot topics. Here are some of the more popular ones from around the country. Are they in line with what you experienced?

  • Sharing Economy Income Activities
    According to the IRS, if you use one of the many online platforms available to rent a spare bedroom, provide car rides or to connect and provide a number of other goods or services, you’re involved in what is sometimes called the sharing economy. An emerging area of activity in the past few years, the sharing economy has changed how people commute, travel, rent vacation accommodations and perform many other activities. The sharing economy allows individuals and groups to utilize technology advancements to arrange transactions to generate revenue from assets they possess (such as cars and homes) or services they provide (such as household chores or technology services). Were your clients prepared for the tax implications of providing these services? Did you use the IRS Sharing Economy Tax Center?
  • Crowdfunding
    Crowdfunding sites, such as Go Fund Me and Kickstarter, have become popular ways to raise money for all sorts of things from startup businesses to supporting those with emergency healthcare issues. Are you and your clients discussing the tax implications of the various types of crowdfunding activities? Is it taxable income? Can your client deduct crowdfunding payments as a charitable contribution? What about capital/equity transactions sourced through crowdfunding?
  • Marijuana Business
    Although the marijuana business is flying high in a number of markets, it is still considered illegal at the Federal level. Do you know the legal ramifications of providing services in this area? AICPA has a dedicated webpage to those providing services to businesses in the marijuana industry.

Here’s to lessons learned and well needed relief from a compressed tax season!