2018 is off to a crazy start. Tax practitioners faced a new federal tax law that will affect every client they work with. Every new year brings challenges (including an upcoming tax season), but clients will expect their practitioners to know about both the old tax law and the new during early 2018.
Most likely, practitioners have already received numerous questions from their clients on how the new tax bill will affect them. These questions may have led to long nights and workdays. It might be easy for a practitioner to feel burdened by these calls and e-mails, especially as they prepare for the upcoming tax season.
However, practitioners should realize that the new tax law brings an excellent opportunity for them to provide planning services for their clients and earn additional tax planning revenue, especially during the off season.
Here are five things a practitioner can do now to engage clients and encourage tax planning:
- Send a letter – Sometime over the next month, send a "state of tax law" letter to all clients letting them know about the key provisions in the tax bill. Give examples of how the new tax provisions might affect them - both positively and negatively! The AICPA has a Tax Law Snapshot and Year-end Planning Presentation in their Tax Practitioner Marketing Toolkit that are perfect for this. Invite your client to schedule a meeting with you to go over detailed planning for their particular situation.
- Send a 2017 vs. 2018 tax projection – Consider sending clients (along with their 2017 return) a projection of their 2018 tax liability using the same figures (i.e. W-2, K-1) from 2017. Many tax software providers have planning software that makes this easy to do. Include a note with the transmittal letter inviting your client to review the 2018 projection and to contact you if they wish to go over the projection.
- Use data analytics – Consider a deduction that is changing with the new tax bill (i.e. miscellaneous itemized deductions), and if your tax software has the capability, run its data analytics tool to reveal which clients will be affected by the change. Contact those clients to make them aware of the upcoming change and steps they might take to minimize the effects.
- Go out to lunch – Take individual clients or a select group of clients out to lunch and present them with key changes in the tax law. Give them examples of how it might affect them (i.e. pass-through deduction) and possible advisory services (i.e. C corporation conversion) you can perform to save them additional tax.
- Make a tax law change checklist – Make a checklist of the key changes in the tax bill. Use the checklist for each client as you’re preparing their 2017 return, checking each issue that might affect the client. When the return is complete, review the checklist with the client.
This year will be a typically busy year for all practitioners. Having to understand both the old and new tax codes will be an additional challenge during an already busy time. However, using the opportunity to provide additional value with careful tax planning could come with huge rewards.
Practitioners should resist waiting until after this tax season to engage their clients in planning. Instead, consider engaging them while the new tax law is still fresh in their mind. Making the effort early on will not only help the client, but also help generate additional advisory revenue during the remainder of the year.