The Client Tax Letter Project: Client Communication for Tax Professionals

Editor: Annette Nellen, CPA, CGMA, Esq.

Undergraduate tax students are typically juniors and seniors eager to apply in a professional context the accounting and tax concepts they learn. They perceive value in the real-world context of interactive in-class activities. In preparation for their professional careers, students welcome the opportunity to develop essential skills, including writing a letter to a client. Students find this practice helps them in their internships, where they see firsthand the value of effective communications (see AICPA Insights blog post, “The Importance of Communications in Accounting” (Aug. 27, 2012), available at blog.aicpa.org).

Tax firms are looking for students who can demonstrate professional skills in writing. While some professors feel that substantive tax courses are not writing courses, tax classes should teach students not only to navigate the Code but also to communicate their findings effectively through internal memos and client communications. Indeed, most accountants, faculty, and professional organizations believe that writing should be an important part of accounting education (see Riley and Simons, “Writing in the Accounting Curriculum: A Review of the Literature With Conclusions for Implementation and Future Research,” 28 Issues in Accounting Education 823 (2013)).

Understanding both client needs and the tax law is critical to accounting students’ future professional success. From the introductory undergraduate coursework in taxation, students should be encouraged to frame tax issues and to communicate to clients the relationship between facts relevant to the client’s situation and the applicable tax law. The challenge is finding appropriate tax topics to engage students in creating effective research. A client tax letter project that emphasizes research, teamwork, and effective communication can serve these objectives in the undergraduate tax class.

In this project, students gather in groups with their professor to discuss the needs of fictitious individual clients and evaluate the facts and circumstances of each client’s tax issue. They discuss relevant aspects of the tax law and determine appropriate responses to the client’s questions. By sharing issues of their hypothetical clients with one another, students develop a common core of competency in tax concepts and consider the application of tax concepts in a practical setting. Parsing the Code in their discussion, they become more professional and focused. Through this process, the students prepare to engage hypothetical clients in their final deliverable, a client letter.

The Client Tax Letter Project

The client tax letter project has four parts designed for discussion over three weekly class sessions. First, after the basics of itemized deduction laws have been taught, a unique client fact pattern involving an itemized deduction issue is distributed to each student. Second, the students identify sample client letters for the client fact pattern on electronic research databases such as RIA Checkpoint and BNA Bloomberg and use the links in the sample letters to perform research using the electronic databases. Students print the sample letters and related research and prepare a preliminary presentation. Third, in an in-class meeting, each student presents his or her fact pattern, sample client letter(s), and research to fellow students. Finally, students draft the client letter, read it to the class for quick comments, and submit the client letter deliverable for a grade. Students are graded on their research for the client meeting and on the final client letter deliverable. Students are also graded on their comments to fellow students in the in-class meeting. These steps are further explained below.

Step 1: Establishing Client Facts for Research—Itemized Deductions

In class, prior to launching the client tax letter project, the instructor provides an overview of the framework of itemized deductions versus the standard deduction and, either in class or in a workshop setting, introduces research and the electronic tax research databases. Itemized deduction issues work well for this project because students generally enter the individual taxation course with some basic understanding of them, as they have heard about different deductions in the news or from their parents. The introductory individual federal tax course develops students’ understanding of the entire itemized deduction framework. Because so many specialized fact-specific issues involve itemized deductions, most students find research projects on this subject interesting. Fact patterns can include those of lower-income and high-net-worth individuals and involve gray areas in the law that require the student to engage in tax research and analysis.

Each student is given a unique client fact pattern involving itemized deductions. Students are told the client is a business professional who seeks detailed research. At the launch of the project, it is important to discuss understanding the client audience and how the tax professional will determine how much technical information to include in the ultimate client communication, based on the client’s needs and tax knowledge.

Step 2: Student Tax Research Using Electronic Databases

Students engage in tax research using the electronic databases, where they locate a sample client letter on their assigned topic, and they consider the strengths and weaknesses of the overall sample client letter structure. Students print all relevant research from the database linked to from the sample client letter, parse the substantive issues and law related to their tax pattern, and prepare preliminary meeting notes. Students come up with additional questions for the client and identify concepts they find confusing or unclear.

Step 3: The Class Meeting

During the in-class meeting, students simulate a meeting with accounting firm partners and colleagues to discuss the client issues from the fact pattern and shape the content of the client letter. In class, students begin by sharing their fact patterns and outlining their research outcomes. The class then discusses the fact patterns and related issues. The other students who are acting as work colleagues are required to provide feedback on fact-specific applications of issues. Together, the class identifies what additional information should be obtained from the client before the research project can be completed. At this point, the instructor can supply additional facts to the student. Additional information can be provided to identify next steps and items to be discussed in the client letter.

The value and use of sample client letters can be discussed with the class. While producing sample letters may provide introductory guidance, customizing their tone and tailoring them to the client’s facts are critical to success. Some sample client letters from the databases may include a checklist of items to discuss with the client; other sample letters may not be relevant to the specific client facts or may not include all relevant points for discussion. Students need to develop their individual voices in client communications and understand the pitfalls of the checklist-oriented client letter.

Students benefit from discussing what research to include in the client letter and overall editing of client communication in preparing their ultimate deliverable. In the beginning, many students adopt a kitchen-sink approach and include too much irrelevant research in the letter. It is important to specify the tax sophistication level of the client to know whether to include tax citations and references. A discussion of how to explain tax rules to a layperson client (one who has little knowledge of the tax law and no interest in tax law citations) is useful and a good reminder to students that writing must consider the reader.

Step 4: Writing the Client Tax Letter

Students prepare and customize a client letter covering all the facts and relevant points of tax research and applying the tax provisions and related information according to their client’s needs. Students should present the client tax letter in class for a second critique from classmates. This might also be done in smaller groups to limit the amount of class time used. Students are encouraged to use plain language in the letter whenever possible but to provide citations to relevant tax laws and issues (assuming the client has some knowledge of the tax law). The final deliverable should demonstrate strong writing skills and seamlessly outline tax research points and relevant outcomes.

The actual writing portion of the project is an ideal time to connect the student with writing centers and resources on campus and beyond. It is also helpful to list online resources by which students can improve their writing skills, such as the OWL website at Purdue University, an online database with tips on improving student writing (owl.english.purdue.edu). Several other colleges and universities also have helpful writing resources, such as DePaul University (condor.depaul.edu) and the University of Montana (www.umt.edu).

Effective business communication and the tone of client communication for accountants should be discussed. Asking students to recall what they learned from their business communications class is helpful and allows them to apply that knowledge to a specific tax communication.

Getting the Community Involved

Local tax professionals can be enlisted in the project as well. Instructors can invite them to the client letter meeting to provide professional feedback and advice. These professionals can also describe situations in which they have drafted tax letters to clients. The faculty member can obtain speakers from the campus accounting advisory board or career center who can come to class to discuss effective tax communications. This interaction can help introduce students to professionals in the accounting community and reinforce that accountants spend a good amount of time writing and communicating with clients.

Another Valuable Online Resource: KPMG Effective Tax Communications

KPMG provides another highly useful resource for incorporating tax communications into the tax course, through its online Effective Tax Communications program, developed by Tracy Noga, Ph.D., CPA. The program includes five short-format video modules, totaling 50 to 60 minutes, and related practice exercises. The exercises provide completed tax research for the issues presented and allow students to focus on converting research to effective written client communication. They cover topics in individual taxation, business expenses, property transactions, and partnership and corporate taxation.

The modules of the KPMG Effective Tax Communications program are:

1. Introduction to Effective Communication;
2. General Writing Tips;
3. How to Write a Research Memo;
4. Crafting a Client Letter; and
5. Other Communications—Email, IM, and Workpapers.

The modules can be used together or assigned at different times throughout a course. Information about the KPMG Effective Tax Communications program can be found at university.kpmg.us.

Conclusion

Requiring students to write a client letter from tax research is a positive experience that provides skills that are useful in the professional environment. Students see the value of engaging in this practical exercise, and it provides a work product that they can discuss with prospective employers and during internships. Students enjoy the interactive nature of simulated work meetings and feel a sense of project ownership as they gain the ability to develop client materials, from concepts to polished professional writing.