Tax season is over (or is it?): Now what?

Editor: Michael W. Crisler, CPA

Sure, busy season may be in your rearview mirror (for the moment, at least), but take care not to leave it there for too long. Summer break is here, and traveling and time away from work can be very enticing—as they should be. However, now is also the perfect time to ensure that all is right with your professional practice as you look forward to the next busy season only a few short months away. This column presents a few thoughts to consider before you fill up your gas tank and take to the open road for the summer vacation that you worked so very hard for.

Summer is a time for special projects

Just because tax season has ended and you are thinking about being on the beach with a nice, refreshing beverage in hand, that does not mean that the projects “on hold” can wait any longer (no rest for the weary, right?). It is time to roll up those sleeves and consider how to tackle any special projects that you may have put on the back burner during the last few months. Open those files, reacquaint yourself with your notes, and consider the possibilities. Is there a summertime tax projection to be done? Or maybe a research project regarding an upcoming sale transaction? Consider your current staffing to determine who would be best suited for the project.

Here are points to contemplate when assigning a special project to a staff person:

• Consider the staff person’s current and upcoming workload. For example, is he or she assigned to a large partnership that is on extension, where the bulk of the work may be performed over the summer months? If so, that staff member might not be the best fit for the project.
• Consider the cost efficiencies that you, as the business owner, are trying to manage. What do you ultimately expect to be able to bill the client for?
• Consider that special projects can be teachable moments outside the normal course of tax return preparation.
• Take care to provide staff with a deadline and a budget—especially in the summer months—to ensure that the project is appropriately prepared and that sufficient time remains for review.
• Think ahead to what’s next. Maybe the special project will bring about a future workload (i.e., another tax return). If so, perhaps the staff person assigned to the special project should then be involved in those next steps, creating yet another learning opportunity.

Analyze returns filed in April

To generate potential special projects, further analyze the returns that were just filed.”Analysis of a Tax Return for Personal Financial Planning,” a resource from the AICPA Personal Financial Planning Division (available at www.aicpa.org, is a helpful place to start. From this analysis, several opportunities could translate into benefits for your firm. First, this analysis provides questions that you should consistently be thinking about for your clients and that may lead to other service opportunities. Second, the analysis provides an opportunity to educate new (and even seasoned) staff about your client base. Reviewing a tax return after the fact can afford a learning moment for staff that is harder to find the time for when the firm’s professionals are up against a deadline.

Proactively manage tax returns on extension

While you are assessing which returns were extended during the spring season, strive to keep the momentum going. Focus on the work you know needs to get done, such as quarterly estimates that are looming, as well as the actual returns themselves. The next deadline is never too far away.

As you work through returns on extension, keep a few pertinent points in mind:

• Consider whether you are working on the “extension” return or the actual return itself, and be cognizant of any estimates that may have been input into the tax software. Being in the upper tier of the review cycle, you might not know how or where exactly the information was input, but you know your clients and their income and expense sources. Keep a keen eye out for duplicated data, e.g., if an estimated amount is entered and then not removed when an actual Form 1099 arrives.
• Remember that some information received after the extension has been filed could affect the return. For example, when receiving a Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc., from an outside partnership, you may find that your client has nexus in another state and that an extension for that state was not filed. Take steps to see what should be done to mitigate the accumulation of penalties and interest on any balance of tax that might be due, and, of course, be sure to alert the client.
• Consider estimates that you received for the extension deadline. Estimates can be a moving target. They could change over the summer and could well change again by the time the corresponding income tax return is filed. For example, for items such as the sale of property, executor’s fees, or cancellation-of-debt income, the underlying calculations may be tweaked along the way to determine the correct amount. It is your responsibility to remain attentive to those revisions at all levels.

Stay current with tax law changes

Tax practitioners should be well aware that the Code is ever-evolving, and with that evolution come changes at every level—federal, state, and local. While keeping up to date is challenging and time-consuming, tax practitioners must stay abreast of those changes to focus on how they may affect the many facets of their clients’ tax situations, whether they be quarterly estimates, income tax returns, or multiyear planning scenarios.

Tax law changes could affect returns that were just extended, current-year estimates, and, very likely, future years. These changes could bring about additional requirements for the client (e.g., some states are requiring taxpayers to provide driver’s license numbers for e-filing) or for tax professionals (e.g., expanded due-diligence requirements with Form 8867, Paid Preparer’s Due Diligence Checklist).

Most significantly for tax law changes, communication is key. Clients will certainly be hearing many things in the news, and your guidance is essential—keep them informed in your role as their trusted adviser.

Firm administrative matters

When managing a professional practice, a multitude of administrative matters must be addressed throughout the year. In the post-season, a few stand out as timely:

• Remind staff (and yourself) of their continuing professional education (CPE) requirement. Keep in mind not only the total number of CPE hours that must be completed but also the particular disciplines that must be maintained. These requirements vary from state to state. If you consistently find yourself trying to secure CPE hours just under the wire at the end of a reporting period, create a schedule and add a few hours or disciplines to your calendar each month.
• To avoid being shorthanded, ask staff to note (to the best of their ability) when they anticipate taking vacation during the summer. Your firm’s workflow may be a little slow during those times, but you still need to ensure that you have enough staff to keep the firm running.
• Engage your staff by providing them with consistent and timely feedback. Many firms seem to provide formal feedback at least twice a year, but you should not fall into the mindset of just leaving it at that. Staff want to know how they are faring and how to do better, so tell them. These conversations may be difficult at times, but it is incumbent upon experienced tax professionals (and, hopefully, mentors) to provide this feedback.
• Revisit your insurance policies that require annual maintenance and updates. As a post-season idea, consider taking steps to get your annual renewals on a cycle to address them in the summer, when you have time to ensure that the policies are covering what you want covered, when you might have a few minutes to confirm or shop around for the best pricing, and when you can consider what insurance you truly need (e.g., liability, life, disability, health, cyber, etc.).

Power of introspection

It is also helpful to evaluate your own work product and practices. Do you ever take the time to reassess yourself? Even with all you learn from co-workers, CPE, and even your own missteps, there is always room for improvement and better efficiencies. Beyond this, consider what quality-of-life decisions you are bringing into your own practice. Even the boss needs to recharge once in a while!

Stock your supply closet and get the best deal

Maybe you are already working in the cloud and are a paperless firm, but your office’s supply closet undoubtedly needs to be replenished after April 18. From paper clips to firm letterhead, consider the items that you use regularly and reorder them now so they are ready for the fall season. If you are considering hiring new staff over the summer, consider what furniture, equipment, or software might be needed to seamlessly bring them on board. Or do your current staff’s surroundings need an update?

Also consider your client deliverables. Perhaps more clients would prefer an electronic copy of their tax returns, and, if so, note that you may not need to order as many deliverable folders, for example. Now is the time to evaluate what you have on hand, consider what you may need in the coming months, and contact your usual vendors (or seek out new vendors, as you never know where a good deal may be) to get your supplies stocked for the fall busy season.

Get on social media

If you are of the mindset that “one of these days, I will get to that social media stuff,” then hear this message: Social media will be here once you return from your summer vacation. It is not going away. In fact, there could well be a new latest and greatest social media outlet once you return from your vacation. Social media outlets present an opportunity to expand your online presence and further build your personal brand. Sure, the social media world is vast, but a good resource can be found on the AICPA website. The Social Media Toolkit (available at www.aicpa.org provides social media platform-specific guides and tutorial videos to help you get started. Once you understand social media opportunities, consider creating an action plan to keep you on track. Resources at aicpa.org can help you create a clear road map and provide guidance for establishing your professional social media presence action plan.

Stay in the know with cybersecurity

Just as social media outlets move, change, and evolve at a mind-boggling pace, so do hackers and identity thieves. Almost daily, one can hear stories about online security. This makes cybersecurity that much more important for tax professionals as they look to provide stellar service to clients. With the strides that the IRS is making in promoting its message of enforcement, the Service has formulated a variety of resources for tax preparers, some of which can be found in IRS Publication 5199, Tax Preparer Guide to Identity Theft. Beyond this knowledge, think about what you, as a tax professional, can do to continue to protect yourself and your clients. There are a couple of points to consider.

First, learn how cybersecurity affects your firm. It is not cookie-cutter; what works for one firm may not work for another. The AICPA has developed a resource that may prove invaluable—A CPA’s Introduction to Cybersecurity, available to members at www.aicpa.org. Second, contact your insurance carrier (or other providers) to understand cyber insurance offerings and what may make sense for your firm. The aforementioned AICPA resource provides considerations that you should incorporate into your decision-making for adopting a cyber-safe mindset.

Community involvement

While the profession’s traditional busy seasons do not comfortably afford tax practitioners the opportunity to get out into the community, the somewhat calmer summer months can make up for those busy times. So, take this time to give back. Perhaps “giving back” means reconnecting with volunteer opportunities that you had to put on hold during busy season. Perhaps it means connecting with your state CPA society to find opportunities to mentor students in the upcoming school year. Perhaps it means getting involved with a business organization to present one (or many) tax-focused seminars in the off-season, when taxpayers might not necessarily be thinking about taxes. Giving back can hold many meanings to a variety of individuals, so take the time to determine what it means to you.

Even if you were to consider only a few of the points covered above, you would be well on your way to smoothly sailing into the next busy season. So tackle some of these issues now, and get out there to enjoy all that the summer has to offer!