Working remotely: A tax practitioner’s checklist

As the world, hopefully, moves to the other side of the COVID-19 pandemic, many routines, practices, and procedures have changed — likely for good. PwC, for example, announced in late 2021 that it would allow its U.S.-based client-serving professionals to work remotely going forward (“A ‘Big Four’ Firm Will Allow 40,000 Employees to Work From Home,” CNN Business (Oct. 2, 2021)). Other firms are following suit.

The vision of what constitutes a workplace certainly has changed, with more individuals opting to work outside the office. Some, for example, are working from home by choice; others are doing so as businesses reduce their office space; and some are working in a hybrid model, splitting time between home and an office. As tax practitioners responding to this new environment, we must ensure that we continue to protect the confidentiality of our clients’ information, comply with document-retention policies, work as efficiently as possible, ensure that deadlines are met, achieve the highest-quality work, and continue to obtain required training. In today’s computerized world, many of the issues a remote tax practitioner should consider are not that different from what the in-office practitioner faces. This column reviews some of the nuances in these considerations that tax practitioners should think about as remote working continues to increase.

The many facets of client confidentiality

A tax practitioner’s obligation to maintain client confidentiality derives from many sources. Under Sec. 7216 and the regulations thereunder, for example, practitioners are generally prohibited from disclosing or using client information without client consent. Such information includes a taxpayer’s name, address, or identifying number, any of which were provided to the practitioner in connection with the taxpayer’s return preparation. The “Confidential Client Information Rule” of the AICPA Code of Professional Conduct (ET §1.700.001) forbids AICPA members in public practice from disclosing “confidential client information” without the client’s consent. For lawyers in practice, American Bar Association Model Rule of Professional Conduct 1.6 generally prohibits a lawyer from disclosing information related to a client representation without the client’s consent. The accountancy and business laws of most states also place a duty of confidentiality on practitioners (see, e.g., Cal. Bus. & Prof. Code §5063.3 and N.J. Admin. Code tit. 13, §13:29-3.7).

In a traditional office environment, compliance with such rules is often a part of the practice’s infrastructure. For example, policies and procedures are often in place to ensure that client-related conversations occur in closed-door offices or conference rooms. Staff members often have designated responsibility for receiving paper fax transmissions, mail, packages, and other items, ensuring these materials’ proper handling so that information is not improperly disclosed. In remote work, however, many of the safeguards professionals may have come to take for granted in the office setting likely will not be in place. For instance, staff will likely not be present to ensure proper handling of documents and parcels. An expectation of confidentiality may be unrealistic in certain remote settings.

When they work remotely, however, professionals can take several measures to ensure that client confidentiality is preserved. First, eliminate the receipt of paper fax transmissions. For those working with tax authorities, this may not be simple. Some tax authorities may still require a confirmed traditional paper fax machine; indeed, the IRS often asks if the receiving fax is paper or electronic. In a remote environment, if one cannot ensure 100% oversight of a paper fax machine, a computer-based fax service will need to be used to make certain any taxpayer information cannot be seen. And, finally, ensuring a secure Wi-Fi connection is critical — both through a secure network and a strong password.

Often, when a practitioner works with a tax authority on a client’s examination, they exchange information. While some tax authorities will allow the use of fax email or even secure messaging file exchanges, others may require paper. In such cases, practitioners may receive packages from the tax authority at their remote location or send packages from outside the office. Procedures should be in place at any remote location to ensure that only the practitioner oversees the receipt and sending of any packages to and from tax authorities.

Physical office locations are often designed to maintain client confidentiality. They generally have locking offices, separate conference rooms, and staff training in maintaining confidentiality — all difficult to replicate remotely. Outside the office, it becomes much easier for confidential information to be inadvertently — or purposefully — seen or overheard by the wrong individuals. However, steps can and must be taken to maintain confidentiality. When working from a hotel, for example, practitioners and any team members should seek a quiet office space. If working at the client’s location, they should arrange to work in a separate conference room. At home or at another remote location, a room that allows for private conversations ought to be available. If packages are received at a remote location, arrangements must be made with the appropriate staff to ensure prompt notification, and a tracking service is best used whenever possible. Finally, no matter where one is working, computer security is paramount; laptops and similar devices must be locked whenever the user is away — even if only for a minute.

As a related matter, a tax practitioner’s communications with a taxpayer may in some instances be protected by the federally authorized tax practitioner privilege under Sec. 7525 (or, if a lawyer is providing services, the attorney-client privilege, as well). Confidentiality is required in order to claim and preserve the privilege. Ensuring that confidentiality is protected is a crucial step to protecting valid claims of privilege where appropriate.

Observing document-retention policies

Document retention is generally viewed through two lenses: the practitioner’s policy and a tax authority’s guidelines. Practitioners are responsible for ensuring that their policies are complied with. For example, if a practitioner’s policy requires maintaining tax returns and workpapers for a certain number of years, the practitioner is responsible for ensuring that is done. Larger firms may have staff dedicated to ensuring compliance with document-retention policies.

Tax authorities also have guidelines concerning how long taxpayers should keep tax records. The IRS, for example, generally provides that taxpayers keep records until the limitation period for the particular tax year expires (see IRS webpage “How Long Should I Keep Records?”). Complying with tax authority document-retention guidelines is generally the taxpayer’s responsibility.

For the remote-working tax practitioner, electronic records should be preserved as they would be in an office setting — by using the appropriate electronic storage tools. A remote practitioner may not have adequate physical space to store paper records, including backup and source documents for tax return workpapers and tax returns. In this case, the practitioner is guided by Rev. Proc. 97-22, which provides procedures for electronically storing images of hardcopy paper documents and storage of electronic books and records. Remote-working tax practitioners may need to arrange for someone at the office to scan and preserve documents, or they may ensure they have the right equipment to do so at their remote location, ensuring that, once documents are scanned and preserved, paper copies may be destroyed.

Working efficiently

Years ago, working remotely was not perceived as the most efficient way to work. In a tax practice, preparing tax returns, reviewing files, and consulting without the presence of key personnel, important client files, and necessary technology were barriers to efficiency. As tax filing dates approach, remote workplaces also entail the absence of staff responsible for ensuring the timely and successful transmission of tax returns. How does the remote worker ensure efficiency while working in an environment without these important on-site resources?

Today, preparing tax returns usually involves the use of software or web-based technology. Web-based applications are usually built to allow use from anywhere there is a secure internet connection. Stand-alone applications, however, can require local processing with a local computer. For the remote tax return preparer — and reviewer — today’s technology should allow for efficient tax return workflow. From workpapers and checklists to the tax return software itself, all should be available to preparers and reviewers on their computer or online. Today’s staff should be ready and equipped to prepare tax return workpapers and other documents on their computers and share them in a secure online format, such as a secure web-based or encrypted platform. Checklists and reviewer notes also should be input via computer for easy access from anywhere, by any authorized person.

Perhaps the greatest void in working remotely is the absence of key colleagues — especially for developing professionals who benefit from the presence of their contemporaries and supervisors, and for consulting and collaborating on tax issues. For those working remotely, even if only part of the time, ensuring a videoconferencing platform is available will allow face-to-face engagement when practitioners cannot be together in person. Tax professionals can often participate in client meetings via videoconferencing as well, fostering a more personable discussion, especially if they are scheduled at the last minute.

While video meetings are not the same as in-person meetings, much of the experience can be replicated. The face-to-face experience, even if via video, allows the discussion to flow differently, enabling participants to note facial expressions and reactions and observe their places in line for speaking. This can foster efficiency and even allow for more personal interaction where colleagues are in different locations and ordinarily would speak by telephone, particularly during the busiest times.

Managing due dates

Tax practice is a due-date-driven profession. Some practitioners can recall attending tax department paper tickler meetings to review their clients’ due dates and ensure that there was adequate time to prepare extensions, prepare returns, and make certain that filings were provided to clients in enough time to take them to the post office. Today, returns generally are prepared and filed electronically. Due dates can be tracked similarly on an appropriate electronic platform, just as in an office. Whether on one’s stand-alone computer or through an office network, due dates should be readily available to practitioners outside the office. Even so, however, timely preparing and filing is a human-driven process; the presence of professionals in an office facilitates this process as in-person colleagues remind each other of workload and due dates.

Practitioners must also track tax authority administrative due date postponements, such as for disasters. Recently, more disaster due date postponements have been granted than in prior years, with specific terms regarding who is covered and when they are covered. Practitioners working remotely must make sure they carefully follow those developments that relate to their clients and practice, especially if they are accustomed to in-person staff managing changes in due dates.

The goal of all practitioners: Producing the highest-quality work

For many years, the formula for producing the highest-quality work product involved long hours at the office. The physical office provided everything needed to timely prepare extensions, estimates, and tax returns. The presence of colleagues promoted collaboration and engagement — key components to delivering top-quality tax services and meeting clients’ expectations.

Although today’s remote-work environments lack the presence of colleagues with whom to spontaneously confer and consult, technical resources allow for the preparation and review of quality work. Most tax returns and workpapers are prepared with up-to-date software, which itself is a check to ensure quality work. The availability of online technical resources and applications is another way practitioners can deliver quality. The remote-work practitioner, however, has a greater responsibility for ensuring that there is adequate time for consulting, preparation, and review. Only by personally overseeing these critical measures in tax compliance and consulting can the remote-work practitioner deliver the highest-quality work.

Training must go on

When most practitioners were in an office environment, it was fairly effortless to be reminded of continuing professional education requirements and attend on-site and off-site live classes. Once the world went remote, in-person trainings came to a halt, and remote training became the norm. Practitioners must be more diligent in remembering CPE deadlines and finding suitable classes. On-site live course trainings may not be offered as in the past, and off-site live classes may not be available nearby. For the remote practitioner, it is critically important to track CPE, if necessary, by finding remote learning that will provide needed credits in all required CPE categories, such as taxation, audit, professional development, and ethics.

Contributor

Todd Simmens, Esq., CPA, is national managing partner of tax risk management at BDO in Woodbridge, N.J., and is a member of the AICPA IRS Advocacy & Relations Committee. For more information on this column, contact thetaxadviser@aicpa.org.