Lessons from tax season: Home run or rain delay?

Advice

Tax season is a lot like baseball season, and both have been for the record books this year. We started 2020 with hopes of a solid season after a rebuilding year following the Tax Cuts and Jobs Act. Instead, this season threw us more curveballs, changeups, game delays and empty seats than any season in history. Now that tax season has passed, we can reflect on the highs and lows of the season, and contemplate changes for next season.

Tax season game delays. Extended filing deadlines are a normal part of federally declared disasters. COVID-19 has been unique in that it impacts us nationally, instead of the usual state-level disasters, slowing down the traditional tax season in March when President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act. Once extended, many taxpayer clients became hard to reach as they focused on more urgent issues. It’s possible filing deadlines will continue to be disrupted into next season, so consider adding contingency planning and increased client communication to the list of off-season planning.

Legislation fastballs. Tax legislation is nothing new for us, but most of the time, we have at least a few months of training season to learn about the details before advising and implementing with clients. This year, we had days and weeks to understand the Families First Coronavirus Response Act and CARES before acting with imperfect information to help clients. The media frenzy informed clients about the Paycheck Protection Program (PPP) before many advisors could evaluate the best combination ofnstimulus provisions for each client. Similar to most rushed legislation, the details are still trickling out, and the rules have changed since passage. This series of fastball tax legislation is more complex than prior tax changes, and there may be more legislation coming. One lesson may be that we need to build our processes to learn faster, as legislators allow for shorter training seasons before we are back at bat.

Tax advisory curveballs. In addition to our role as tax preparers, Congress designated us economic stimulus advisors. The media blitz around PPP loans and individual stimulus checks drove countless calls from clients and put the spotlight on us as expert advisors. The PPP was only one of many stimulus provisions available to business clients, and analyzing stimulus provisions was often a complicated engagement. These stimulus provisions and tax benefits are likely to continue at least into next season, and maybe for several years. With trillions of federal dollars available for economic stimulus, your role as a tax advisor can expand with the right processes and business model. Some firms had already transitioned from leading with compliance, to leading with planning and advisory services, and for them, tax advisory came naturally. For other firms, this is an opportunity to transform your services to lead with tax planning and advisory services that focus on tax saving strategies, instead of preparation and compliance.

E-file instant replay. One reason for tax professionals to celebrate is that the IRS announced they will now support e-file for individual amended tax returns. Just as baseball was the last major sport to embrace instant replay to review and amend bad calls, the amended 1040 is the last major form set to join e-file. Tax professionals love the efficiency of e-file and have been requesting this for more than a decade. The Intuit family of professional tax programs will be updated to support this capability.

The technology-enabled stadium. Just like major league baseball, we have seen empty seats where clients and employees used to sit. The pandemic accelerated a trend to operate remotely using cloud technology. Many firms had already mastered their virtual game, including hiring remote talent, leveraging cloud accounting, operating securely with hosted tax software, and meeting business clients on video calls, but some firms scrambled in March to create remote work environments. Firms that harness technology and master remote processes will be more flexible to navigate future disruptions. They may also be better positioned to advise clients who are making their businesses more visible online to replace lost brick and mortar revenue.

Off-season development. For many tax professionals, tax season has been an emotional roller coaster that included financial hardships, home school, employment changes, health issues, travel disruptions, and other challenges. Clients and co-workers are also friends, and when they hurt, we hurt. While our off season seems to shrink more and more each year, consider ways to rest and refresh before the next season begins. Many teams are experiencing burnout and mental exhaustion from this season. Create an environment to help your team disengage from the work and recharge.

Consider your own retrospective and make a list of adjustments to make before next season. While this season didn’t unfold like anyone planned, “there’s always next year.” And please forgive my corny baseball analogies.

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