tax season half over but no one is celebrating

office worker spraying silly string on colleaguepros are gaining ground in e-filings.

by beth bellor
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we’re halfway through tax season! woohoo, blow the party horns!

more tax season data: tax pros filing only 51% of e-returns | tax refunds up slightly | tax filings data looking less squirrely | tax return filings still lag, but pros hold 57% of market | tax filings down, but irs blames the calendar
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where’s your horn? you don’t seem to be celebrating. what up, dog?

filing statistics are down, and some of you aren’t shy about suggesting why.

cpa john. r brougher iii said, “well, let’s see…what have i been busy with this year? oh yeah…making sure all 1099s & w-2s to the irs and ssa by jan. 31 instead of having more time to fit those submissions in. correcting the filings of same that went out with errors that would have otherwise been caught prior to sending the irs/ssa copies later rather than sooner. the rest of my time has been spent dealing with trying to get the partnership returns out the door a month earlier than before for the people who actually expect them to be filed by the due date without extensions. every now and then, i get to work on a personal return.”

ruth wenger, cpa and mba, agreed and noted, “many more people are self-preparing because the software companies, through which we buy expensive tax software, are providing low-cost or free filing to taxpayers. so, essentially the accountants are competing with the very same companies holding us hostage to their software! i see no reversal in this trend. i prepare primarily business returns and very complicated 1040s. the straightforward returns have largely gone away.”

“this trend has been foreseeable for quite a few years. well over a decade, in fact,” jassen bowman advised. “i would hope by now that most practitioners have at least *started* transitioning into either more lucrative services, or carving out niche specializations for their 1040 services (high net worth individuals, physicians, real estate investors, business returns only, etc). again, the data and warning signs have been quite clear for years. it’s our responsibility as business owners to adapt to the market, not to expect the market to remain stagnant or constrained to our business models.”

so where do we stand?

chart of irs data through march 10, 2017
irs data through march 10, 2017

as of march 10, the latest week for which data are available, the internal revenue service had received 69.4 million returns, down 6.8 percent from the same time period last year. “same time period” compares to march 11, 2016, but the irs continues to note that “calendar year-to-year comparisons are difficult at this early point in the season, as four additional days of tax return processing are included in the 2016 totals.” yes, halfway through it’s still being called an “early point.”

returns processed number 67.3 million, also down 6.8 percent. the happy news for citizens is that the agency continues to churn returns back at a good clip, currently 97 percent.

e-filing receipts total 65 million, down 6.6 percent. tax pros account for 34.1 million of those, down 8.2 percent, and self-preparers for 30.9 million, down 4.7 percent. that has tax pros gaining a little ground, handling 52.5 percent of e-filed returns.

happily, that percentage has been trending upward:

 tax pro e-filings update chart
tax pro e-filings

 

visits to irs.gov number 215 million, down 7.3 percent.

as for refunds … the irs is saying the same kind of thing it has been all season: “early season refund numbers and dollar amounts are affected by the new law requiring refunds involving the earned income tax credit and additional child tax credit to be held until the later part of february. many taxpayers claiming these credits traditionally file during the opening weeks of tax season.”

well, that hold was lifted feb. 15, and “opening weeks” are long past. so tra la la, on to the numbers, something we can trust:

  • refunds issued total 56.2 million, down 5.9 percent, and $167.1 billion, down 5 percent. the average refund is $2,973, down 1 percent.
  • direct deposit refunds total 50.5 million, down 5.2 percent, and $156.8 billion, down 4.4 percent. the average direct deposit refund is $3,105, down 0.9 percent.
  • direct deposit accounts for 89.8 percent of refunds, and direct deposit refunds average 4.4 percent higher than the overall total.

what’s happening in the world of paper?

non-e-filers still make up 6.4 percent of individual income tax returns. their average refund is $1,806.68, or 61 percent of the total average and 58.2 percent of the direct deposit average.

8 responses to “tax season half over but no one is celebrating”

  1. ben guerrera

    the number of tax returns filed by my office seems down from last year, but i’m in a small rural town with a population that is decreasing. the cutbacks within the irs has definitely had an impact on my overall revenue over the past few years. nobody is afraid of the irs anymore. the decline in the number of irs auditors has allowed taxpayers to get away with filing erroneous returns on their own. this is not a good thing for tax professionals and makes no sense to me.

  2. mike kimble, cpa

    yes, the jan 31 deadline for w-2 1099 did hurt, and the changes in 1065 and 1120 due dates did pose a problem with processing and client education. however, the fact that the traditional quick refund tax prep companies are not advertising as much on tv and in town, as in the past decreases urgency by the general public (and my client base) and the fact that april 18th is deadline causes procrastinators to procrastinate even longer. i did extend a bunch of 1065’s but that takes no time really. my business clients seem busier this year with their everyday business and keep putting off seeing me. and also, tennessee where i am located decided to launch tn tap for sales tax in march, which is crazy for general cpa practices that also help clients file sales tax. and now by the time we kind of got used to aca, looks like it is going away or changing dramatically. not to mention the phishing scams on going constantly by hackers and the new irs guidelines forcing login to tax software and the extra gear and gadgets etc.. in place to stop ransomware… it has definitely been a year so far. wow i may be getting a lot grayer this year.

  3. keith schroeder

    the biggest issue in my office is the extra disclosure work with the child tax credit. in the past we avoided tax returns with eic so the sinkhole of time verifying if the client is ligit was eliminated. now we can’t avoid those junk returns with high incidence of fraud anymore. if a client has children we spend significantly more time on that return. fees had to be adjusted accordingly. the tax preparation industry is really changing as the government places more enforcement work on the tax professional.

  4. laura morton

    i am noticing the same declines – my corporate work is down 25% and my individual work is netting at 12% increase. i am wanting to scale back but this was not the area that i wanted to scale back in. it is going to make me really look at numbers and make the necessary changes to be either competitive or continue to develop teaching programs that i can provide and get paid for.

    • rick

      i am seeing an uptick in business returns and a decline in easy returns, any thoughts on why you are showing the opposite trend?

  5. colin m cody, cpa

    it should not be surprising that form 1040s submission are down as of march 10, 2017. practitioners have had to devote time and efforts to preparing forms 1065 and 1120s or extensions. this took time that otherwise would have been available for form 1040 work. from now through april 18th there will be more hours available for the form 1040 work, because the 1065 and 1120s extensions are out of the way.

  6. jeffrey l. rochester, cpa

    i am way up from any previous season, with no end yet in sight. many new clients are former self-preparers who screwed up a previous year or two and now need it cleaned up. i expect these types to be an increasing revenue stream.

  7. frank stitely

    we are experiencing the exact opposite. we were way up in january and february. i was concerned that we were borrowing revenue from march and april. now i wish we had been. we are at or beyond capacity with no let up in sight.