“thirty percent of tax services will be obsolete in three years.”
robert hockensmith talks about tax season 2019 on local tv news in phoenix.
by 卡塔尔世界杯常规比赛时间 research
this year’s tax season is giving tax preparers a taste of the future—a future where tax returns are both simpler and more complex.
according to data streaming into the 卡塔尔世界杯常规比赛时间 busy season barometer survey, tax practitioners are just beginning to get a handle on the radical changes wrought by the tax cuts and jobs act—not just the technical changes to the tax code but the resulting changes to the business of tax preparation.
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robert f. hockensmith, cpa, ea, in phoenix, ariz., and a website site notably named azmoneyguy.com, offers a variety of tax and non-tax services, sums it up thus: “thirty percent of tax preparation will be obsolete in three years. clients will want advice and tax resolution more than preparation for 50 percent of taxpayers. and only 50 percent of all tax returns will be prepared by professional tax preparers.”
the loss of low-end clients means merely that practitioners are going to have to go after taxpayers who file more complex returns.
michael wall at fsb& cpas in lincolnshire, ill., breaks it down rather well:
- major changes and uncertainty in tax law will keep clients anxious, but still wanting a tax professional in their corner.
- revenue for “simpler'” tax returns will continue to decrease while prices for more complex work will continue to stay steady or rise.
- more returns have become “simpler” to some folks; total tax return revenue will decrease and needs to be replaced by more outsourced accounting and advisory work.
the changes brought about by the tcja are affecting taxpayers, too, of course. just like tax practitioners, they are trying to figure out how they are affected. this year many are coming to cpa offices for information and advice. once they have an understanding of the new rules—this year or next—many of them will opt to do their taxes on their own.
pam gaines, managing partner with gaines cpas, pllc, with offices in nashville and new york, is optimistic about the ongoing change in client needs. “i’m still positive about the future because clients are wondering how the new tax laws will affect them as well as concerned about preparing their own taxes,” she says. “also, we are having more clients ask for advice before they make decisions so preparing more tax projections.”
it won’t be what it used to be.
this season is all about figuring out what changes to the business are necessary. next season will be all about putting those changes into effect.
what has to change?
- client relationships
- the profitability of some clients, the loss of others
- services offered by practitioners
- valuation of services and billing
some professionals see disastrous days ahead as more clients forgo the complexities of itemization. others, however, are recognizing that the future is in clients with more complicated finances.
practitioners are telling us what they are going to have to do—maybe not this year, but next:
- prepare to lose low-end (and low margin) clients.
- look for new upper-end clients, especially among small businesses and investors.
- watch for potential clients who filed their taxes wrong because the simplification isn’t as simple as some people think.
- figure out how to raise revenue through advice and planning.
- be careful with informal client relationships that will expect free advice.
- look for opportunity in assisting middle- and low-income taxpayers involved in qualified opportunity zones.
- replace billing for forms with billing for counsel.
deborah flaherty, cpa, working out of ames, iowa, is among those who already sees the change and knows what to do about it. “as i expected, more and more individuals will be doing their own returns online, so i will have to look to adding those whose returns are more complex, or are experiencing a major life event that changes their returns.”
a pseudonymous cpa self-identifying only as “preparer x” reflects the same idea, but with an even more clear-cut schism. “either you do a wham-bam quickie tax return (do it online or go to the refund store at the corner),” x says, “or you have a complex return and need professional help. nothing in between.”
leslie lewis, principal cpa with lewis & co. in cedaredge, colo., says that tax prep isn’t going to be as important as tax planning. “clients need us now more than ever to plan for taxes,” lewis says.
do you see the pattern happening here?
clients already need less help calculating their taxes but more help understanding what they have to do and what their taxes will be in the future.
one response to “tax season 2019 serves up a taste of the future”
katrina geety
my firm welcomes the changes that the tax cuts and jobs act brings to the tax preparation side of our profession. the simple returns will be prepared by the computer/internet savvy taxpayers. with the higher standard deduction for all taxpayers, including the dependent filer, coupled with the elimination of the exemptions, “who claims the kids” is of less importance. those claiming eic, hoh or education credits are faced with a daunting due diligence questionnaire that will reduce this population of filers too. as a cpa, i choose not to handle this sector of the tax return population. the returns are time-consuming and risky, riddled with penalties as part of the due diligence requirements. if the taxpayer prepares their own return, they are not required to complete form 8867 and the supporting due diligence worksheets.
we prefer to work with our business clients, shareholders and individuals with more challenging tax returns, including small businesses, rental properties and multistate returns and tax resolution services. we also will be able to focus more of our time on providing bookkeeping, accounting and write up services, issuing financial statements prepared in accordance with gaap and regulated under the aicpa peer review program.
i am very much looking forward to getting out of the “retail tax market” which requires evening and saturday hours. i have struggled with getting out of this market because most of our clients are long standing, but the tcja is taking care of this for me. i estimate that 20% of this our clients will self-prepare and of these, 90% are lower fee returns. this “market” is a major distraction to the work we perform for our contractual business clients, in particular to the work we must perform at year end.