busy season barometer 2024: topline results

happy days are here… again

(for most, anyway)

by 卡塔尔世界杯常规比赛时间 research

so far, halfway into tax season 2024, accountants and tax practitioners are reporting another pretty good year.

that’s two in a row!

last year, 58 percent of survey respondents reported a much or somewhat better year than 2022, which, as you may recall, had been a rather rotten year.

so, when 37 percent of this year’s contributors tell the 卡塔尔世界杯常规比赛时间 busy season barometer this season is better than 2023, it doesn’t mean fewer are having a good year. it means more than a third are reporting a year better than a good year.

another 36 percent say this year’s about the same as last year, which is another way of saying they’re having a second good year.

still, more than a quarter—almost 27 percent—say this year’s “somewhat worse.” hardly anybody—just three percent—says it’s even worse than somewhat worse.

breath deep

so what’s going on?

for one thing, we’re seeing practitioners report a more manageable workload. some have managed to add staff. some are culling clients. some are better organized.

and some have managed none of the above.

the general staffing shortage is now the second-most common problem, reported by 37 percent. more serious by far is clients who are late or unprepared, a problem for exactly half of the respondents. and, of course, some hapless practitioners have bad clients and not enough staff to deal with them.

pricing and billing rates ranked third, at 31 percent.

borbala banto, founder and ceo of concierge cpas, found a good solution, albeit not easy. her firm’s having a “much better” season, and this is why: “we overstaffed the office to anticipate growth and a smoother tax season.”

compare that with bruce ekmanian, owner of ekmanian tax & accounting in california. he’s having a “somewhat worse” year  because “with professional staff shortages, i have had to bring in a contract tax preparer.”

someone with a small practice in virginia has found a magic combo: “we’re firm with client internal deadlines so we can concentrate on returns being filed by 4/15,” the anonymous respondent says, adding, “breathe deep and do yoga. i’m limiting my hours so i don’t work on sunday.”

better organization

tony coladonato’s year is about the same as last year. he’s having trouble with too few staff and too many unprepared clients—a rock-and-hard-place situation—but he’s making up for it with better organization,

“we’re doing a better job of managing workflow,” he says, “with project tracking & managing client expectations with specific due dates for clients to have their complete tax information to our office in order to avoid their returns being on extension. we do this in particular with our ‘annual / tax return only’ clients.”

someone else is doing somewhat better by “logging each piece of information received, by date, type, and source.”

and someone else is doing much better, thanks simply to “working 99% remote.”

and somebody out in everett, wash., is trimming the firm and taking it easy. “not working late,” the anonymous practitioner says, “raising prices, firing clients that want in-person meetings and not willing to pay.”

respondent comments are by no means consistent. there are problems aplenty. but, generally speaking, it looks like cpa and tax firms are finding solutions to their problems.

the reasons

they’re seeing a better season – better than last year’s good season! – for several reasons.

• ai may – may – ease operations.
• most firms are outsourcing more work.
• almost half see opportunities in advisory services.
• almost 70 percent are trying to work with better, higher-value clients.
• more than a third expect overall fees to increase by about 10 percent.
• more than a third will increase billing rates by about 10 percent.
• a fifth expect a 10 percent increase in clientele.
• thirty percent foresee a 10 percent increase in revenue per client.

ai: the big unknown

while 29 percent see artificial intelligence having a positive impact on their practice, 67 percent say it’s too soon to tell.

despite the guarded optimism on ai, comments revealed considerable concern about the impact.

“not sure” was the most common response.

a worried canadian had a very negative opinion, predicting that ai will “take away the accouning business.”

and john lawson, at schechter dokken kanter in minneapolis, says “ai will allow others to commoditize our service.”

from his wisconsin firm, john howard says ai will do “nothing for small firms.”

but darek koleda, at new jersey firm fanty, koleda & associates, says ai will “help with the grunt work so accountants can focus on advisory.”

will the economy help?

respondents are rather divided about next year’s business conditions and the national economy. curiously, they generally think it will get worse for everybody else but not themselves.

• 34 say it will get worse for clients, though most say only “somewhat worse.”
• 63 percent say it will get worse for the national economy.
• 58 percent say it will get worse for small businesses in particular.

and yet …

• 40 percent say it will be better for their own firm, and only 6.5 percent think it will get worse.

what to do?

half of the respondents had advice for small businesses.

here’s a sampling:

“don’t take shaky deals. if the customer looks like they will not pay, don’t sell to them. you don’t need bad receivables or inflated sales numbers.”

“pay attention to cash flow, reduce borrowing (so as to lower financing costs), establish a cash reserve to weather a rough patch (invest it in fairly liquid but interest-earning vehicle), focus on doing high-quality work.”

“hang in there and make sure to save for the rainy season – it’s coming.”

accountants torn over 2024 economy, offer advice

they’re of two contradictory minds. hmm…

by 卡塔尔世界杯常规比赛时间 research

america’s cpas are perceiving a paradox for the economy.

• they think their firms will do well.
• they think their clients might be ok.
• but the rest of the country? not ok.

a disturbing forecast

according to early results from the 卡塔尔世界杯常规比赛时间 outlook 2024: emerging issues, opportunities and trends survey, north american accountants are pretty confident that they’ll do somewhat better over the next 12-18 months, or least no worse.

a solid 42 percent are in the optimistic camp, though only 6 percent dare say they will do much better. the majority – 45 percent – figure they’ll do about as well as they did this year, which for most wasn’t so bad.

they’re not quite as hopeful for their clients. only 3 percent think they’ll do much better, and only 16 percent think they’ll do somewhat batter.

with 46 percent thinking their clients will hold steady, that leaves just shy of 35 percent fearing their clients will do worse.

that’s a disturbing number, but not nearly as disturbing as the forecast for the nation and small businesses in general.

uh-oh

asked how the nation’s economy will go, 63 percent say it ain’t lookin’ good. about half say it’s going to get somewhat worse, with almost 14 percent saying it’s going to get much worse.

the numbers for small businesses were about the same. only 12 percent of survey respondents believe small businesses will do better than they were doing in late 2023. with 27 percent figuring it will be status quo at best, about 48 percent fear a downward trend.

a curious difference

how to explain the curious difference between the forecast for clients and that of all small businesses? small businesses make up the vast majority of cpa firm clients.

with 34 percent figuring their own clients will do worse, almost twice as many think all the other small businesses will do worse.

one possible explanation: small businesses working with cpa firms tend to do better than those going it alone.

survey respondents had plenty of advice for small businesses. the general drift: caution!

that call for caution could be divided into two categories:

manage your cash, ditch your debt.

craig s. hanson, writing in from north dakota, advises, “work on keeping expenses as low as possible to get the maximum out of the income that you receive.”

billie anne grigg, at profit first professionals, urges the small business owner to “get a handle on your cash flow now!”
charles wilson, of wilson and johns in jacksonville, fla., keeps it simple: “hoard cash. get out of debt.”

do what you do best – and do it better.

phillip brown, working out of springfield, mo., has some good advice: “concentrate on providing a high degree of personal service or high-quality products. target high-net-worth clients. they will always have money to spend. take time to investigate available tax savings strategies and put the savings toward future needs and wants.”

bethany h. dever agrees, telling small businesses to “take enough time to provide a quality service.”

“strengthen what can separate you from competition. be actively engaged in customer retention/satisfaction and employee retention/satisfaction,” says nick waldron at y.o.l.o. tax and advisory services.

an anonymous respondent says, “keep offering the best service; attrition is the enemy.”

another says, “be prepared to work harder over the next 1-2 years due to staffing shortages and increased cost of everything, including access to capital.”

finally, charles h. houston hits both categories of advice.

“enhance your knowledge of service lines offered,” he says. “evaluate and consider best practices of best industry competitors. improve cash flow by maintaining a watchful eye on accounts receivable aging analysis/collections; and develop a strategic plan to meet accounts payable demands. carefully evaluate capital project needs and related financing.”

accounting hiring hits another high

tax prep is less than half the increase.

by beth bellor
卡塔尔世界杯常规比赛时间 research

is the accounting profession closing its staffing gap?

it sure seems that way, as employment hit an all-time high this year. women fared well, too, reaching record levels in the field overall and in payroll services.

nationally, unemployment held at 3.7 percent as total nonfarm payroll employment increased 353,000, according to the latest data available to 卡塔尔世界杯常规比赛时间 research. of those new hires, 74,000 came in professional and business services, well above 2023’s monthly average of 14,000.

pay tied the record set in july 2023.

overall employment in the accounting profession

the details

employment in the accounting profession reached a new high in january at 1,159,200, according to the latest data available to 卡塔尔世界杯常规比赛时间 research. that’s growth of 4,100 or 0.4 percent for the month and 24,100 or 2.1 percent for the year. workers average 36 hours per week, down 12 minutes or 0.6 percent for the month but up 6 minutes or 0.3 percent for the year. they earn $41.33 an hour – matching the record set in july – up 13 cents or 0.3 percent for the month and 95 cents or 2.4 percent for the year.

staff total 840,500, up 1,100 or 0.1 percent for the month and 22,400 or 2.7 percent for the year. they average 35.7 hours, down 12 minutes or 0.6 percent for the month but up 36 minutes or 1.7 percent for the year. staff make $32.14 an hour, down a scant penny or statistically flat for the month but up $1.62 or 5.3 percent for the year.

cpa firms

cpa firms employ 552,400, up 800 or 0.1 percent for the month and 7,600 or 1.4 percent for the year. employees average 36.9 hours, up 100 or 0.3 percent for the month and year. hourly earnings of $43.69 are up 2 cents or statistically flat for the month and 56 cents or 1.3 percent for the year.

staff at cpa firms total 377,600, down 1,300 or 0.3 percent for the month but up 2,700 or 0.7 percent for the year. they’re working 36 hours, the most since october 2022, up 30 minutes or 1.4 percent for the month and 24 minutes or 1.1 percent for the year. they’re making $33.48 an hour, up 20 cents or 0.6 percent for the month and $1.22 or 3.8 percent for the year.

tax preparation services

tax prep employs 101,800, the most since may 2023 and up 1,900 or 1.9 percent for the month and 7,100 or 7.5 percent for the year.

payroll services

overall employment in payroll services totals 216,200, up 1,600 or 0.7 percent for the month and 400 or 0.2 percent for the year. employees average 35.2 hours, down 30 minutes or 1.4 percent for the month but up 1 hour 54 minutes or 5.7 percent for the year. earnings have swung wildly throughout the year, as low as $35.74 and as high as $38.51. they stand now at $37.72, down 79 cents or 2.1 percent for the month but up $1.18 or 3.2 percent for the year.

staff in payroll number 188,100, up 2,700 or 1.5 percent for the month and 13,000 or 7.4 percent for the year. they work 35.4 hours weekly, unchanged for the month and up 3 hours 54 minutes or 12.4 percent for the year. earnings have crept up 11 of the past 12 months and are at a new high of $34.86, up 47 cents or 1.4 percent for the month and $5.39 or 18.3 percent for the year.

bookkeeping

other accounting services employ 285,400, up 400 or 0.1 percent for the month and 5,400 or 1.9 percent for the year.

women

women in accounting overall are at a new high mark of 732,700, up 3,200 or 0.4 percent for the month and 24,100 or 3.4 percent for the year. at cpa firms they also have a record at 335,800, up 2,400 or 0.7 percent for the month and 13,500 or 4.2 percent for the year. women in payroll are at their lowest level since january 2022 – 97,000, down 1,500 or 1.5 percent for the month and 8,300 or 7.9 percent for the year.

cpa biz is booming, but for how long?

five reasons that growth in profit is outpacing growth in revenue.

by 卡塔尔世界杯常规比赛时间 research

the rosenberg 2023 practice management survey exults in the growth and profitability of cpa firms last year, but warning bells are flashing. how long can this keep up?

the good news: firms with revenue greater than $2 million saw 2022 average income per partner soar 11.8 percent over the previous year, and revenue shot up 11.4 percent. this was the second year that profits grew faster than revenue.

yay, right?

yay, yes – but whoa, wait! the gush of income has come at a cost, and that cost shows no sign of easing off.

hope is not a strategy

accountants have risen to the opportunities for revenue and profit, but to rake in the dough, they’ve had to stretch themselves to their limits, the survey says. the severe staffing shortage has practitioners working harder than ever.

and the instability of the economy hasn’t helped.

meanwhile, the efficiencies of new technology come with new demands for investment, training and imagination.

and cpa firms are now competing for not just clients but staff.

the situation is tolerable now but getting more serious fast.

“doing nothing is not an option,” the survey foreword says, “and hope is not a strategy.”

five coping strategies

growth in profit is outpacing growth in revenue for several reasons other than burning the midnight elbow grease. each reason widens the profit-revenue ratio by either lowering costs or increasing production.

1. outsourcing/offshoring/onshoring: more than half of firms with over $10 million in revenue are outsourcing work, and nearly 70 percent plan to do more next year. and half of those not outsourcing now plan to start next year.
2. client culling: on the slightly bright side of the staffing shortage is the necessity of trimming off clients who are less than ideal. at the same time, many firms are more careful about which new clients they take on. slightly over half of firms with more than $50 million in revenue are actively culling clients, and 45 percent of firms between $2 million and $10 million are also doing so. the culling, of course, is an opportunity for firms seeking more clients.
3. technology: firms that can afford the latest in tech are reaping the benefits of efficiency. traditional work gets done more quickly, and advisory services can expand. firms on the cutting edge of technology are already taking advantage of artificial intelligence and exploring its potentials.
4. non-accounting hires: with cpas hard to find, hire and hold on to, firms are realizing that professionals in other fields can be put to work on non-accounting advisory services. hr costs may decline even as expanded services increase revenue.
5. advisory services: not only are firms investing in advisory services, but private equity is increasingly seeking to invest in firms in order to acquire those services. with 10 percent of the participants in this year’s rosenberg national survey of cpa firm statistics earning more than half their revenue in non-compliance services, the survey is considering a new title that encompasses more than cpa firms.

though the stats in this year’s survey tell us a lot about what happened last year, they are harbingers of what’s to come. and what’s to come is going to be different from what’s already come and gone.

treasury ig sees progress at irs

comparison of individual return inventory carried over to the next filing season

backlogs cleared, fraud detected.

by 卡塔尔世界杯常规比赛时间 research

the treasury inspector general for tax administration has issued a report on the 2023 filing season, and it is generally complimentary to the irs.

one big accomplishment: by feb. 2, 2023, the irs had cleared the entire carryover inventory of unprocessed individual tax returns received in 2022 – a backlog of 447,000 paper returns and 445,000 amended returns.

most numbers down

the report finds slight declines in returns received and refunds issued. the biggest decline was in usage of the historically unpopular free file program. the only increase was in percentage of returns e-filed.

• total returns received: 141,136 million, down 1.4 percent
• paper returns received: 6,990 million, down 7.5 percent
• e-filed returns accepted: 134,147 million, down 1.1 percent
• tax preparer e-files: 72,047, down 0.1 percent
• free file returns: 2,691 million: down 10.2 percent
• percentage returns e-filed: 95 percent, up 0.3 percent

the tigta is conducting a separate review of the problematic free file program, which has never been popular and is reportedly difficult to use.

refund dollar amounts were also down, most probably, says the irs, because of the expiration of certain american rescue plan act (arpa) provisions in 2021.

• total refunds: 93,790 million, down 0.6 percent
• dollars refunded: $262.9 billion, down 7.9 percent
• average refund amount: $2,803, down 7.3 percent
• total direct deposits: 88,380 million, down 0.5 percent

more good news

the tigta report praised the irs for its aggressive hiring goals. in the submission processing function, 62 percent of projected 5,473 hirings were complete by may 9, 2023. the accounts management function exceeded its goal of hiring 5,775 employees, hiring 5,964 by may 4.

also in the department of good news, the irs software that identifies problems as soon as returns are filed has been working well. tests of the system found that the irs was accurately rejecting questionable returns and not erroneously accepting the unacceptable.

the irs also succeeded in adjusting all returns that had to retroactively take into account the unemployment compensation exclusion that was allowed under the american rescue plan act. because the arpa was enacted during the 2021 tax season, many taxpayers who had already filed their returns were entitled to return adjustments, which often as not were refunds. as of jan. 6, 2023, 14 million returns were corrected, resulting in 12 million refunds.

the report notes that any taxpayer who did not receive but was eligible for a refund would need to file an amended return for tax year 2020.

fraud detection up

the irs is succeeding in rejecting more fraudulent e-filed returns and preventing paper returns from posting. as of may 25, 2023, the irs had locked the accounts of 53.5 million deceased individuals. this is up from 50.1 million on september 29, 2022.

the dollar amounts of fraudulent refunds identified and stopped has been rising steadily, soaring in 2023.

• in 2021, $928,429,370 fraudulent refunds were identified, with $908,912,798 stopped.
• in 2022, $1,512,690,102 fraudulent refunds were identified, with $1,476,528,206 stopped.
• in 2023, 337,662 fraudulent returns were identified, with $2,697,305 stopped.

meanwhile, prisoners seem to have learned their lesson, almost half of them anyway. the irs screens all returns filed with the social security numbers of prisoners. by may 27, 2022, 97,580 returns were screened, many filed quite legitimately by those who had earned something in the year they were sentenced. in the same period in 2023, only 51,743 were screened for fraud, possibly indicating that 47 of america’s incarcerated may have learned that at least sometimes crime doesn’t pay.

ten irs problems that need solutions

how good is better than terrible?

by 卡塔尔世界杯常规比赛时间 research

every year, america’s national taxpayer advocate – in recent years it’s been erin m. collins – presents an annual report to congress. the report identifies successes and failures of and recommendations for the internal revenue service.

this year’s report praises the irs for its progress since the worst of the covid-19 pandemic, but it finds plenty of room for improvement.

“the year 2023 was one of extraordinary transition for the irs and therefore for taxpayers,” collins writes. “despair has turned to cautious optimism.”

plenty of problems

the most impressive success was the clearing up of a 2021 backlog of 35 million tax returns that required manual employee treatment. the phones were ringing off the hooks, but agents answered only 11 percent of them, a number that almost tripled in 2023. average telephone waiting times dropped from 29 minutes to 13 minutes.

an infusion of funding helped a lot, and the nta office said that it has been well spent.

still, plenty of problems remain.

the ten most serious problems

traditionally, the nta report lists the 10 most serious problems at the irs. here they are in 10 nutshells.

1. processing delays: millions of taxpayers experienced frustration and financial burden while awaiting refunds or other irs actions necessary so the taxpayers could comply with their obligations. the interest on delayed refunds cost the irs $1.4 billion.
2. hiring, recruitment, training: many problems resulted from inadequate staff levels, which have fallen to levels not seen since the 1970s. the irs hired 30,742 people (including internal hires) in 2023, but 18 percent of employees are eligible for retirement. external hires took an astonishing average of 193 days, causing the irs to lose qualified candidates.
3. transparency: taxpayers and preparers still struggled to find timely, reliable guidance on pending issues. last year only 35 percent of phone calls were answered as of late april.
4. telephone and in-person service: several states have just one taxpayer assistance center, and many others have limited hours or skeletal staffing. agents answered only 29 percent of calls. another 18 percent got automated answers. the irs never answered the rest.
5. return preparer oversight: tax pros prepare over half of all individual returns, but almost 60 percent have no credentials and none are subject to minimum standards. the consequent incompetence results in excessive audits, adjustments and overpayments.
6. identity theft: last year, the irs flagged millions of returns for possible fraud, many of which were perfectly legitimate. as a result, the processing of legitimate returns was delayed, and victims of id theft suffered even longer delays as the irs lost time weeding through non-victims.
7. online access: taxpayers and preparers lack comprehensive online accounts with integrated digital communication tools. the online tax pro service was used far below its potential.
8. international: special reporting requirements for persons receiving funds from abroad or engaging in cross-border reporting requirements resulted in delays and exposure to significant penalties.
9. compliance challenges for taxpayers abroad: taxpayers abroad faced vast difficulties complying with u.s. tax obligations, and the irs offered limited assistance and guidance.
10. appeals: the lack of independence and efficiency in the irs independent office of appeals continued to undermine taxpayer trust and prolonged dispute resolution. in states without an appeals office, average wait times in 2023 doubled from 120 to 243 days.

in our continuing effort to facilitate tax preparation by encouraging improvements at the irs, 卡塔尔世界杯常规比赛时间 will be taking a closer look at each of these problems in the coming weeks. responses from tax preparers are encouraged.

irs plays whac-a-mole with the phones

what, just moving the resources around doesn’t work?

by 卡塔尔世界杯常规比赛时间 research

the internal revenue service did a dismal job of answering phone calls in 2021, struggling to pick up the toll-free 1040 phone 11 percent of the time it rang. a year later, that number leaped to a still-dismal 29 percent.

so janet yellen did what any treasury secretary would do: she gave the irs a swift kick in the 1040 and committed the service to answering at least 85 percent of calls in 2023 and cutting wait times in half.

and the irs’s customer service representatives did it! yay, right?

well, not so yay. strapped for staff and funding, the irs solved the phone problem by shifting resources from the processing of tax returns to the answering of phones. the result: slower processing times, delayed refunds and, inevitably, more phone calls regarding the very problem that the irs created by solving the phone problem.

if the olympics ever recognizes whac-a-mole as a sport, the irs may well win a gold medal for america.

a variety of backlogs

national taxpayer advocate erin m. collins, in her annual report to congress, points out that delayed tax refunds can be a burden to taxpayers who have paid more than their share up front, a debilitating cash flow problem for businesses, and a needless expense to the irs.

indeed the delays violate three legislatively mandated taxpayer rights:

• the right to be informed
• the right to finality
• the right to quality service

in 2023, the irs did an admirable job of issuing refunds for electronically filed returns that did not have or look like they had problems.

but when csrs got involved in the process – the same people who got moved over to the phones – various processing areas got backed up, among them:

• processing of amended returns
• processing of correspondence and accounts management cases
• processing of paper returns
• resolution of returns suspended in the processing stream

when delays in refunds for overpayment are considered “excessive,” the irs has to pay interest on the refunds. the loss to the irs budget added up to some $1.4 billion, money that would have been better spent whacking moles.

a common sense solution

the report said that csrs spent 3.73 million hours successfully staffing toll-free phones from january through april 22, 2023, but the success “came with a huge cost.”

“csrs spent 1.27 million of those hours waiting for the phone to ring (idle time),” the report noted, “while amended returns, correspondence and am case inventories continued to climb.”

not one to complain without offering a solution, collins suggested that more moles could get whacked and stay whacked if better training and more use of remote call centers allowed csrs to handle processing tasks while the phone isn’t ringing.

collins also suggested that more first-time penalty abatements (ftas) would reduce processing time and the number of phone calls.

ftas can be requested by phone, but many taxpayers make their requests in writing, which tends to slow down processing. either way, the abatements are granted only if requested.

in 2023, only 125,000 ftas were granted while another 1.4 million appeared to be eligible. most of the former probably had professional tax prep help while the latter, often of lower income, never knew of the possibility.

one of collins’s many common sense solutions: just give all eligible taxpayers the abatement. that would mean fewer phone calls, less correspondence, less csr time spent on needless bureaucracy, and more fairness for taxpayers.

eight ways the irs can speed up processing tax returns

some of the fixes will require software updates, but some are simpler.

by 卡塔尔世界杯常规比赛时间 research

national taxpayer advocate erin m. collins has determined that delays in the processing of tax returns is one of the most serious problems at the internal revenue service.

millions of americans couldn’t agree more.

collins’s 2023 report to congress is more than a detailed kvetch. it’s also a buffet of solutions – some that the irs could effect, some that congress needs to legislate.

she offers several solutions to the problems with processing. here are the main processing problems and their solutions:

problem: delays involving employee retention credits and other covid-19 relief provisions

congress provided incentives for employers to retain employees during the covid-19 pandemic. the incentives were approved during the tax preparation season, so they inevitably increased the number of amended returns and a consequent backlog. employers and the irs struggled to deal with the complexity of the law. that complexity led to a host of scams. some involved illicit returns. others involved businesses victimized by bad actors offering illicit advice. the expected $85 billion in claims swelled to $230 billion. the irs had to slow down (way down) the approval process to deal with potential scams. consequently, legitimate claims are still suffering delays in refunds.

solution: “to provide the relief congress intended, it is critical that the irs develop an improved screening process to better identify legitimate claims and significantly increase the volume of erc claims it processes (allows or disallows in full or part) or assigns to an auditor to begin an examination.”

problem: delays as customer service representatives were moved from processing to answering phones

after treasury secretary janet yellen promised that 85 percent of phone calls would be answered, the irs moved thousands of csrs from processing returns to answering phones. returns were therefore delayed, resulting in … you guessed it … more phone calls.

solution: “by providing remote csrs with the training needed to perform processing activities, the irs could improve its flexibility between telephone and processing duties (reducing available time between phone calls when telephone demand is low), expand csr authority to perform more account resolution actions while assisting taxpayers over the phone, and reduce the volume of unprocessed cases, correspondence and amended returns carried into each new filing season.”

problem: too many requests for first-time penalty abatements are in writing

taxpayers who haven’t had to pay certain penalties in the previous three years may qualify for a first-time penalty abatement (fta). but they have to ask for it. the request can be done by phone, but many apply in writing, which takes more time. also, too many eligible taxpayers don’t know about ftas.

solution: “the national taxpayer advocate strongly recommends that for fs 2024 the irs systemically apply fta to all eligible taxpayers. the systemic application of fta would have the twofold benefit of increasing taxpayer fairness while reducing the volume of calls and correspondence received regarding these penalty abatement requests.”

problem: paper returns awaiting processing

paper (as opposed to digital) tax returns account for 15 percent of the backlog in refunds, primarily because they require manual processing.

solution: two solutions figure prominently in discussions for combating paper return backlogs: more document scanning and the expansion of electronic filing.

problem: too little scanning of paper forms

the irs has begun improving the use of scanning to digitize certain returns, starting with forms 1040, 940 and 941. by mid-2023, the irs scanned about 738,000 forms out of 55 million it received. but the original plan was to scan millions, not thousands, in 2023.

solution: “it is imperative that the irs get this right …” the irs is getting it right. it knows what to do. it just has to get it right faster.

problem: too many forms required on paper

only 8 percent of individuals returns are coming in on paper, but that is often because of irs system requirements. many forms cannot be filed digitally. and in many cases, taxpayers have no option but to file paper returns.

solution: expand the digital filing system to accept more forms. accommodate taxpayers who cannot file digitally so they do not cause delays.

problem: inadequacies of direct file

the irs is exploring a pilot system, direct file, to provide an additional agency-run, free, direct e-file tool. problem is, direct file may be unable to file state tax returns and may negatively affect state tax authorities. also, the software will need to be readily updated to accommodate tax law changes.

solution: keep working on the software and “devote substantial customer service and support for its e-file tool for this program to be a success.”

problem: too many electronic filing rejections

too often digital returns are automatically and inappropriately rejected or flagged under suspicion of fraud, and often taxpayers are subsequently required to file forms on paper. often the filer could easily correct problems and resubmit digitally with no csr intervention. insignificant flaws can result in unnecessary delays.

solution: “… the irs (should) accept (certain flagged) electronic returns and direct them to an appropriate treatment stream for resolving discrepancies … the irs can accept the e-filed return, assign it for issue resolution, determine if it can process the return, or determine if the return is potentially fraudulent.”

10 tips to the irs for beefing up staff

guess who has the federal government’s worst retention rate for employees under 40?

by 卡塔尔世界杯常规比赛时间 research

if you think it’s hard staffing a cpa firm, imagine the challenges at the internal revenue service where

• the pay’s not so good
• laws limit bonuses
• it takes three months to hire an applicant
• federal bureaucracy gums up the process
• the hiring process uses antiquated technology
• only a remote office can authorize many hires

• the recruitment and retention budgets are austere
• training programs, spaces and equipment are inadequate
• more than 100 full-time positions need to be filled every day
• over half of employees will be eligible to retire within five years

the taxpayer advocacy service says the irs needs to deal with these problems, and it’s going to take money, effort, technology and legislation to get it done.

don’t blame the agents

until last year, we saw irs services steadily getting worse. thanks to additional resources made possible by the inflation reduction act, which went into effect in 2023, services have improved, though they’re still inadequate.

according the national taxpayer advocate’s 2024 annual report to congress, “many of the irs’s challenges are traceable to simply not having adequate staffing. attrition compounds cause for concern because about 18 percent of irs employees are currently retirement eligible and can leave at any time, with 37 percent of irs employees estimated as retirement eligible in the next five years.”

so when your cpa firm or its clients suffer inadequate service at the irs, don’t blame the people who work there. their problem isn’t competence or attitude. it’s that there aren’t enough of these unsung heroes, and if nothing’s done, there will be fewer in the future.

significant threats

“consistent, significant employee attrition combined with the often lengthy process have left the irs severely understaffed and unable to adequately recruit, hire and train much-needed new employees over the past decade,” the nta report says.

warning of staffing shortages posing “significant threats to federal tax administration and taxpayer rights,” the report says the irs must

• increase hiring capacity
• remove obstacles in the hiring process
• reduce pay disparity between federal and non-federal employees
• enhance benefits packages
• increase staffing at the human capital office to allow more training

the hco has sped up the hiring process recently by using direct hire authority. dha gives agencies the power to hire more efficiently and quickly for jobs at general schedule levels of 15 or below. with dha, the irs was able to make 31,880 “hiring actions” in 2023, compared to 23,800 in 2022.

nonetheless, the irs still isn’t keeping pace with attrition.

who waits 98 days?

the office of personnel management has set a time-to-hire goal of no more than 80 days from a request to hire to an employee’s first day on any federal job. but the irs takes an average of 82 days for an external hire with dha and 98 days without dha.

who waits 98 days for a decision to hire? in today’s accounting market, almost nobody.

and those patient souls who wait tend to get anxious. they inquire. the inquiry takes time because there is no quick way to track a candidate’s progress through the process. the search takes up somebody’s time, delaying the process even more.

the nta suggests several ways to speed up the hiring process:

• additional technical capabilities
• a mechanism for the irs and candidates to track the process from start to finish
• better communication among everyone involved in the process
• more training for hco personnel so they can quickly determine whether candidates are qualified

the cost of a hire: $10,350

higher salaries would help, too. federal salaries in 2023 were 27 percent lower than non-federal salaries, worse than the 24 percent differential in 2022.

better benefits and workplace culture would increase the candidate pool and employee retention, the nta report says.

retention is a real problem, with the irs having the federal government’s worst retention rate for employees under the age of 40. with the hiring process costing an average of $10,350 per new employee, better salaries and benefits would be a prudent investment.

the nta report concluded with an urgent message: “to ensure fairness, efficiency and protection of taxpayer rights, the irs must urgently focus on resolving challenges with employee hiring, recruitment, retention and training.”

must the irs be a dark hole?

taxpayer advocate calls for more transparency.

by 卡塔尔世界杯常规比赛时间 research

the internal revenue service is the one federal agency that touches nearly every american. yet too often taxpayers and tax preparers find it all but impossible to see what they need to see in that dark and distant entity.

•   many struggle to access information from the irs.
•   many have difficulty finding clear, timely, dependable guidance.
•   many can’t determine the status of pending issues.
•   many can’t understand irs correspondence or how to respond to it.
•   many never find an irs agent who can answer a question authoritatively.
•   many find it impossible to resolve an issue.
•   many, after experiencing any of the above, suffer the stress of confusion and frustration.
•   many end up distrusting the tax system.

national taxpayer advocate erin m. collins says this is a problem of transparency. but a lot of it is a matter of communication.

accountability, simplicity, trust

the u.s. tax code is notoriously dense and difficult to deal with. it’s safe to say that no one has ever read the 2,652 pages of the code, let alone the 70,000 pages of external interpretations. so questions are inevitable and answers are hard to find.

the nta defines “transparency” as “the government’s obligation to share with citizens the information they need to make informed decisions and hold officials accountable for the conduct of the people’s business.”

regarding the irs, she says in her annual report to congress, full transparency is important for:

• accountability: taxpayers, voters and congress need detailed information about irs decisions and plans so necessary actions can be taken.
• simplicity: taxpayers need clear answers, not a struggle to understand the impossibly complex.
• trust: taxpayers are more willing to engage with the irs when they know they will find prompt answers and fair solutions.

some illustrative gripes

collins specified several gripes.

one is that the irs tends to oversell its progress and successes. as a result, taxpayers may expect more than the irs can deliver.

case in point: the irs touted its paperless processing initiative, telling taxpayers and tax pros that they could submit all documents digitally through the document upload tool.

what the irs neglected to mention was that it had yet to develop a back-end system to handle those submissions, so they still had to go through manual sorting and processing. last year a 1040-x amended return still took seven months to process. and “all” forms did not include those that needed pen and ink signatures.

another gripe: the irs announced it had opened 50 taxpayer assistance centers since november 2022. it did not announce that it closed 43 tacs at some point in the 2023 tax season and did not fully staff 230 others.

and another: in september of 2023 the irs announced a moratorium on processing new employee retention credits but would continue to process previously filed claims. but the service did not mention that “processing” included strategizing on what to do next. real processing had stopped and apparently has yet to start again.

the nta makes a good point. stakeholders – from taxpayers and tax preparers to congress and the secretary of the treasury – cannot help solve problems if the problems are hidden. the irs needs more transparency in its operations and better communication with everyone who has a question or an issue. because the irs is the last place that should be dark and impenetrable.

irs still falling short on service

it doesn’t seem to know which problems most need solving.

by 卡塔尔世界杯常规比赛时间 research

the internal revenue service wants to do a better job. it really does. it got an infusion of funds (though it seems some might get taken back), and it’s got a strategic operating plan with objectives for improving the taxpayer experience and modernizing operations.

and it’s made a lot of progress. but it’s still got wide open spaces to accommodate improvement.

the irs tries to track its performance with a level of service measurement. regarding the phones, for example, they measure how often a customer service representative answers and how long the callers had to wait.

and by the phone call los metrics, they’re doing a pretty good job! during the 2023 tax season, they answered a good 85 percent of the incoming calls and cut wait times in half.

but there’s a problem, says national taxpayer advocate erin m. collins. just answering the phone isn’t enough. among the critical factors that don’t enter into the los metric are:

• whether the csr at least seemed to try to help
• whether the csr succeeded in helping
• whether the the problem was solved, the customer satisfied
• how many subsequent phone calls were necessary
• whether the interaction increased confidence in the irs
• whether the solution, if any, was simple, easy or quick
• whether the customer was treated fairly

without these metrics, the irs can’t really know whether it is measuring los or lol, whether the progress is substantive or illusory.

human-centric design

trouble is, the current los metrics – for phones, anyway – are quantitative, not qualitative.

what really counts is quality.

in her annual report to congress, released this january, collins called for “human-centered design.”

“human-centered design creates products and services around the needs, wants, perspectives and behaviors of people. it uses empathy and understanding to meet the needs of users, looking more at the nuances of individuals’ behaviors and experiences than opinions. a core component of human-centered design is to learn what customers need using qualitative research methods such as interviews, firsthand observation and focus groups … the irs needs a focused approach to improve the taxpayer experience, as some segments of the taxpaying population face unique challenges in getting access to the information and services needed to comply with their tax obligations.”

the lack of a strategic human-focused design may be one cause of a tactical error that created a service problem by solving the phone problem. to meet the goal of an 85 percent los, the irs moved thousands of csrs from processing returns to answering the phones.

1.27 million idle hours

csrs were able to dedicate 3.73 million hours staffing the phones. but with the rate of calls ebbing and flowing, the csrs spent 1.27 million idle hours just waiting for the phone to ring. meanwhile, the work on tax returns lagged. the result: dissatisfied customers (and more phone calls).

to call this shift an error isn’t quite accurate. short on funds and staff, the irs was forced to shift rather than hire.

still, with some forethought, creative problem-solving and human-centric design, irs management might have been able to enable csrs to work on returns during lulls in phone traffic.

better technology would help, too. csrs can’t access the answers that are elsewhere in the system. for example, they can’t even see the notices and letters the irs has sent to a given taxpayer.

the irs has a lot to grapple with to improve service to a point where taxpayers aren’t frustrated, angry and distrustful. the u.s. tax systems depends on taxpayer cooperation. the irs needs to do some human-centric research to identify the problems that actually need to be solved.

the nightmare of non-credentialed tax preparers

six solutions offered.

by 卡塔尔世界杯常规比赛时间 research

are you a sleazy, incompetent, unethical tax preparer?

if so, no problem! not for you, anyway. your clients might suffer, but as far as the internal revenue service is concerned, you’re as qualified to prepare other people’s taxes as any cpa or enrolled agent.

and that’s a problem.

a wild west environment

tax preparers good and bad prepare over half of the country’s individual income tax returns. they play an essential role in tax administration, and they are a frontline defense in preventing fraud and error.

many of them, however, have no credentials, have never met minimum standards and have no interest in continuing education. they have no institutions behind them, no licenses to lose. and some are even worse, using their expertise to enrich themselves at the expense of unwitting clients of their own government.

national taxpayer advocate erin m. collins came right out and said it: “the current unregulated state of the preparer industry sometimes lends itself to a ‘wild west’ environment that victimizes taxpayers.”

the nta’s annual report to congress cites some examples:

• a utah accounting firm was charged with claiming over $11 million in fraudulent employee retention credits on behalf of clients.
• a preparer in new jersey was arrested after filing more than 1,000 false tax returns claiming over $124 million in tax credits.
• an ohio preparer was charged with filing returns without approval from clients and even forging client checks.
• a california firm prepared thousands of returns reporting improper deductions, including mortgage interest for taxpayers who did not own homes.
• another california preparer stole client identities and used their data to file fraudulent returns.
• other rip-offs include using the filing process to sell high-priced loans, theft of refunds, theft of identity, and conspiring with banks and financial technology companies.

worse than a bad haircut

ethics isn’t the only problem. sheer incompetence creates a lot of problems, especially for taxpayers of lower income. irs statistics show that non-credentialed preparers generate a disproportionate level of audit adjustments. for example, a staggering 94 percent of the dollar value of audit adjustments on returns claiming earned income tax credit were for returns prepared by non-credentialed preparers.

as the national consumer law center points out, “there are more regulatory requirements for hairdressers than for tax preparers. yet the impact of a bad haircut is far less damaging than an inaccurate tax return.”

the nta lists five main concerns regarding non-credentialed preparers:

• the preparers harm taxpayers – especially those of lower income. these taxpayers are more likely to claim eitc and to hire the least expensive preparer they can find. the consequent errors, often innocent mistakes, can be catastrophic for the taxpayer but not for “ghost preparers” who fail to sign the returns.
• stakeholder calls for preparer regulation have gone unheeded. taxpayers, the american institute of cpas, the government accountability office, the consumer financial protection bureau, the electronic tax administration advisory committee, the national association of enrolled agents and the irs have all called for regulatory legislation.
• legal limitations present an obstacle to oversight. court decisions prevent the irs from regulating all preparers or establishing educational minimums or other qualifications.
• the non-credentialed lack incentives to voluntarily come within the established oversight umbrella. the irs has authority only over preparers who voluntarily subject themselves to regulation.
• administrative deterrents to bad behavior are insufficient. the irs has limited power to assess and collect penalties for preparer errors and malfeasance. in 2020, the irs assessed only 352 preparer penalties, 96 percent of them against non-credentialed preparers. of the total $20 million in penalties, only 8 percent was collected.

recommendations

the nta made four recommendations to the irs and two to congress.

to the irs:

1. make efforts to educate taxpayers on the benefits of credentialed preparers.
2. increase publicity about volunteer income tax assistance and tax counseling for the elderly programs.
3. vigorously enforce preparer penalties.
4. consolidate authority within a single function to be responsible for all matters regarding tax return preparation to better protect taxpayers from incompetent or unscrupulous return preparers.

to congress:

1. amend title 31 of the u.s. code to authorize the treasury secretary to establish minimum standards for paid preparers.
2. amend internal revenue code § 6109 to allow the secretary to revoke preparer tax identification numbers concurrently with assessment of sanctions for violations of minimum standards for return preparers.

id theft a problem for irs even when it doesn’t exist

either way it consumes scarce resources.

by 卡塔尔世界杯常规比赛时间 research

tax return identity theft’s a bummer.

how big a bummer?

so big that even when there’s no theft, it’s a bummer.

it’s a bummer when it happens, not only because it happened but because the internal revenue service can take up to 19 months to recognize the problem, do something about it and send the hapless taxpayer a refund not for this year’s return, not for last year’s return, but for the year before last.

and it’s a bummer when there’s no theft involved because when the irs’s rickety technology flags a return as a possible id theft, the return gets delayed for months and months of manual processing.

must it be this way?

a flood of fakes

the national taxpayers advocate considers the resolution of identity theft issues to be one of the 10 most challenging problems at the irs. she pointed our four aspects of the overall problem.

1. victims of tax-related id theft wait way too long for the irs to process their returns and send their refunds.
2. irs systems for detecting and preventing the fraud struggle with high false detection rates, subjecting refund delays for legitimate returns.
3. taxpayers receive only one letter asking them to authenticate their identity, and taxpayer response rates are low.
4. some taxpayers wait too long to receive their identity protection personal identification numbers (ip pins), delaying their access to an underutilized tool for preventing id theft.

part of the problem is a flood of fraudulent tax returns. the economic impact payments and advance child tax credit programs opened the door to a horde of fake claims. in 2019, the irs received 92,631 claims for assistance through its identity theft victim, assistance (idtva) program. two years later, the number leaped to 328,591. the overload, worsened by the pandemic quarantine, drove up process cycle times from 117 to 279 days. by 2023, it was 556 days – more than a year and a half.

the situation wasn’t bad enough in 2023, so the irs moved 572 identity theft agents to phone duty.

a good question

the problem is aggravated even more by the taxpayer protection program that identifies returns possibly filed by identity thieves. trouble is, the software is wrong more than half the time, though in 2022, it was only 47 percent wrong.

when a return gets flagged, the irs sends a letter (just one) to the real taxpayer asking for authentication online, over the phone or at a taxpayer assistance center. in 2022, 4.8 million letters were sent out.

but is it that easy? apparently not. taxpayers have taken an average of 46 days to authenticate themselves. more than half of the letters get no response.

why does it take so long? good question.

• do taxpayers not understand the one letter they receive? (seems likely.)
• is the online process too complicated? (pretty safe bet.)
• too hard to get an appointment at a tac? (ditto.)
• did they not get the letter, or not open it, or lose it or forget about it? (could be.)
• good old american procrastination? (it happens.)

the irs doesn’t know the answer, but at least it’s trying to find one. it’s working with the taxpayer advocacy service to develop a survey. it should be done pretty soon. before too long, anyway. probably.

can’t irs online accounts be more useful?

taxpayers and pros alike are frustrated, exasperated, disappointed and angry.

by 卡塔尔世界杯常规比赛时间 research

ever-improving internet commerce is one of the great developments of this first quarter of a century. the process and potential of dealing with products and services, including government services, has come a long way from the toddling brouhaha of the world wide web of the 1990s.

the internal revenue service still dreams of joining these early years of the 21st century. to get started, the service has gone so far as to launch an individual online account program. iolas allow taxpayers to

• view basic information,
• make payments,
• enter into payment plans and
• view and download certain notices.

all of which is very nice but soooo 1998.

national tax advocate erin m. collins says the irs can and must do better.

more work to do

in her annual report to congress, collins commended the agency for continuing to expand functionality within iola but said that “the irs has more work to do before achieving fully functional accounts that entice taxpayers to select iola as their preferred communication method.”

almost 17 million unique users accessed iolas in 2023 (compared with 92.9 million attempted phone calls). taxpayers made 8.2 million payments adding up to $39.7 billion. the irs was able to send 325,000 notices in digital form only. the savings from avoiding the manual shuffling of papers are tremendous.

but not as tremendous as they could be.

the nta pointed out that of the irs’s 16 active self-assistance applications, only four are available within iolas. to access the remaining 12, taxpayers have to navigate their way to as many apps in as many places in the labyrinthine irs website.

those other 12 don’t require the same level of authentication as iolas, so each provides limited information. under the more secure iola tent, they could offer more.

pretty simple stuff

the basic four are:

• get transcripts online
• have transcripts mailed
• direct pay
• online payment agreements

that’s pretty simple stuff. would it be all that hard to loop in such in-house apps as

• where’s my refund?
• where’s my amended return?
• id verify
• identity protection pin
• modernized internet employer id number
• interactive tax assistant
• free application for federal student aid online (transferring fax return directly to fafsa form)

but the irs says no

in 2020 and 2022, and again in 2023, collins recommended these and other apps be available through iola.

but the irs says no, the unified apps would be a burden on taxpayers and because iola requires a higher, more complicated level of security.

but collins went on to say, “…the irs missed the point.these applications do not provide the necessary information when taxpayers encounter a problem.”

the irs acknowledged that the recommendation “is consistent with taxpayer expectations,” but it would not commit to a one-click access framework.

tax pro limits

there are also limits of functionality in business tax accounts and the tax pro accounts.

the bta is available only to sole proprietors and offers only a limited network of functions.

the tpa is available to preparers who have met certain requirements. it gives them access to a few – very few – functions. tax preparers can

• electronically file forms 2848, power of attorney and declaration of representative, and 8821, tax information authorization
• view a list of their authorized individual taxpayers
• withdraw authorizations for individuals
• request transcripts of accounts

when the taxpayer advocacy service held focus groups about taxpayer needs and preferences, “participants expressed feeling frustrated, exasperated and angry with their inability to communicate with the irs.”

tax professionals feel their pain, especially with regard to the limits of tax pro accounts. more could be done, the nta says, and the irs should make it a priority.

if only the irs’s tax pro were useful

the national taxpayer advocate has a long wish list.

by 卡塔尔世界杯常规比赛时间 research

if you are a cpa, tax preparer or registered agent – a tax pro, in other words – there is a slim possibility that you are registered with the internal revenue service’s tax pro program.

but even if you are registered, the odds are vanishingly small that you actually use it.

why? because it’s really of limited use.

very limited. specifically, tax pro is good for nothing more than

• electronically filing forms 2848 (power of attorney and declaration of representative) and 8821, tax information authorization
• viewing a list of their authorized individual taxpayers
• withdrawing authorizations for individuals
• requesting transcripts of accounts

to which many a tax pro says, “big deal. who needs that?”

not worth the trouble

as an example of how often tax pro gets used, between july 2021 and september 2023, 2.3 million form 2848s were filed by e-fax. another 776,595 went by taxpayer digital communication, and another 544,147 went by paper application.

that’s a total of 3,620,742.

how many went by tax pro? just 15,047.

why aren’t more tax pros using tax pro? quite likely it’s because it just isn’t worth the trouble when the program’s functionality is so limited.

national taxpayer advocate erin m. collins imagines a better world, one where tax pros can

• view the entirety of their clients’ online account information (to the extent of their authorization)
• request an installment payment agreement
• view the status of a tax return
• view all notices and correspondence
• respond to correspondence and notices
• request an offer in compromise
• verify submissions
• track submissions throughout the entire process lifecycle of a tax return (processing, examination, collections, administrative appeal)
• calculate payoffs for any balances due
• communicate with the irs throughout the process
• schedule a call with an irs employee
• request a centralized authorization file number
• view taxpayer-specific disaster relief postponement dates
• determine assessment and collection statute expiration dates
• request penalty relief or abatement for their client
• apply for an extension of time to file for their client

… and here’s a biggie …

• do all the above for not just individuals but business clients as well.

and as long as we’re imagining this wonderful 21st-century world, why not

• allow registered reporters to use tax pro for at least some functions?

less could be more

this being america, we can not only dream big but actually make big things happen. a functional, useful, intuitive, centralized tax pro program should be well within the capabilities of irs web engineers.

just think of the advantages for tax preparers:

• less time holding on the phone
• less submission of paper forms
• less time waiting for the manual processing of paper
• less time searching the irs for the right form, app or person
• less delay in resolving of issues
• less stressful tax seasons
• lower client fees, higher profitability

if the irs is looking to cut costs and improve service, a more robust tax pro program would be a good investment. after all, it’s tax pros who make the u.s. system of taxation work. streamlining their interactions with the irs would benefit everyone.