A post-Oct. 15 review: Rating the ‘second season’

Oct. 15 has become the new second tax day for many Americans — and their tax preparers.

This second tax season “went very quickly. We had more extensions than usual, and we never felt quite caught up,” said Debra James, an Enrolled Agent at Genesis Accounting & Management Services, in Lorain, Ohio. “We usually wait until July to start reminding people that we’re waiting on them, and if we were to do anything differently, we would have started hounding them sooner.”

“Luckily we didn’t have many clients that had to extend their returns,” said Bruce Primeau, a CPA and president at Summit Wealth Advocates, in Prior Lake, Minnesota. “That said, I just reviewed a return where the CPA was asleep at the wheel: He had the clients overpay their 2018 income taxes almost $450,000 … he extended their return so they never received any of that refund as he applied the entire overpayment to their 2019 return instead.”

Season’s glitches

EA Bill Nemeth, at Tax Audit Guardian in Atlanta, has an active Form 8821 on every one of his prep clients to access their wage and income transcripts. “Pulling transcripts is the foolproof way of knowing all the income reported to the taxpayer is on the filed return,” he said. “The IRS did not give tax pros access to the 2018 Wage and Income Database this year until after April 15. My speculation is that the IRS is trying to reduce tax ID theft.”

“For our clients who have issues giving us all their income docs, it was mandatory that we file an extension, pull their IRS Wage & Income docs in the summer and file a complete and accurate return,” Nemeth said. “I’m finishing up the last of these 30 returns in October.

AT-040219-Percentage of clients on extension in 2019

“In my next life, I am going to have perfect clients who give me all their tax docs by March 1,” Nemeth said. “I’m stuck with my current clients, and I love them.”

‘Never a fan’

Not all preparers were having the second season at all.

“I have never been a fan of extensions and I’ve always had a policy that I don’t accept clients who need extensions,” said Jeff Gentner, an EA in Williamsville, New York. “My tax practice started out small and was a second job for many years, so I needed to be finished by April 15. As my practice grew, I always kept that policy and, for many reasons, I am glad I did.”

And IRS numbers were off in the first year of the Tax Cuts and Jobs Act: About 15 million individual taxpayers filed for an extension this year, compared with about 10 million people in previous years.

“To do an accurate extension, you have to do most of the return anyway,” Gentner said. “I’d rather work until midnight on April 15 than put a client on extension. Those same clients will disappear until Oct. 1, then you have a mess on your hands: lost papers, incomplete records and so on.”

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