Smoother processing by the IRS and a refreshing lack of massive changes in tax law made the tax season that just passed one of the easiest in recent memory, many are
"Employees and peers were dropping like flies, causing me to cast my networking net wider," said Enrolled Agent John Dundon, president of Taxpayer Advocacy Services in Englewood, Colorado.
"Communication with remote staff and technology issues in communicating with them," were the big problems for Dan Henn, a CPA in Rockledge, Florida.
"Client withholding continues as a challenge," said Phyllis Jo Kubey, an EA in New York. "I provide 2023 tax projections with my client's 2022 tax returns, and I do my best to project as accurately as possible. Since the Tax Cuts and Jobs Act did away with the old payroll system of exemptions, it's been more difficult to tweak client withholding to get it right — especially for clients who have multiple employers, short-term/seasonal employment and so on. I'd give my kingdom for a straight percentage option on the W-4."
"One of the biggest challenges we faced this tax season involved the filings of state pass-through entity taxes," said Cindy Ostrager, a CPA and partner at Top 100 Firm CohnReznick in New York. "This was a complex and time-consuming proposition given the nature of these taxes. Each state that has enacted a PTE tax has different eligibility requirements, election due dates and filing deadlines."
Matter of time
Some preparers reported being squeezed by a shortage of time for one tax prep matter and by a lengthening of time for another.
"The time that preparers have to properly file individual income tax returns for complex tax issues has been compressed," said Scott Kadrlik, a CPA and managing partner at Meuwissen, Flygare, Kadrlik & Associates, in Eden Prairie, Minnesota. "The brokers' 1099s are issued later and later every year, so that most of them are not available until March. The K-1s from pass-through entities are issued in March or not until as late as September. This means that the bulk of individual income tax returns are filed within a 6-week period starting in March."
"There are only so many hours and people available to work during this period that it makes it virtually impossible to file all the returns," he continued. "Most clients are very understanding of the complexity of their returns and will allow extensions, but still want their tax return completed as soon as all the data is available. It is very hard to staff up to meet the six-to-eight-week time crunch and still service clients properly."
"Last tax season was easier, in many ways, because we didn't have to track advance payments, such as EIP and Advanced Child Tax Credit," Kubey said. "A big challenge for clients who took COVID retirement distributions in 2020 and spread the income over three years was the IRS's late issuance of updated instructions to Form 8915-F. The IRS didn't publish the new instructions until March 31, and it took the software vendors additional time to incorporate the changes into their software. Many clients expecting early refunds had to wait to file until Form 8915-F and associated instructions' changes were available."
"The 2023 tax season isn't over in California and certain parts of Georgia and Florida," said Mary Kay Foss, a CPA in Walnut Creek, California. "The IRS gave us until October 15 to prepare, file and pay taxes for the 2022 tax year and for three quarters of 2023 estimates. We started out not telling the clients they had more time, but as they started to panic close to the due date, we revealed that more time was available."
A big point of discussion among California tax preparers: Should they hold returns until Oct. 15? "Invoices go out with the returns for the most part, so waiting until October could be a big cash flow problem," Foss said. "Getting information in too close to the deadline is always a problem, so enforcing the cutoff date for data to be received with no extension filed has to be strictly enforced."
'Sounds easy'
"My biggest issue was trying to multitask and getting bogged down in multiple projects at the same time," said Brian Stoner, a CPA in Burbank, California. "Better to work on one item as far as I can, make notes for completion or finish the project, then move on."
"Sounds easy," he continued, "but when you have multiple items on your to-do list, it's not as easy as you would think, especially when you are getting phone, email and text requests for 'how things are going.'"
