I am on the mailing (both e-mail and snail mail) lists of many accounting firms, and about this time of year, much of the correspondence I get seems to have the common theme of year-end tax planning.
I wonder how many clients who aren't already focused on year-end tax planning are motivated to action by this correspondence. Most of this year-end tax planning material talks in general terms about deferring income, accelerating expenses, and involves a general discussion about tax rates, deduction, and the alternative minimum tax. Many tend to have long narrative discussions, with pages for individuals, investors, professionals, and businesses. I can understand why someone wouldn't be too motivated to spend a great deal of time focusing on year-tax planning after reading some of rather dry correspondence sent by some firms.
The ones that I like focus on specifics such as expiring tax provisions, or provisions that are new for the year and taxpayers might not be aware of yet. I also like those that point out the benefits of specific events or action such as creating a Keogh plan before year-end to allow 2005 contributions as late as April 17, 2006. But care must be taken here, for some firm newsletters explain in great detail accruals, specific qualification rules, and the effect of the taxpayer's percentage ownership interest in a business making the payments.
Would it be better if firms got more creative? Maybe the correspondences can simply give three case studies that show how much tax could be saved for each of the groups--individual taxpayers, businesses, investors, or professionals--or explain who is in a position to really benefit from this type of tax planning. Or how about developing an online questionnaire so a firm can then identify and follow-up with clients before year-end that seem to have the best possible year-end tax planning opportunities.
There are certainly firms out there that are very proactive in educating and meeting with their clients on year-end tax planning. In some instances, the year-end planning correspondence is probably just the initial contact and they probably don't even prepare the correspondence, but have it done by a third-party provider.
But still, I have the feeing firms should focus on what could be done better, as they do with regard to their tax preparation procedures, and view that year-end planning correspondence more as a marketing piece to get a client to come in for a consultation, and less as a treatise describing every possible year-end tax planning opportunity.
This doesn't mean more time has to be put into producing the piece. In fact, hopefully it will take less time, or cost less than buying a 16-page or 32-page booklet from that third-party provider. At the very least, consider a post-mortem evaluation of how effective your firm was this year in encouraging clients to come in for year-end tax planning. After all, year-end tax planning is only a year away for 2006.
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