Squeeze play: Preparers’ most time-consuming early-season tasks

Tax season has begun. The last frantic days of even end-of-year holiday shopping can’t compare to last-minute prep for, well, prep.

The pre-busy season brings “a tremendous amount of mission-critical, non-billable effort by administrative and professional staff. Updating tax deadline ticklers, sending out tax information organizers, updating engagement budgets, reviewing and emailing engagement letters, setting up computers, new-hire training, and so on,” said James McGrory, a CPA and shareholder at Drucker & Scaccetti, in Philadelphia.

“We also do payroll, so the final quarter, including W-2s, takes a lot of time,” said Helen O’Planick, an Enrolled Agent at HELJAN Associates in Manchester, Pennsylvania.

“We spend a great deal of time trying to close books and do final accounting for the year during January to be ready to prepare a tax return for a variety of entities,” said Debra James, an EA at Genesis Accounting & Mgmt. Services in Lorain, Ohio.

“This requires a great deal of time and planning, during a month where we are also doing fourth quarter and annual payroll tax returns, in addition to having staff, equipment and software in place for tax season,” James added. "To reduce the stress of time constants in one month, we get as early a start as possible by asking for records in November and December, doing equipment and software maintenance as soon as we can, and basically starting tax season well before what most consider ‘tax season.’”

“Making sure the software works and learning about any changes,” said Lawrence Pon, a CPA at Pon & Associates, in Redwood City, California. Also, “getting the organizers out to our clients and getting them ready for tax season. Our long-time clients know the drill.”

Getting organized

Readying for filing season, according to preparers, seems to fall into a few distinct categories.

“Four operations consume a lot of time in January,” said New York EA Phyllis Jo Kubey. “Welcoming back prior-year clients and making sure I get back signed engagement letters, an initial fee deposit and setting up an appointment for those few clients who prefer a live meeting; 1099-MISC preparation for my small-business clients; adjusting wage, pension and Social Security withholding; and getting up to speed with tax software and other technology updates.”

“Getting organizers out to all existing clients is the most time-consuming task. Over the years it’s almost become reduced to a few steps but there are always a few glitches,” said Mary Kay Foss, a CPA in Walnut Creek, California. “The printing takes a lot of time, toner and paper. Be sure to schedule the supplies (the easy part) and the time.”

“No matter how much warning you give,” Foss said, “there’s always someone with a rush project that insists on using the high-speed copier during organizer printing.”

“My most time-consuming task early in the season used to be getting paper, ink, tax folders and other stationery lined up,” said Manasa Nadig, an EA and owner at MN Tax and Business Services and a partner at Harris Nadig, in Canton, Michigan. “By moving to be a paperless firm, I’ve minimized this requirement. There are still a few older clients who can’t or won’t move, but I can afford to indulge them.

“This year I am trying to move my clients over to a new portal and that’s been a bit of a learning curve. But I think once I get over the hump and get my clients on board, I should see smooth sailing as far as document delivery goes,” Nadig said.

“Before you start the printing you need to go over the lists,” Foss added. “Are there clients that shouldn’t receive one? Are there new clients that need one? Should you bother sending them to those who return the envelope unopened? Engagement letters: Should they be emailed and sent with the organizer? Should they only accompany the organizer? What date should be listed as the drop-dead date? Different partners may want different dates, which means organizers have to be printed by partner rather than by some other category.”

Support systems

Things that are supposed to support preparers also sometimes don’t, like software and governments.

“Software requires patches and will likely have errors until March,” said Daniel Morris, a CPA and senior partner at Morris + D’Angelo CPAs, in San Jose, California.

Tax rules and regulations, Nadig said, involve “getting the clients emails regarding what part of the new rules apply to them, answering questions about the tax extenders and if we have to amend their 2018 returns, that has been challenging,” she said. “I have a few templates ready for responding to these queries. I’ll tweak them as necessary.”

“California frequently has late changes and Congress has forgotten the value of providing clarity of tax policy and must receive a personal thrill to make late-in-the-year changes — retroactive, at that,” Morris said.

Then there’s the time spent cleaning up mistakes from those who should do better. “I have a customer who followed the IRS 2018 worksheets as instructed and paid his tax,” Morris said, “[and then] received a letter from the IRS that said he followed their instructions — however, their instructions included an error and he owed an additional $6,000.”

“That means we have to educate people with complexities that they should all file extensions and allow time to fix clerical errors that the IRS has because they’re reacting to congressional changes,” he said. “Frustrating.”

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