Tax planning is one of the few forward-thinking services that accountants can offer their clients. Given the fact that the accountant has most of the data and is the clients’ most trusted advisor, it makes sense for them to show clients how to save money on taxes in the year ahead.“They generally see the direct benefit of tax planning, and they don’t mind getting a bill for planning services,” said Rob Carmines, a partner at Newport News, Va.-based Carmines, Robbins & Co. PLC.

“It’s all about generating revenue,” said Sue Jones, marketing communications manager for BNA Software. “I have a lot of customer testimonials, and without fail they say that they can’t believe how much revenue they’ve generated using tax planning.”

“We truly believe that tax planning is an opportunity that most accountants don’t take advantage of,” said Jorge Olavarrieta, senior product manager at Lacerte.

Some of the roadblocks that practitioners face in offering tax planning include the fact that, “Clients don’t call us until it’s too late,” said Carmines. “Also, we’re either too busy due to staff shortages, or we’re sitting there waiting for the phone to ring.”

The traditional way that most practitioners attempt to find tax-planning clients is by sending out a newsletter to their clients listing all of the changes in the Tax Code, or with business cards and ads that state the availability of tax planning.

Often, however, such lists only generate nuisance calls from clients asking about the standard mileage rate or maximum IRA contribution allowable, according to Carmines. “Our receptionist can answer those questions,” he said.

A better way is to target only those “A” clients who have complicated returns. “We cull clients affected by tax law changes from our tax return data, and send a targeted newsletter which highlights a change, but send it only to those clients affected,” explained Carmines.

Ron Sosinski, product manager for client relations at CCH’s ProSystem fx Tax, noted that the alternative minimum tax by itself would drive many clients into the need for planning. “It’s no longer just for high-income taxpayers,” he said. “The middle classes are being hit, and they’re looking for ways not only to minimize the effect but to prepare for it.”

As the population ages, the need for tax planning will grow, according to Teresa Mackintosh, a CPA and vice president of marketing at Thomson Tax & Accounting: “It’s the profession’s responsibility to use tax planning as an opportunity to touch base with retirees or retiring clients to make sure they’re on track for a stable retirement.”

Low-level tax planning, such as how much you save if you replace your windows, has its benefits, but is not the primary goal of tax planning, according to Carmines. “Real tax planning involves substantial, quantifiable benefits to doing a transaction one way versus another way,” he said. “Sometimes this involves timing issues. When you can structure a deal differently and get significant tax benefits, it is worth the cost of the tax planning.”

Some examples of higher-end tax planning that can benefit clients include vacation home versus rental property, sale of investment property versus a Section 1031 like-kind exchange, AMT issues, tax benefits of the choice of entity type, the purchase or sale of a business (assets or stock), and “gaming” the system by taking advantage of the phase-ins and phase-outs of laws, such as the “Kiddie Tax” rules over the next year.

“These are areas that tax planning software can play a big role,” said Carmines.


While many of the tax compliance programs are able to provide a look-ahead for one year, the more powerful ones are able to project a number of alternative “what-if” scenarios over multiple years.

TaxSimple includes tax-planning worksheets that allow practitioners to project tax liability to future years. Drake Software now includes a Tax Planner with its package that allows up to seven years or seven scenarios of tax planning per client.

“Any Tier One compliance software can do a fair amount of projections, and roll forward your current fact set and project the coming years’ taxes based on the same facts. A true planner software takes that a step further and does more complicated scenarios and what-if analyses,” said Mackintosh. “Where you would want to use planner software is when you’re trying to evaluate different alternatives, such as what state to retire in, how much 401(k) distribution to take, or should I sell or exchange investment property. Anytime you’re trying to analyze more than one alternative at once, it’s important to use planning software, because it allows you to change the underlying fact set.”

“Thomson’s Planner CS works with both UltraTax and GoSystem Tax,” explained Mackintosh. “It also works with other compliance software. The difference is that when it’s used with a Thomson product, it imports directly from the compliance program.”

The granddaddy of tax-planning software is BNA’s Income Tax Planner, which is sold as a stand-alone product. It can import data from leading tax systems, including GoSystem, Lacerte, ProSystem fx, UltraTax CS and CrossLink, and generates reports and graphs as well as client letters. It provides federal income tax projections for up to ten years or cases, and seven modes of analysis.

“The software allows you to be responsive for virtually any tax situation that comes in the door,” said BNA’s Jones. “If you have to turn down an engagement because the software won’t handle it, that’s lost money.”

CCH’s ProSystem fx Planning integrates seamlessly with ProSystem fx Tax, so that you start with base-year amounts already set up. It can include numerous federal calculations, including regular tax, AMT, capital gains tax, underpayment penalty, premature distributions, filing status calculations and carry-forward calculations, as well as integrated state tax computations. The tool also generates charts, graphs and client letters.

“Our focus is making the accountant as productive as possible end to end,” said Lacerte’s Olavarrieta. “One of the pieces to helping accountants is the tax planning they do for their clients. One of the key benefits is integration between the tax-compliance product and the tax-planning application.”

The Lacerte Tax Planner allows the comparison of multiple complex scenarios using actual current and future tax rates, and generates customized graphs, reports and letters to communicate with the client.

Both CCH’s Client Relate and Thomson’s Tax Alerts take planning a step further by linking their tax compliance and tax research software. This enables the practitioner to identify specific clients who are affected by a tax development or might need a specific service.

“It alerts practitioners to new developments that would cause them to get in touch with their clients,” said Karen Notaro, portfolio managing editor for Client Relate. “If there’s a tax law change, we write an explanation of the development and create a search that can be modified by the practitioner. It runs against the ProSystem fx client base, and finds whoever is affected.”

“It also analyzes additional services they can offer to a client,” she said. “The practitioner can run the tax return against our services to see what might be pertinent, or they can search by client to see what we have in Client Relate that relates to that particular client.”

Thomson’s Tax Alerts works with GoSystem RS and InSource Express RS, and is building integration with UltraTax, according to Mark Sheiner, product manager for Checkpoint. “It will generate a list of clients who are potentially affected by a development or who might need a specific service,” he said. “The focus is on helping clients be prepared for situations that affect their tax liability. For example, if something happens in July that affects college savings plans, why wait till January to talk to your clients?”

“Most accountants don’t talk to their clients outside of tax season,” he added. “This gives them a good reason to keep in touch with them.”

For clients with multiple Schedule D transactions, Wolters Kluwers’ Financial Services’ GainsKeeper imports trades from brokerage accounts to provide a complete Schedule D. “It tracks trading activity, enters data and identifies any wash sales that a client had during the year,” said Stevie Conlon, tax director for GainsKeeper.

“You can run a realized and an unrealized report at any time, so you can look in your portfolio and see what are the unrealized positions. You can compare basis with the fair market value of your securities to assess potential gains and losses — it answers the question, ‘What security should I sell next?’” she said.

This year, GainsKeeper has added a highest-in, first-out capability. “This allows you to look at transactions and effectively select the best tax loss to minimize your taxable gain upon sale,” Conlon explained.


Naturally, despite the power of the various planning tools available, it is your knowledge and skill that finally decide the outcome for the client.

And by contacting clients, presenting them with a potential problem and then discussing how to solve it, you gain customer loyalty, referrals and fees that they are happy to pay, according to Carmines: “Even if they choose not to take you up on the opportunity, they appreciate that you are thinking about them.”

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