Tax reform as a springboard to deeper relationships
The once-in-a-generation tax reform legislation that was enacted last December has created a once-in-a-generation opportunity for tax practices to go beyond their compliance routine to enhance client benefits and bonding.
“Tax reform can certainly constitute a jump from compliance to value-added services,” said Kyle Brownlee, CEO and senior wealth advisor at Wymer Brownlee Wealth Services. “Taking a proactive approach by identifying clients that need additional services not only increases a firm’s value but also is in the best interest of the client.”
The firm has seen the start of surging demand for holistic advice that encompasses both tax advisory and wealth management for high-net-worth individuals.
In response, Wymer Brownlee is kicking off a strategic growth plan to double its client assets under management, and intends to add up to seven new staff members to help capture the rapid growth opportunities that are emerging in the post-tax reform landscape.
“We have been proactively identifying clients that will be most affected by tax reform,” said Brownlee.
“Before the end of the summer, we will be preparing a large number of tax projections to help clients understand how the reform will impact their own returns,” he added.
Brownlee sees tax reform as a double-edged sword.
“It will provide additional work, which means more revenue. However, it will also require additional research and training,” he said.
“Our goal is to understand the Tax Cuts and Jobs Act inside and out so we can better answer client questions and alleviate concerns through tax projections,” he said. “Tax reform has started a dialogue with clients about the value of tax planning versus tax preparation, which sets everyone up for greater success when next tax season rolls around.”
“Firms need to be preparing now — and helping their clients prepare — for next tax season,” Brownlee advised. “If you are not ready, next tax season could be very challenging.”
Starting with education
“Tax reform has created opportunities for us to work more closely with our clients,” agreed Sabre Linahan, senior manager in tax at Atlanta-based Smith Howard. “As a full-service accounting firm, we provide traditional services in the tax and accounting area. As a result of the Tax Cuts and Jobs Act, we had to make sure that we had initial and ongoing conversations with our clients.”
“We started those conversations very early,” she said. “Most of them had heard about the new law, but we had to make sure we educated them about their particular situation.”
“What most had heard about was that deductions were going away,” she said. “But when you put it all into a blender, most will see a reduction in their overall tax dollars.”
Linahan works closely with high-net-worth individuals and privately held companies headquartered in the Southeast that engage in business nationwide. “In addition to talking to our clients, we make sure we collaborate internally, especially between the tax department and other departments,” she said. “Our audit and advisory groups are out in front of clients, and they need to be aware of what things on the income tax side will affect the clients.”
“Our main focus is on educating both our staff and clients, and making sure that we’re working together across all departments to ensure we continue to serve our clients well,” she said.
A running start
Members at Tronconi Segarra & Associates began reaching out to clients even while tax reform legislation was being drafted, according to Alyce Notaro, senior tax manager at the firm.
“As the new legislation gained traction, we began drafting an advisory, which we updated almost in real time as the proposed legislation was changing,” she said. “The advisory was sent out to our clients shortly after the legislation was signed into law. And we included inserts with key provisions of the law in the organizers we sent to clients.”
“With the legislation [coming] right before tax season, it was difficult to address every aspect of the law for every client,” Notaro said.
“To maximize our reach and impact, while dealing with finite resources — both people and time — the firm identified internal subject matter experts for various topics. Those subject matter experts were responsible for spearheading the firm’s initiative on that topic, and keeping our associates up to date by presenting internal CPE sessions and alerting associates to new developments,” she explained.
Topics were prioritized by urgency or time sensitivity, and the firm set out a timeline for addressing various aspects of the legislation.
“For example, Code Section 965 [on deemed repatriation] needed to be addressed right away, as payment of tax potentially needed to be made in March or April,” Notaro explained. “We sent a communication to our clients to let them know that we were in the process of studying the legislation, and we would be reaching out to them on any items of immediate urgency, and then following back up with them during the coming months, and throughout the year, to do a comprehensive evaluation of their own specific tax situation.”
After filing season was over, the firm’s professionals engaged in community outreach by giving presentations to local business, trade and professional organizations.
“Some of the projects we reached out about and performed, specific to the new legislation, include entity choice and structuring analysis of C corporations versus S corporations, gifting strategies and estate planning, cost segregation studies, and planning for the new Section 199A qualified business income deduction,” Notaro said.
“We’ve also engaged in planning for itemized deductions, including timing for certain tax payments and charitable contributions, as well as considering the potential effects of new state-specific legislation related to the $10,000 cap on the deduction for state and local taxes,” she said.
Notaro noted a large increase in contact with Canadian clients and prospects, who are exploring opportunities to expand into the U.S. due to the new lower corporate tax rates.
“We’ve taken the opportunity to leverage the relationships we’ve built over time in our cross-border practice,” she said.
“Given the uncertainty and lack of guidance so far for some of the legislative provisions, we’re very conscious of the need to balance the risk of being overly aggressive, while not being paralyzed into inaction by that uncertainty,” said Notaro. “To effectively serve our clients, while dealing with this uncertainty, the ability to draw on our accumulated experience and professional judgment is crucial.”
“At the end of the day, the biggest impact of the new tax legislation on our practice is that it serves as a catalyst to re-engage our clients,” she said. “Even if we don’t end up doing a project directly related to the new legislation, it’s still a good opportunity to reaffirm a client’s current tax strategy. In a number of cases, the dialogue with our clients has even resulted in various other, unrelated projects, which may not have come up otherwise.”
People want answers to their questions, and they want to deal with CPAs who have the answers, observed Donna Erbs, chief marketing officer at St. Louis-based Anders CPAs + Advisors.
To that end, the firm has crafted a web-based tax reform resource center, including videos of Anders’ experts explaining various topics.
“We did it in a way that you can take it apart, question by question,” said Erbs. The resource center can be viewed on the firm’s website, or on Facebook, YouTube or LinkedIn.
“In addition, we’ve been blogging about tax reform all the time,” said Erbs. “Anders professionals have spoken at different law firms, women-owned businesses and industry-specific groups,” she said. “We break [the legislation] down into what makes the most sense to the audiences.”
“These activities not only gain new clients, they cement our bonds with existing clients,” Erbs said. “They know that we understand this and have people working to advise them for the best results, and to take advantage of the opportunities this will afford them.”
Accounting firm Boyer & Ritter has reached out to one of its core specialties, auto dealerships, in a unique way, by co-authoring a comprehensive guide to tax reform.
“Auto dealerships comprise about 30 percent of our practice,” said Bob Murphy, CEO of the firm. “[The National Automobile Dealers Association] asked us to provide professional support as one of three firms to prepare the NADA’s new guide to the Tax Cuts and Jobs Act.”
NADA commissioned the guide to assist dealers in working with their tax practitioners and to identify potential tax planning opportunities; it was distributed to more than 6,000 members of the association.