By Jim Guarino, CPA, PFS, CFP®, MST.
I was recently asked if I thought the upcoming tax season will represent a return to normal for tax advisors and their clients. To be honest, I thought, “What’s normal anymore?” If normal can be defined as adapting to perpetual change, then the answer is an emphatic “YES!” Or, as New York Yankees legend Yogi Berra once said, “It’s like déjà vu all over again.”
In fact, I contend the 2018 tax season was perhaps the last “normal” busy season encountered by tax professionals (2017 tax returns were filed based on pre-Tax Cuts and Jobs Act of 2017 tax law). Since then, each subsequent tax season has been demanding, challenging and for some tax professionals, career-altering…a bit more on that later. All tax professionals have been impacted. Perhaps the only tax season attribute that can be considered “normal” for tax advisors nowadays is to expect the unexpected.
When I reflect back on recent tax seasons it is quickly apparent how chaotic it has been to be a tax professional since the passage of TCJA.
For example, the 2019 tax season involved the first busy season filing (2018) tax returns under the new TCJA tax rules and with it, a significantly revamped Form 1040. Not only were tax advisors dealing with interpreting new tax law (arguably, the most significant since the Tax Reform Act of 1986) but also new tax forms. This was occurring while TCJA tax law integration was still being processed by the Internal Revenue Service. As a result, many client tax returns were extended and submitted at the October 15th filing deadline, rather than the standard April 15th deadline.
I suspect the 2020 and 2021 tax filing seasons need no further explanation other than to mention “COVID-19” and the wave of tax law legislation (CARES Act) that was rapidly passed to deal with pandemic-related strains on businesses and individuals. Initially, tax advisors were required to learn, interpret and implement new tax law on the fly just as the 2020 busy season was hitting full stride in March. Adding to this was the extension of the traditional April 15th due date to July 15th and busy season 2020 morphed well into the summer vacation months. Notwithstanding, the 2021 busy season was slightly less tumultuous but not without its own share of pandemic-related adjustments, including another April 15th deadline that was extended through May 17th for this past year.
Simply put, after the past three tax seasons, many tax professionals are exhausted and drained. The effects are sobering. The profession is seeing escalated levels of attrition at all non-partner ranks and the pipeline of first-year staff entrants into the field seems to get smaller each year. Rather than aspiring to be promoted to tax partner, younger tax professionals are questioning if a career as a tax advisor in public practice is sustainable and whether work-life balance is realistic.
The partner group is not immune from the consequences of the past three tax seasons either. Many an experienced practitioner has re-evaluated their own circumstances. Some have opted to retire earlier than planned and others have abandoned their own succession plan (including patiently grooming the next generation tax advisor) and instead, have sought out merger opportunities with other firms.
So, how do we reverse this trend? The solution might be one of the few positives that emerged from the pandemic. The enhanced use of technology and a remote/hybrid work environment. Similar to many other service providers, tax advisors needed to adapt to a ‘new normal’ as a result of the pandemic. For the tax profession, that meant pivoting to a remote office environment, integrating a hybrid workforce and implementing a near 100% virtual tax engagement service model for clients in just a matter of weeks.
Clients have adapted to this new normal as well. Individuals appear to be getting more involved with their own tax planning and seeking tax advisors who are conversant with legislative changes and tax saving strategies. Clients understand the impact of saving taxes. They want to work with tax advisors who remain knowledgeable about tax law, regardless of how complex it becomes or how frequently it may change. Personally, this is what makes being a tax advisor so fulfilling for me – answering the challenge of each busy season, be it a “normal” tax season or some iteration thereof.
Bringing this discussion full circle then, the hope is that this upcoming tax season will be a bit more traditional, in effect, more “normal.” Tax advisors and their clients are now accustomed to the routines of remote work, Zoom calls and paperless tax preparation services.
To successfully navigate this coming tax season, we need to continue to embrace the changes that we all made to provide tax services in the first year of COVID. We also need to ensure we are continuing to engage our clients about their tax and financial situation, even when we’re remote. A strong relationship between advisors and clients has always been critical to success.
As we approach the end of 2021, we are again confronting developments that have recently become all too familiar. The world is once again feeling anxiety over another COVID-19 variant and potential new tax legislation is being considered and debated by Congress. Buckle-up fellow tax practitioners for another year-end of busy season anticipation… as the saying goes, the more things change, the more they stay the same. As Yogi said, it really does feel like déjà vu all over again.
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Jim Guarino, CPA, is a managing director in the tax practice at Baker Newman Noyes. He specializes in serving high net worth individuals and families as well as closely held businesses and their owners.
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Tags: Firm Management, Technology
