Tuesday, Oct. 15, looms.
The Internal Revenue Service has estimated that some 19 million taxpayers filed for an automatic extension this year, more than a 30% jump from just
"I remind clients that Oct. 15 is merely the IRS deadline for extended tax returns, but their own target should be ASAP," said Jean-Luc Bourdon, a CPA at Lucent Wealth Planning in Santa Barbara, California. "The sooner clients file the prior year's tax return, the sooner it can be used to improve the current year's tax forecast and planning."
"Developing a [practice's] strategic plan to manage time and resources effectively during the busy season is key," said Carl Cesarano, managing shareholder at Cesarano & Khan CPAs, in Floral Park, New York. "Prioritizing tasks, scheduling client meetings and setting realistic deadlines."
'Sense of urgency'
Increasingly, firms enter the fall season off a late spring of work that was pushed due to April's tax season, and off a phony "
Paucity of staff isn't a complete disadvantage. "There's a shortage of qualified tax preparers, which allows them to choose their clients," Bourdon said. "It's not uncommon for tax preparers who despise a deadline glut to fire their last-minute filers … The tax-preparer shortage is also causing many tax pros to extend tax returns for which they received all information prior to the April deadline: They simply don't have time to handle them all by April 15."
Firms also don't typically prepare for the October season as they do for Tax Day. Staff tend to resent working spring-like long hours in the fall, and cash flow can also be disrupted as some firms bill only after an extended return is completed.
So "increasing communication with clients during [the autumn season] is essential," Cesarano said. "Regular updates on market conditions, personalized advice and addressing specific concerns clients may have provide reassurance and guidance."
"Ensuring all necessary documentation is up to date and compliant with regulatory requirements is another key preparation step," he added. "This includes preparing for any upcoming audits or reviews."
Make sure clients are responsive in the run-up to the second season, added Jaclyn Connor, a CPA and partner of tax services at Top 100 Firm Cherry Bekaert in Austin, Texas — and make sure they feel free to connect their tax preparer with other professionals serving the client, such as the financial advisor or investment manager — or steer their preparer toward other portals or persons who can provide tax documents on time.
"If their tax return needs to be extended, [clients] should maintain a sense of urgency," Bourdon said. "If you can't be a king by filing by the April deadline, be a prince by filing as soon as possible after."
Never boring
"Few of [my] clients are into digital assets, and only three have foreign accounts that need to be addressed," said Morris Armstrong, an Enrolled Agent and registered investment advisor at Armstrong Financial Strategies in Cheshire, Connecticut. "My practice is geared to the middle-income market, and retirees can be boring at times, but usually we get a handful of returns that have some challenges. We're also gearing up on the tax controversy side, as the IRS now has resources allowing them to pursue more cases of potential scofflaws."
"My process is pretty simple: a robust engagement letter, an organizer and interview," Armstrong said. "We'll maintain that protocol although some clients find the organizer an annoyance — it does serve our purposes." Armstrong's firm is also busy customizing engagement letters and will be creating hard deadlines for next year.
Perhaps preparation for future Octobers will benefit from technology. "We have been toying with artificial intelligence in terms of productivity, and that is an eye-opener," Armstrong said. "It can generate some wonderful forms and letters in the slow blink of an eye. We're cautious using it for interpretative issues, although it can provide [citations that] may be examined further."
