Tax Season ’09: CPAs Dodge a Bullet

Economy impacts end-of-season parties.

Are job cuts next? Join the survey; get the answers.

By Rick Telberg

CPAs closed out Tax Season 2009 last week feeling dazed, confused, weary and maybe even a little bit lucky.

Despite a dismal and dismaying economy, most tax practices were apparently bucking the recessionary downdrafts and mostly holding their own or even gaining ground.

So if you’re superstitious, kiss your lucky charm, knock on wood and throw some salt over your shoulder. Most CPAs seem to have dodged the economic bullet – at least for now.

In the last days of Busy Season 2009, 34% of 1,451 accountants surveyed were reporting better business than the year before, with 42% holding steady, and only 23% posting declines, according to the CPA Trendlines straw poll for the AICPA.

The 76% of CPAs reporting business as steady or better represents markedly stronger performance than 2008’s 66% or 2007’s 60% — making 2009 the best year for CPAs since 2006’s 81% net positive rating.

HOW WAS YOUR BUSY SEASON? WHAT’S NEXT FOR THE PROFESSION IN THIS ECONOMY? Join the survey; see the results. (Free. Confidential.)

To be sure, many accountants are worried about their clients and about getting paid. And their busy season is getting longer with an ever-increasing number of extensions.

Furthermore, many firms will be scrambling in the coming days to re-fill a depleted business pipeline for the traditionally slow summer months. But in these recessionary times, CPA firms are generally among the survivors.

Still, CPAs are concerned. And you may be hearing about some significant reductions in force at a few firms whose fortunes are disproportionately tied to especially volatile segments of the economy, such as banking, housing or construction.

“The firm is firing or has fired 15 percent of its professional staff,” according to a senior partner at a major firm, which is forecasting no improvement in the economy until the second quarter of 2010.  “First our customers,” he says, “then our firm, will bounce back.”

At another firm — a mid-sized one — they hired additional staff going into busy season, according to a high-level partner, “which reduced workload and stress.”

“Now,” he adds, “we have to figure out what to do with everyone during the summer months.” He’s expecting some “slight” staff reductions and an intense drive “to replace lost revenue due to the economy.”

At a smaller mid-sized firm, they’re feeling the repercussions of their clients’ problems. “Clients were much more apprehensive about the economy” this year, according to one partner. And it’s easy to understand why when he adds, “We are seeing a 7 to 8 percent drop in revenue for our clients.”

Nevertheless, CPA firms are coming out of busy season relatively strong. The recession may have hit hardest during the accounting busy season, softening the blow. The vast majority of CPA firms are expecting to weather the recession intact and unmarred.

“The economic climate is rough and people are not happy,” says a senior staffer at a regional firm. But the “forecast is for slight improvement” with “no additional hiring.”

At Dauby O’Connor & Zaleski CPAs in Indianapolis, partner Ted Zaleski reports, “We expect to expand and add staff.”

Staying productive and positive may have been one of the biggest personal challenges through a tumultuous tax season.

But for Rich Levy at Levy & Associates in Fairfax, Va., his feelings of grace and gratitude come daily. “My office is upstairs from a kidney dialysis franchise,” he says. “It’s easy to stay positive when you see real adversity on a daily basis.”

NEXT QUESTION: Now that tax season is over, what’s next for accountants in this economy? Join the poll; get the answers.

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Posted on April 20, 2009