Early optimism turns to fear and dismay as the COVID-19 crisis spreads.
By CPA Trendlines Research
Whether the Covid-19 panic is much ado about nothing or not enough being done about something, America’s tax and accounting practitioners are already seeing their early-season optimism shift into a mid-season nosedive.
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The CPA Trendlines 2020 Busy Season Barometer has been fielding responses since early January. And, for a while, things looked good. Until the end of February, early respondents generally saw their season moving along swimmingly, the economy booming, clients doing well, families hunky-dory. This year was going to be so much better than last year.
That was then. This is now.
In the course of a fortnight, optimism tipped into pessimism. Through February, 63 percent of respondents were reporting this year's busy season was shaping up to be "much better," at 15 percent, or "somewhat better," at 48 percent.
But today, that total has dropped 13 points to barely 50 percent. And those now reporting a "somewhat" or "much worse" year has more than doubled, from nine percent to 21.
Fearing the fear of fear
It’s hard to deny that fears of the Covid-19 coronavirus have something to do with the radical shift in outlook, though a few respondents fear there’s nothing to fear but fear itself. But there’s a lot of fear, so they’re afraid.
“Seriously," says one sole practitioner, "I think the media is making way too much out of this. We always have sickness, especially during tax season. It's just one more thing to worry about.”
Others, however, are concerned and taking preemptive action.
"I've canceled all face-to-face client meetings," says solo practitioner Kenneth Stafford at Stafford Advisors in Falmouth, Maine.
"I think we may do more online activities by collecting data and tax documents," adds Nina Tross, MBA, EA, and executive director of the National Association of Tax Professionals.
“Our office wipes down every day," Robert Hartmann, EA, founder and president of Hartmann Professional Services in Sparks, NV, says. "If the virus were to get into our office we would have to close or limit contact with our clientele. We do spray (alcohol and distilled water) on all dropped-off material before distributing to staff.”
Whether or not the disease itself becomes a problem, quarantines are going to complicate the tax season. Staff may need to stay home to care for kids whose schools have closed. Clients may not have access to the information they need for tax purposes. Travel could become restricted.
Timing will be a big issue. Will the spread of the virus (and the quarantines) peak before April 15? Or, will quarantines and anti-contamination efforts stave off the worse until after the season?
“It shouldn't have much effect, depending on what part of the country you are in," says a CPA named Toni, working out of offices in Louisiana. She isn’t panicking, but she’s concerned, telling us, "If the IRS and other government agencies start shutting down to avoid contact, it could have a significant effect.”
The closing of government offices and schools, plus the widespread canceling of events, is almost certain to impact the economy. The stock market sees it coming, and so do CPAs. When the Barometer asked before the pandemic, “What are your chief concerns?” only eight percent specified the economy. But now, that number has tripled to 23 percent.
Concerns over late clients, competition, tax regs, IRS operations, and most other issues are remaining pretty stable.
But worries about personal or family issues are taking a big jump, from 16 percent to 25 percent – presumably, concerns over how to care for sick family members while dealing with the busy season made busier by absent staff.
Outlook on revenues and profits are also tanking, a reasonable response to fears of closed offices, sick clients, a lagging economy, and IRS services slowing from glacial to comatose.
Today, the numbers are down—not by much, but heading into a bearish direction.
Busy Season Barometer responses through February showed a bullish 72 percent expecting increases in total revenue and in net profit. Today, expectations of higher revenues have dropped to 68 percent, and optimism for net profit gains have sunk to 63 percent. These latter figures are very close to those of 2019 in the weeks when the government was shut down.
It’s not clear whether washing hands, wiping doorknobs and sticking to fist-bumps — or even closing the office and working from home — will dissipate the dark clouds of doom.