Five Questions You Need to Ask Tax Clients Today

CHECKLIST: Tax-Time Client Needs Assessments and Referral Generation.

By Rick Telberg
CPA Trendlines

Get a read on the busy season. Join the survey; get the results
Benchmark your busy season. Join the survey; get the results.

Busy season may be hectic and the hours may be long, but if you’re not making time to get to know your clients better, then you’re missing an opportunity that may not come again for another year.

MORE TAX SEASON: When Clients Face ‘Unreal’ IRS Audits  |  IRS Warns about Private Debt Collectors for Tax Season 2018  |  Underfunded IRS Swamped with Problems  |  2018 Tax Filing Season Begins Jan. 29  |  2018 Tax Season: The Race to Be Ready  |  The IRS Tip 10 List for Choosing a Tax Pro   |  New eBook: Maximizing Sec. 199A Deductions

Browse more at CPA Trendlines’ taxtrendlines.com

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

By then, a competitor may have beaten you to the punch.
READ MORE →

Tax Accountants Fill the Breach of a Failing IRS

But is it good for business or just a headache?

By Rick Telberg
CPA Trendlines

The Internal Revenue Service appears to be making a big mistake in trying to digitize its outreach and education efforts and to outsource education to tax preparers and related organizations.

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS |  Beware the EZ Way Out   |  Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018 | Underfunded IRS Swamped with Problems  |  IRS in Retreat from Communities  |  Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft?  |  IRS Mulls Raising Fees to Cover Budget Shortfalls |

Browse more at CPA Trendlines’ taxtrendlines.com

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

In the absence of IRS assistance, tax preparers and CPA firms can expect an influx of taxpayers seeking help. This could be a boon for the industry, but it could also be a seasonal headache for tax pros who can’t bring themselves to charge for quick bits of advice.

READ MORE →

Artificial Intelligence Gets a Boost with Tax Reforms

The five new complications humans can't handle alone.

By Rick Telberg
CPA Trendlines Research

The tax reforms of 2018 may mean a lot more than a radical drop in the corporate tax.

MORE:  Lessons for Accountants from Self-Driving Cars   |   How Artificial Intelligence Will Drive the Next Wave of Merger Mania   |   How Artificial Intelligence Feeds Accounting Marketing  |   Tax Pros Gain Slight Ground in E-Filings   |  Tax Pros Turning in Only 39% of E-Filings  |  Beware the EZ Way Out  |  IRS #FAILs at Online Services Spell Problems for Professionals  |  Can the IRS Improve Its Phone Service?  |  When Clients Face ‘Unreal’ IRS Audits  |  IRS Warns about Private Debt Collectors for Tax Season 2018

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today

Because the reform reaches so far into and across transnational corporations, the power of artificial intelligence may leverage tax data into a driving force that pervades all aspects of operations—and not just at big companies.

The slashing of the corporate tax rate from 35 percent to 21 percent opens all sorts of options for corporations. Five, to be exact:

READ MORE →

New Tax Law Roils Busy Season 2018

How savvy CPAs turn confusion into new billings.

Join the survey. Get the results

By Rick Telberg
CPA Trendlines Research

The Tax Cut and Jobs Act won't officially take effect until next year, but professionals are already reporting that it's causing problems and depressing their forecasts for this year's busy season results.

MORE on BUSY SEASON: Tax Pros Gain Slight Ground in E-Filings   |  Tax Pros Turning in Only 39% of E-Filings  |  Beware the EZ Way Out  |  IRS #FAILs at Online Services Spell Problems for Professionals  |  Can the IRS Improve Its Phone Service?  |  When Clients Face ‘Unreal’ IRS Audits  |  IRS Warns about Private Debt Collectors for Tax Season 2018

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

Early soundings from the annual CPA Trendlines Busy Season Barometer show that 33 percent of practitioners are forecasting more trouble this year than last year – and they blame it on the new tax law.

READ MORE →

When Artificial Intelligence Gets Real

Survey: 78 percent “would work with an A.I. manager if it meant a more balanced workload.”

By Rick Telberg
CPA Trendlines

There’s a brave new world rising, a world juiced up on artificial intelligence.

MORE on A.I.:  Lessons for Accountants from Self-Driving Cars   |   How Artificial Intelligence Will Drive the Next Wave of Merger Mania   |   How Artificial Intelligence Feeds Accounting Marketing 

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

What’s it going to be like? What will A.I. be capable of? Is it the dawn of a glorious new age of automation or a Cat-5 storm cloud on the horizon?

CPA Trendlines has some answers, and you might not like them.

READ MORE →

Beware the EZ Way Out

IRS mulls new 1023-EZ rules for 501(c)(3)'s.

By Rick Telberg
CPA Trendlines

It’s safe to say that CPA firms tend to love IRS Form 1023-EZ, the simplified form for application for 501(c)(3) tax exempt status. Introduced in 2014, the form was EZ on the nascent, smallish not-for-profit and on the CPA trying to help them get started.

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS | Beware the EZ Way Out | Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018  | Underfunded IRS Swamped with Problems | IRS in Retreat from Communities | Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft? | IRS Mulls Raising Fees to Cover Budget Shortfalls  |

More at taxtrendlines.com

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

This easier version of Form 1023 was a good and necessary idea. The IRS was way backed up on approvals of the original application. Approval was taking an average of 315 days. To the delight of do-gooders, wanna-be do-gooders, and outright frauds, virtually all 1023-EZs are approved in short order. Approvals were and still are passed down in just a couple of weeks.

Trouble is, a lot of those expedited approvals were for organizations that didn’t qualify for 501(c)(3) status.

READ MORE →

IRS #FAILs at Online Services Spell Problems for Professionals

Unintended consequences: Pushing low-end taxpayer-clients to tax professionals.

By Rick Telberg
CPA Trendlines

Online accounts at the IRS are a good idea, but maybe not as good as the IRS would like to think – certainly not as good as a qualified tax preparer.

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS | Beware the EZ Way Out | Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018  | Underfunded IRS Swamped with Problems | IRS in Retreat from Communities | Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft? | IRS Mulls Raising Fees to Cover Budget Shortfalls  |

More at taxtrendlines.com

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

The Taxpayer Advocacy Service has long called for online accounts. In 2016 they became a reality. Unfortunately, for many, it has been a painful reality.

The migration toward online assistance – ideally automated online assistance – is a product of the severe budget cuts the IRS has suffered. The Service can’t afford personnel to man the phones or keep Taxpayer Assistance Centers open.

But the budget cuts did not mandate a cut in the Taxpayer Bill of Rights. Taxpayers still have a legal right to quality service, confidentiality and a fair, just tax system.

READ MORE →

Can the IRS Improve Its Phone Service?

By Rick Telberg
CPA Trendlines

When the Internal Revenue Service launched its “Future State Initiative” in 2016, it promised a new and admirable level of service. From then on, taxpayers could expect the same level of service when dealing with the IRS as they get from a financial institution or a retailer. Or, so it seemed.

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS | Beware the EZ Way Out | Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018  | Underfunded IRS Swamped with Problems | IRS in Retreat from Communities | Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft? | IRS Mulls Raising Fees to Cover Budget Shortfalls  |

More at taxtrendlines.com

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

Such brave words for a brave new world of tax collection! Alas, the promise of better service has not combined well with congressional cuts to the IRS budget. The brunt of those cuts is felt at the interface of frustrated taxpayers and stretched-thin IRS agents.

READ MORE →

When Clients Face ‘Unreal’ IRS Audits

IRS adopts confusing, misleading terminology. But it's all very real.

By Rick Telberg
CPA Trendlines

Tax professionals and accounting firms need to be aware that their clients may face two kinds of Internal Revenue audits: Real and Unreal.

Really.

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS | Beware the EZ Way Out | Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018  | Underfunded IRS Swamped with Problems | IRS in Retreat from Communities | Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft? | IRS Mulls Raising Fees to Cover Budget Shortfalls  |

More at taxtrendlines.com

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

And it’s the “unreal” audits that are going to become more common. READ MORE →

IRS Warns about Private Debt Collectors for Tax Season 2018

What accountants can do to help. And 20 other problems.

By Rick Telberg
CPA Trendlines

The Internal Revenue Tax Code requires the National Tax Advocate to prepare an annual report to Congress that summarizes at least 20 of the most serious problems encountered by taxpayers.

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS | Beware the EZ Way Out | Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018  | Underfunded IRS Swamped with Problems | IRS in Retreat from Communities | Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft? | IRS Mulls Raising Fees to Cover Budget Shortfalls  |

More at taxtrendlines.com

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

The IRS watchdog solved that problem by going thematically. This year it picked five themes and focused on problems relating to them. The themes for the 2017 Annual Report to Congress are:

  1. Tax Administration
  2. The Right to Quality Service
  3. Special Taxpayer Populations
  4. Independent Administration Appeal
  5. Revenue Protection

Twenty, it turned out, wasn’t enough. The advocate couldn’t resist going for 21. It ranked them as best it could under such criteria as

  1. impact on taxpayer rights,
  2. number of taxpayers affected,
  3. interest, sensitivity and visibility,
  4. barriers these problems present to compliance,
  5. revenue impact and
  6. trends picked up by the NTA management information system.

#1 Top Problem

Accountants, CPAs and tax practitioners should be aware of what bobbed up to the top of the ranking under this year’s themes: private debt collection.

In 2015, Congress required the IRS to start outsourcing its “inactive tax receivables.” And look what happened: In 2017, the IRS spent $20 million administering the outsourcing program but collected only $6.7 million in receivables. Private collection agencies recouped only 1 percent of the $920 million of inactive debt receivables assigned to them. The IRS collected 40 percent as much as the debt collectors simply by sending out a letter informing taxpayers that their debts had been assigned to a collection agency.

That may be a rotten deal for the IRS and taxpayers, but there’s good news for the collection agencies. They get their commission whether the taxes were paid due to their own action or that of the IRS. PCAs can get a commission of up to 25 percent. And the IRS (rather than the national treasury) gets to keep another 25 percent.

As predicted by the NTA back in 2015, the program fell most heavily on taxpayers suffering economic hardship. Of the 4,100 taxpayers who made payments after their debt was outsourced,

  1. Median income was about $41,000;
  2. Over 1,100 taxpayers – 28 percent – had incomes below $20,000;
  3. 19 percent had incomes below the federal poverty level;
  4. 44 percent had incomes below 250 percent of the federal poverty level;
  5. Five percent were receiving Social Security income and had a median income of $14,365 (and, by law, being Social Security recipients, should not have been turned over to collection agencies); and
  6. Of the 1,700 taxpayers who entered installment agreements, 45 percent had income below their allowable living expenses. In other words, they promised more than they could afford

The National Taxpayer Advocate recommended seven corrective actions the IRS should take. As for CPA firms and tax preparers, any clients being turned over to a PCA should be made aware that either the IRS or a PCA may be abusing their taxpayer rights. This is a great opportunity for CPAs and preparers to put their knowledge to good use.

Underfunded IRS Swamped with Problems

Olson talking budget cuts on C-Span

Not a good way to start Tax Season 2018.

By Rick Telberg
CPA Trendlines

An angry and frustrated National Taxpayer Advocate Nina E. Olson has slammed Congress hard in the Taxpayer Advocate Service 2017 Annual Report to Congress. After a series of IRS budget cuts over the last several years, Olson says she sees the daily consequences of reduced funding and the choices made by the agency in the face of funding constraints.

SPECIAL REPORT – Fixing the IRS: IRS #FAILs at Online Services Spell Problems for Professionals | Tax Accountants Fill the Breach of a Failing IRS | Beware the EZ Way Out | Can the IRS Improve Its Phone Service? | When Clients Face ‘Unreal’ IRS Audits | IRS Warns about Private Debt Collectors for Tax Season 2018  | Underfunded IRS Swamped with Problems | IRS in Retreat from Communities | Military Personnel Face New Battles at Home: The IRS | As New Economy Surges, IRS Falls Further Behind | Is the IRS Winning the Battle Against Identity Theft? | IRS Mulls Raising Fees to Cover Budget Shortfalls  |

More at taxtrendlines.com

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

“Funding cuts have rendered the IRS unable to provide acceptable levels of taxpayer service, unable to upgrade its technology … and unable to maintain compliance programs that both promote and protect taxpayer rights,” Olson says in her preface to the annual report.

“‘Shortcuts’ have become the norm, and ‘shortcuts’ are incompatible with high-quality tax administration,” says Olson, describing her agency as swamped with problems and inadequacies.

READ MORE →