4 Reasons Not to Let Staff Go After Tax Season

Midsection of businessman moving out with cardboard box from officeWhat will you need to pick up when they’re gone?

By Ed Mendlowitz
The CPA Trendlines Practice Doctor

QUESTION: I am planning on letting go of some staff after tax season and will hire replacements at a higher level. Any suggestions?

MORE: Good Preparer Procedures Will Reduce Review Time | 10 Things NOT to Say During Tax Season | Top 12 Tax Return Errors | Why ‘Tick and Tie’ Needs to Die | Use Tax Return Prep for Training and Growth
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ANSWER: 1) Your implication is that you will hire replacements at a higher level.
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What Are IRS FAQs Worth?

Not enough, says National Tax Advocate.

By CPA Trendlines Research

The COVID-19 crisis hit the Internal Revenue Service pretty hard.

  • Employees were sent home to quarantine.
  • Entire operations were shut down.
  • Most taxpayer-to-agent communication was impossible.
  • Taxpayer Assistance Centers were shuttered.

MORE: The Top Six IRS #FAILS this Tax Season (So Far)
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Complicating matters, Congress passed a number of initiatives that the IRS had to execute even as it was stripped down to the skeleton crew:
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The Top Six IRS #FAILS this Tax Season (So Far)

Erin Collins, IRS Taxpayer Advocate
Collins

Sending out notices with expired deadlines? Check.

BUSY SEASON BAROMETER:
How accountants are battling the Coronavirus recession
Join the survey. Get the answers.

By CPA Trendlines Research

It’s been a hard year for everyone, from pauper to president to tax practitioners. The latter have been triple-whammied by the need to keep clients and employees healthy, the shifting rules and deadlines made to accommodate the lockdown and the staggering, stumbling service of the Internal Revenue … well, Service.

MORE on TAX SEASON 2020: Tax Pros Handling Bigger Share of E-filings | How COVID Has Pulverized IRS Operations | The Mystery of 10 Million Missing Tax Returns | COVID Cuts Accounting Profits | Why Busy Season May Never Be the Same Again | Getting a Handle on COVID |

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Let us pause to pity poor Erin M. Collins, who late last year landed a great new job: National Tax Advocate. She replaces Nina Olson, who held that position from 2001 to 2019, bowing out in the nick of time, leaving behind an impressive record of improvements in the American system of tax collection.
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Tax Pros Take Bigger Share of E-filings

Refunds up, but not by much.

By Beth Bellor

Ever so slowly, the professionals are closing the gap with the DIYers in tax preparation.

MORE: The Mystery of 10 Million Missing Tax Returns | The Tax Season 2020 Dumpster Fire | The Fight for New Tax Clients
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The Internal Revenue Service had received 139.9 million individual income tax returns as of the week ending June 26 – the latest data available – down 3.5 percent from the same period in 2019. It had processed 128.5 million returns, down 10.6 percent.
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How COVID Has Pulverized IRS Operations

Delays, postponements, system failures, shutdowns, and mounting backlogs.

By CPA Trendlines

Taxpayers who filed a 2019 paper return and are entitled to refunds may be in for a long wait, according to the first report to Congress from the new IRS watchdog.

MORE on the 2020 SEASON: The Mystery of 10 Million Missing Tax Returns | Tax Pro E-Filings Down 20 Percent | IRS Web Traffic Doubles over Year-Ago | COVID Drowns IRS in New Filings | 2020 Tax Season Comes to a Screeching Halt | The Tax Season 2020 Dumpster Fire | Tax Pros Fall Behind 6.2% in Returns Filed
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The IRS was forced to suspend the processing of paper tax returns, and as of May 16, it estimated it had a backlog of 4.7 million paper returns, says National Taxpayer Advocate Erin M. Collins, who succeeded long-time predecessor Nina Olsen just as the pandemic was ramping up.

Although the IRS is reopening some of its core operations, it is not clear when it can open and process all the returns sitting in mail facilities, the Taxpayer Advocate Service reports.

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Tax Pros Start to Gain Ground in E-Filings

Refunds one of the only bright spots.

By Beth Bellor

Tax pros may be down for the year in e-filings, but they remain ahead of the do-it-yourselfers.

MORE: The Mystery of 10 Million Missing Tax Returns | COVID Drowns IRS in New Filings
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The IRS had received 138.3 million individual income tax returns as of the week ending June 19, the latest data available. That’s down 4.4 percent from the same period in 2019. The agency had processed 126.6 million returns, down 11.4 percent.
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COVID Cuts Accounting Profits

Two views on tax season from Texas: John Lister and Jonathan Kaplow

A shift in the wrong direction.

BUSY SEASON BAROMETER:
How accountants are battling the Coronavirus recession
Join the survey. Get the answers.

By CPA Trendlines Research

Every business in the country, if not the world, is feeling the impact of the COVID-19 pandemic. Outside of the tech sector, the impact has been largely negative. Every business is suffering. So, relatively speaking, the tax and accounting sector may be getting off easy.

MORE TRENDS in SURVEYS & RESEARCH: Seven Ways COVID Has Changed Busy SeasonGetting a Handle on COVID | COVID Crushes CPA Business Outlook |  Is the Worst Over? 63% of Small Business Say So | Beat the Covid Crisis with These 20 Steps for Your Firm and Your Clients | Clients, Revenues, Profits – Trending Down, Down, Down | Covid Crushes Rosey Forecasts | The Seven Factors Keeping Accounting Firms Afloat Amid COVID-19 | Feeling the Pain? The Biggest Job Losses by Client Sector | Tax Season Pivots to Covid Rescue Season | Planning for the Coronavirus Recession | How Accountants Are Coping with COVID-19 |

More Coronavirus coverage here

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According to the latest data from the CPA Trendlines 2020 Busy Season Barometer, about 39 percent of firms are still expecting to see an increase in business, but overall optimism seems to be dipping even as the economy begins to reboot.

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