The IRS reports a 30% increase in tax extensions over the past five years, with 19 million taxpayers filing for automatic extensions this year. This trend, driven by later-arriving tax forms and increased public awareness of extension options, is reshaping our profession (and driving us all nuts).
The October rush presents unique challenges. Unlike the April season, we often find ourselves unprepared for the autumn workload. Staff may resist spring-like hours in fall, and cash flow can suffer if we only bill after completing extended returns. Moreover, the shortage of qualified tax preparers often forces us to extend returns even when we have all the necessary information and suffering through the final push can be exhausting.
To navigate these challenges, we need to adapt our strategies. Jean-Luc Bourdon, CPA at Lucent Wealth Planning, advises reminding clients that while October 15 is the IRS deadline, their target should be "as soon as possible." This approach can help manage the workflow more effectively. In our practice we have found that even more structure is necessary to keep clients (and staff) on track. Timely filing is only guaranteed when all documents are to our office 4-weeks ahead of any deadline.
Increasing communication with clients during leading up to this period is crucial. Automating reminders can be helpful. Another proactive strategy is making sure clients have detailed lists of what it is that they need to provide. To do lists and organizers are a critical tool to make sure that going back and forth isn’t what prevents you from hitting deadlines.
Morris Armstrong, an Enrolled Agent, shares his streamlined approach: a robust engagement letter, a comprehensive organizer, and thorough client interviews. Consider implementing hard deadlines for the next tax season to better manage workflow. The 4-week or 30-days of advance documentation is becoming common practice among most first. You can also aid firm workflow by requiring at least a 50% deposit from clients before filing an extension.
The increase in extended returns and challenges with firm resources and staffing shortages can put smaller practices in a precarious position when leading up to a tax deadline. Adjusting strategies even slightly and looking at how and when we communicate can help create big shifts in our workflow to manage both stress and expectations.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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