by Roman H. Kepczyk, CPA, CITP
As last year's tax season fades in your memory, don't let opportunities to improve next year’s tax season wilt away. Now is the time to re-evaluate your firm's production processes and procedures, while your memory of "the grind" is still fresh and to consider new methods that other firms have pioneered successfully. Below, we have summarized our top ten tax tips along with findings of AAA’s first tax season survey (which included responses from 74 member firms).
- Printing the complete return: Most of today’s tax applications have the capability of printing a complete return that is collated and stapled without having to "pull" diagnostics or other sheets. If you are spending ANY administrative time pulling out sheets or any review time verifying that the sheets were pulled, you should explore the capabilities of your tax application to create the final return in the proper order without these additional sheets. More than half the survey respondents have gone to printing “originals” with 38% using laser printers and 14% using digital copiers or duplicators.
- Printing digitally: While many firms are now printing the client and government copy, a small percentage of the surveyed firms are either locking down the firm copy in an electronic format or "printing" a digital copy in a PDF (portable document format) or similar format for storage on the network. This allows multiple people to access the file from their desktop rather than walking to the file room. An added benefit to these "digital" returns is that they are backed up with other network files and stored offsite.
- Deciding what to keep: While many firms still copy client supporting documents, there is a slight trend towards firms returning these documents to the client and making the client responsible for keeping this information (as outlined in the annual engagement letter). Firms that make the decision to return documents will have an easier transition to the paperless office environment, as they will not have to develop procedures to scan and archive this information with the tax return. Please note that 14% of responding firms were currently using scanners to capture client supporting documents digitally.
- Client Mining: With many tax applications now having the capability of "data mining" information within returns and to identify specific clients impacted by legislative changes, now is the time to learn to use these tools and benefit from them. Vendors are also integrating tax research with tax production, so there will be an advantage for firms having products from the same vendor. Survey respondents were split almost evenly between CCH, BNA and RIA research products. With the capabilities of these applications very similar, evaluate products that integrate directly with your tax application.
- Client communications: More clients then ever have email addresses and are communicating via this medium. Spend the summer updating your email listings and begin sharing information electronically with your clients on business issues or specific items impacting them. Train your clients now, so your people will be able to communicate more effectively next busy season.
- Analyze your organizer usage: Delivery of organizers can be an expensive undertaking, especially if addresses are not kept current. Now is the time to evaluate to what extent the firm should be utilizing organizers and to explore delivery methods to clients. Many firms have reduced the total number of organizers sent out to only those individuals that actually use them. Firms are just starting to use digital organizers, which can be efficient at both delivering the organizer to the client and importing the data into the return.
- Links to the IRS: 1/3 of survey respondents did e-filing, with the results split amongst firms. While smaller firms appeared to say e-filing added production time, the firms doing larger amounts of e-filing were more positive. Some firms filed their "no-pay" extensions electronically near the end of busy season and found it was much easier to manage the list electronically, rather than dealing with each one manually.
- Evaluate Remote Production Opportunities: Almost half of the surveyed firms were producing some returns remotely with 35% using CITRIX/Microsoft Windows Terminal Server and 15% copying the return and applications to a laptop. While laptops are convenient for a small number of users, they must be regularly updated with the tax application, giving a maintenance advantage to those firms using Citrix/WTS. As a side note, the survey found that 5 firms were either utilizing or considering an Internet-based tax application or offshore production of returns, which is a trend to watch in the future.
- Link your audit workpaper to your tax returns: 1/3 of respondents were linking their audit workpaper applications to their tax returns to import data directly into the system, improving efficiency. While the first year is always difficult, the benefits pay for themselves in the following years.
- Standardize best practices: Talk with other AAA members about "best practices" and standardize them within your firm. All such practices need to be documented and made available to firm members (through an intranet or knowledge management system) at a level that even new hires can intuitively understand. Implement these solutions through the extension season and the next tax season will be the best ever!
Spend this summer bringing together your tax and administrative personnel to discuss your firm’s bottlenecks and the alternative methods of processing above. Talk to other member firms to discuss innovative procedures and then test them during this extension season. By October 15, you should have a strong idea of what will constitute new "best practices" for the firm, which can be standardized and implemented.
Roman H. Kepczyk, CPA is president of InfoTech Partners North America, Inc. and the lead Technology Management Strategist for the firm. His primary focus is helping firms throughout North America understand what technology can do for them and directing a path towards today’s eFirm. Roman carries over 16 years of accounting firm experience, highlighted by 10 years with the CPA firm of Henry & Horne, where he was the partner in charge of the firm's Management Advisory Services and Microcomputer Consulting practices. Roman also served as the firm's Administrative partner where he oversaw Internal Accounting, Marketing, Human Resources and was responsible for the creation and implementation of the firm's technology plan and budget.