Tax Preparation: Communication and Planning
by Terrence E. Simon. Ph.D., Assistant Professor of Business Administration
Most U.S. citizens spend little time focusing on taxation during the post-tax season. Given our busy lives, that’s understandable — even the professional tax practitioners we rely on for advice can be too preoccupied with “off-season” goals to keep in touch with clients. Yet because it is during this time that tax laws can change, individuals who are unaware of important new information cannot plan to their best advantage.
Some licensed and certified tax practitioners (CPAs and EAs) and other professionals affiliated with tax preparation chains, such as H&R Block, Liberty Tax Service, and Jackson Hewitt, use the postseason to attend ethics training, seminars, and forums to satisfy Continuing Professional Education (CPE) credits requirements. Keeping abreast of tax law changes and improving one’s skills augur well for the tax preparation industry, which benefits from the competence of its practitioners.
However, not all tax practitioners engage in postseason training. In the U.S., 54% of all tax practitioners are unregulated and are not obligated to attend any training or fulfill CPE requirements. The resulting overall effect of their incompetence can harm clients, who may later be burdened with tax liabilities including penalties and interest averaging $2,500.
It is a common belief among many in the tax community that most people have one expectation of the tax preparation process: refund. But how much real planning is done by clients for the refund? When we consider the lack of postseason communication between practitioners and clients, there are few opportunities to learn about tax law changes that will impact future tax returns.
So who should take the initiative to keep lines of communication open during the postseason? The answer is: clients. They have a responsibility to take charge of their financial activities and should reach out to tax practitioners when major changes occur in their lives such as the birth of a child, marriage, the purchase of a home, and even an increase in salary. These events are likely to have major effects on the tax return of the next season. If your tax practitioner is not regularly accessible during the postseason, seriously consider changing practitioners. For tax preparation to be meaningful to clients and practitioners, there must be direct lines of communication year-round. Only then will effective tax planning be possible, allowing clients to use the advice given to their greatest benefit.
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Terrence E. Simon, Ph.D., is an assistant professor of Business in the School of Business, Technology, and Advanced Manufacturing at Goodwin University. He has 25 years of experience in management and administration in various disciplines including the airline (Guyana Airways), petroleum (Guyana Oil Company), insurance (CLICO), financial services (H &R Block), and telecommunication (Sprint, Voicestream) industries that allows him to articulate and implement policies and strategies to positively impact organizations, the society at large, and enhance the lives of individuals. He serves on several not-for-profit boards and lately, he has been spending time helping various organizations develop a vision and approach of their governance risk and compliance processes, aligning the processes with their overall goals and objectives. He is the author of “A Guide to Ethical Practices in the United States Tax Industry” and several articles. He can be reached at email@example.com.