Planning for the accessible tax division is an important footfall in managing the able accountability accident associated with accouterment tax services. The afterward pre-tax division annual provides several suggestions firms should accede in planning for this work.
What to do now
Help audience prepare
Inform audience of cogent changes in tax law such as the Tax Cuts and Jobs Act (“Tax Reform”) and the South Dakota v. Wayfair, Inc. et. al. (Wayfair) Supreme Court accommodation through applicant newsletters. Need advice accepting started? The AICPA has created sample applicant belletrist accompanying to these topics. Retain a administration annual of such communications, including the dates transmitted, in acclimation to certificate that the applicant was abreast of these changes.
Alert audience about added filing obligations such as Financial Crimes Enforcement Network (“FinCEN”) Anatomy 114, Report of Adopted Bank and Financial Accounts (“FBAR”), accompaniment and bounded assets tax returns, and the after-effects of non-compliance.
Ask audience to agenda accessories to altercate items affecting their 2018 acknowledgment above-mentioned to year-end. If a tax bump will be able or tax consulting will be performed, admission a abstracted active assurance letter for these added services. Sample tax planning and tax consulting assurance belletrist are accessible to policyholders in the Policyholder Resource Center. Be specific about the ambit of services. For example, “assess assets tax aspects of alteration from an S association to a C association in ablaze of Tax Reform” is bigger to “explore Tax Reform’s appulse on the business.”
Contact audience who accept historically procrastinated accouterment their tax acknowledgment advice and accede accouterment incentives to them for aboriginal submission. Ideas on how to incentivize audience can be activate in the commodity The Aboriginal CPA Gets the Acknowledgment (Done on Time). In addition, accommodate these audience with borderline dates by which all advice allegation be received. If advice is not accustomed by the appointed date, accede absolute the applicant relationship. Not abiding if it is time to terminate? Apprehend the commodity Booty a Hike: Ending Applicant Relationships for added items to consider.If your audience accept not already addressed the proposed regulations that afflicted the affiliation analysis rules for affiliation tax years alpha afterwards December 31, 2017, admonish them to do so. Audience should argue with their attorneys about alteration affiliation and bound accountability aggregation agreements in acclimation to abode these changes. AICPA Tax Section associates may advance the Letter to Admonish Audience on Affiliation Analysis Changes as a starting point. Items that clients, with the abetment of their attorneys, should abode in a revised affiliation acceding accommodate but are not bound to:
o Who will be appointed as the affiliation representative,
o Whether the IRS may aggregate any added tax, interest, and penalties anon from the affiliation at the accomplished alone tax amount or to booty any adjustments into annual from the ally in the advised year,
o For acceptable partnerships, whether or not to accept out of the new affiliation analysis regime,
o Who should accomplish decisions accompanying to new elections that will be available, the affiliation adumbrative or addition appointed individual, and
o Which new tax acceding and concepts may crave acclimation to affiliation operating agreements.
Prepare the close
Research accompaniment law apropos allotment requirements for the close and tax acknowledgment preparers. Allotment and licensing requirements alter by accompaniment and some states allegation allotment fees. Renew or annals with the states that accept allotment requirements.
Renew absolute preparer tax identification numbers and annals new tax acknowledgment preparers with the IRS. Any close affiliate who will adapt all or essentially all of a federal tax acknowledgment allegation be registered, behindhand of whether or not the affiliate signs the acknowledgment as the preparer.
Update the firm’s tax affection control, and behavior and procedures manuals. If you do not accept a tax affection ascendancy manual, accede creating one to accommodate advice whenever tax casework are provided. CNA policyholders accept admission to the AICPA Tax Convenance Affection Ascendancy Guide in the Policyholder Resource Center.
Review the firm’s controls pertaining to arcane applicant information. Emphasize that close behavior apropos administration and use of applicant advice should not be bypassed due to tax deadlines. Accede afterlight your behavior for new risks. Not abiding area to start? Controlling Your Abstracts and IRS Publication 4557, Safeguarding Taxpayer Data: A Guide for Your Business are acceptable resources.
Review the firm’s planned acknowledgment to a abstracts aegis incident, including its cyber accountability allowance coverage. For tips on how to acknowledge if a abstracts aegis adventure occurs, apprehend A Breach of Applicant Data: Risks to CPA Firms.
Review tax acknowledgment aggregate from the above-mentioned division and staffing requirements for the accessible season. Be active for bottlenecks that may arise, such as too abounding agents and an bereft cardinal of reviewers. Explore appliance abstracts browse software back planning staffing requirements.
Initiate acquaintance with absolute contractors who assisted aftermost tax season, actuate their availability, and ability an acceding apropos such issues as hours and fees. Actuate if added acting agents will be appropriate and admit a hiring search. Perform due action afore hiring new absolute contractors or acting staff. For guidance, apprehend the commodity Due Action with CPA Close Subcontractors. Accede applicative AICPA belief interpretations and Treasury regulations.
Review tax organizers to ensure that they absolutely abode recent, circuitous areas of law, and advertisement requirements, such as:
o Tax Reform
o Filing obligations accompanying to adopted activity, including the FBAR and the Adopted Annual Tax Acquiescence Act (“FATCA”), and
o The administration economy, including assets from home rentals, active services, or added peer-to-peer services. If you are not abreast with the tax implications of the administration economy, apprehend Short Term Rentals, The Administration Abridgement and Tax.
If organizers do not abundantly abode such issues, accede addition them with added questions or accurately acclamation them in accurate conversations with clients.
Help agents prepare
Provide a training plan for agents and absolute contractors, apperception on changes in local, state, and federal tax laws, including Tax Reform and those accompanying to new and expiring tax provisions. Accommodate a timeline for completion. Accede abstracted training advance for staff, managers, and partners, whose responsibilities apropos tax acknowledgment alertness may differ.
Train all close associates on the accent of attention applicant data, both concrete and electronic, at all times, and abnormally during this active time of the year. Apprehend The Armor of Awareness to apprentice what anniversary being at the close can do to assure applicant data.
Review library assets and training abstracts and ensure that abreast assets are accessible to staff. Verify that agents has admission to cyberbanking accoutrement and databases acclimated as advertence materials.
Revise procedures based aloft aftermost year’s column tax-season authoritativeness affair to advance accepted year processes for managing tax acknowledgment preparation.
Remind the tax administration to alter assurance belletrist for changes in scope. For a refresher on how ambit edge can be adverse to the firm, apprehend Don’t Let Ambit Edge Lead You Out of Bounds.
Review e-file requirements and processes
Research binding e-filing requirements for federal and accompaniment tax returns. Preparers who book 11 or added U.S. alone or assurance allotment are appropriate to use e-file.
Review the advice currently on book with the Internal Revenue Service (“IRS”) acceding the close as an IRS e-file provider, or annals as an e-file provider with the IRS. If advice on book with the IRS has afflicted in the accomplished year, amend it or reapply as a new e-filer.
Train able and authoritative agents on close e-filing processes. Submit completed allotment electronically alone aloft cancellation of both the active e-file allotment forms and an e-mail acknowledging analysis and approval of abstract allotment from the client. Retain the e-mail acknowledging the client’s approval of the acknowledgment in the workpaper book and the e-file allotment anatomy in an authoritative file. Back filing electronically, save acknowledgments from the IRS or added tax authorities advertence acknowledgment acceptance, not aloof receipt, for the appropriate three years.
Inform audience both in the applicant assurance letter and awning letter beatific with the tax organizer that allotment will be filed electronically, and that audience will be appropriate to analysis and accept abstract allotment above-mentioned to such filing. Active copies of e-file signature authorizations, e.g., Anatomy 8879, IRS e-file Signature Allotment and agnate accompaniment forms, allegation be accustomed afore tax allotment may be filed electronically. Both spouses allegation assurance the assurance letter and e-file allotment anatomy if a collective assets tax acknowledgment is filed.
Obtain a active Anatomy 8878, IRS e-file Signature Allotment for Anatomy 4868 or Anatomy 2350 or agnate accompaniment form, above-mentioned to filing an appliance for an addendum of time to file.
Update assurance letter processes
Review assurance belletrist acclimated in the above-mentioned year and update, as needed. Sources of sample assurance belletrist accommodate your able accountability insurer, the American Institute of Certified Public Accountants (“AICPA”), and paid providers. CNA’s sample assurance belletrist are accessible to policyholders in the Policyholder Resource Center.
Emphasize assurance letter accepting for all tax services, including tax planning, tax consulting and tax analysis representation services. In 2017, about 43% of the tax claims in the AICPA Able Accountability Allowance Program reflected a abortion to advance an assurance letter. While CPAs may be active about accepting assurance belletrist for acquiescence services, acquaintance demonstrates they are beneath careful back accouterment aerial accident tax casework such as analysis representation, planning and consulting services. A distinct assurance letter may not answer for a applicant that engages the CPA close for assorted services.
Review close action on arising assurance letters. While accepting active assurance belletrist is consistently the adopted accident ascendancy practice, unilateral assurance belletrist beatific with tax organizers may be added applied for low accident alone tax acknowledgment alertness engagements. A unilateral assurance letter requires signature alone by the CPA firm. The applicant indicates its accepting with the firm’s acceding and altitude by abiding the organizer and accouterment added tax advice to the CPA firm. A sample unilateral assurance letter is included in the Policyholder Resource Center.
Inform audience that the close will not activate advancing tax allotment until the accommodation fee is paid, if requested, and a active assurance letter is received, or in those cases area a unilateral assurance letter is sent, the completed and active tax organizer is received.
Review applicant accepting and constancy procedures
Review the firm’s applicant annual from the above-mentioned tax season. Accede absolute the firm’s able accord with unprofitable, aerial accident and “problem” clients, such as those who do not accommodate advice in a appropriate manner. The article, Clients: Knowing Back to Walk Away identifies added factors to accede back chief whether or not to abide a applicant relationship. If you’re still not sure, apprehend Booty a Hike: Ending Applicant Relationships for added considerations. If the accommodation is fabricated to abolish the client, Applicant Abortion Belletrist explains the accent of accounting abortion belletrist and what to accommodate in such a letter.
Identify aerial accident clients, such as audience creating a abeyant battle of absorption for the firm. Analysis the accessories Managing Conflicts of Absorption and Considerations in Avoiding Becoming a Casualty in the Divorce Wars. Need more? Watch the webinar Stuck in the Middle: Avoiding Conflicts of Absorption for added suggestions. Establish protocols to abode abeyant conflicts of absorption that appear during tax season.
Update the firm’s applicant accepting annual and conduct due action on -to-be clients, such as inquiring why they are alteration accountants and administering an internet chase on the prospect. Request the prospect’s accord to acquaintance the antecedent accountant. Accede accepting a accommodation fee from all clients, or, at a minimum, new and commonly slow-paying clients, as a action of engagement. Our article, Is This Applicant the Right Fit for Your Firm? includes added belief to accede in acclimation the risks and rewards of continuing a accord with an absolute applicant or accepting an assurance with a -to-be client.
Stay tuned, abutting ages we will be accouterment advice on what can be done during tax division to prepare!
Deb Rood is a accident ascendancy consulting administrator with CNA Allowance in Chicago.