2022 Tax Season: The Tax Season From Hell (Part 3)

This is, perhaps, the most painful post I’ve ever written for this blog.  Why?  I’m going to go over everything our firm got wrong with this past Tax Season.  As the saying goes (Murphy’s Law), what can go wrong will go wrong and, boy, was that the case this year!

When the 2021 Tax Season ended (2020 tax returns prepared in 2021), we added an additional tax professional.  We believed that would give us additional capacity for the expected growth for the 2022 Tax Season.  Otherwise, we expected 2022 to be a repeat of 2021.  However, that simply wasn’t the case.

1. We didn’t budget for returns taking 10% more time than last year (on average).  For whatever reason, we found that the amount of time we had to spend working an average return increased by that 10%.  Let’s say you spend 60 minutes (one hour) on a return; that would mean an extra six minutes.  That’s not much…but multiply that by 1,000 returns and you have 6,000 minutes or an additional 100 hours.  We didn’t budget for that (and didn’t see this coming).  This won’t be the first time I mention that while inflation is surely impacting our pocketbooks, there’s been no inflation in the length of a day.

2. Mr. Murphy struck on the illness front. When I wrote Part 1 in April, only one of our employees had gotten Covid.  By October, every employee had gotten Covid.  (Interestingly, no one caught it in the office.  Our office was built in the 1980’s and doesn’t have the best ventilation; one would think Covid would spread easily from employee to employee but that didn’t happen.)  That took each employee out of the office for at least one week (in my case, two weeks).  Additionally, last year’s flu shot was abysmal in preventing the flu (a reported 16% efficacy).  All but one of us got the flu, too (amazingly, no one caught it from anyone at the office–maybe the office’s ventilation is better than I thought).

3. Personal and legal obligations kept me away from the business for several weeks.  I had a family issue arise in January that kept me away from the office for almost the entire month.  While Scott (my business partner) and everyone else pitched in during my absence, it put me behind.  That’s a bad way to start a tax season.  I was then unlucky enough to have to deal with a legal issue which kept me out of the office for a couple more weeks.

4. We dealt with two day-long power failures and two air conditioning failures.  In Las Vegas, you simply cannot work in an office in the summer if there’s no air conditioning.  Twice, the power was out for several hours and we closed.  Twice, the air conditioning failed. (We do have a service contract that specifies same-day repairs, and the company we used was very efficient in fixing the issues).  Still, that’s another week lost from preparing returns.

5. The first four items highlight that we didn’t have enough resiliency built into our planning.  Consider an office of 100 tax professionals where one individual is ill.  The other 99 can pick up the slack fairly easily.  Now consider an office with five individuals with one out for an extended period; it’s far more difficult for the other four to effectively handle the increased workload.

6. We upgraded our internal paperless system and it didn’t work. We’ve used the same paperless system for more than a decade, and at the end of 2020 we “upgraded” to the new, improved version.  Unfortunately, new and improved wasn’t the reality.  It was slower and simply didn’t work.  We downgraded back to the old, unimproved version (which we’re still on).  The new version looked better but we’re far more concerned with quick retrieval of .pdf files, not the fact that the new system uses the cloud.

7. We discovered our systems were not robust enough to handle our growth.  We discovered multiple failure points during the 2022 Tax Season relating to our internal systems and how returns flowed in our office.  Most of these issues related to computer systems we use and were caused by using three different systems (excluding our tax software) for running the back-end of our office.

In many ways it was for us a perfect storm of issues.  It resulted in poor communication to our clients (which is unacceptable to us) and poor performance by us (mainly in timely preparing returns).

So what are we going to do about this?  That’s in Part 4 of this series coming next week.  For now, I’ll quote Lewis Mumford who stated, “The Chinese symbol for crisis is composed of two elements: one signifies danger and the other opportunity.” [1]  We’re looking at this as an opportunity for the 2023 Tax Season.

[1] I don’t speak or read Chinese, but I heard from a friend of mine that the Chinese symbol for crisis is actually not composed of an element meaning “opportunity;” instead, the second element means “change point.”  Whether it’s a change point or an opportunity isn’t relevant: for us, it’s going to be both.


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