If you are searching for a tax professional and have yet to find one, you really, really need to get that into high gear. As of today, we’re telling anyone inquiring that you will be put on a waiting list. Based on talks I’ve had with other tax professionals, few have space for many (if any) additional clients.
There are two main reasons this has occurred. First, the average age of tax professionals is in the 50s. Many tax professionals retired when the pandemic hit. Tax and accounting are not glamorous fields, and not enough individuals are getting into this profession.
Additionally, each year it takes longer and longer to prepare a tax return. This isn’t just the Tax Code getting more complex; it’s also the regulations that tax professionals must comply with. Let me give two examples. Every time we efile a return to the IRS we are required to note the Submission Identification Number (SID) generated by the IRS on either the signature document, or we can note it separately with the signature document. We print this as a pdf from each return and save it in our paperless system with each return. This takes about 90 seconds–not a big deal. But if you multiply this by 1000 returns, that’s 1500 minutes or 25 hours of work–more than three days I’m paying someone for “make-work.” The SIDs are always maintained in the software we use, but the IRS regulation is very specific on what tax professionals must do so there is no choice.
Another regulation we deal with are the required interviews for the Earned Income Credit (EIC), Child Tax Credit/Additional Child Tax Credit, American Opportunity Tax Credit, and Head of Household status. We don’t have many clients who take the EIC, but we have plenty of clients who have children and qualify for these other credits. We’re required to do a brief interview where we talk to the client and note the client’s responses. Most of these interviews take less than five minutes–for the CTC, the average is around three minutes. With about 600 of these interviews, that equates to 1800 minutes (30 hours). Who pays for this? Anyone who hires a tax professional does.
Those were just two of the many regulations we have to deal with. Then we get into the Tax Code, and dealing with Congress’s “simplifications.” Maybe some session of Congress will see the Tax Code simplified, but I have my doubts.
What does this all mean? First, the number of returns a tax professional can prepare decreases each year. It should be the other way; after all, if I’m experienced I can work faster, right? But it’s not: complexity and regulations just eat into the time. Second, I value my employees and I don’t want them to burn out. We (a) moved our deadlines earlier for the 2023 Tax Season and (b) are making sure that our staff gets one day off per week even in the height of Tax Season. Third, while I want to hire an additional tax professional, I have been unable to find quality candidates. Meanwhile, demand for tax professionals in our specialty areas is increasing.
What happens when supply decreases and demand increases? Price goes up–significantly. That’s the case for us and (as best as I can tell) the entire tax professional community. If you need a tax professional, be aware of the issues we face and if you have a good one, treat him or her well.
Tags: 2023.Tax.Season