Experts’ Opinions – Common Tax Preparation Issues Needing Addressal

 The working culture at CPA and tax accounting firms is undergoing an overhaul in light of the ongoing pandemic. Which has arisen a series of tax preparation challenges. Since these firms do not want to lose clients’ trust and, more importantly. Clients themselves, continuously hunt for effective solutions.

But before looking for the solutions available. It is essential to understand the underlying issues they face. Therefore, let’s further read experts’ opinions on everyday issues tax preparers face concerning tax filing.

 Experts’ Views on Common Tax Preparation Issues

1. Megha, KetoConncte

CPAs and business owners face a couple of problems during the tax season. These hurdles include:

Tax Season

Most of the companies are taxed on a financial year basis. So they need to file a tax return for the previous year by 31st March. This leaves significantly less time for business owners to prepare for their taxes and meet the deadline.

Keeping up with Tax Laws

Tax laws keep changing every financial year, and it becomes difficult for CPAs to keep up with the changes. These frequent changes make it difficult to file for taxes in time.

Accounting System

Some small and medium-size businesses don’t have proper accounting systems. It becomes difficult for them to manage the books of accounts and prepare accurate returns on time.

Dependency On other Professionals

Smaller companies don’t have in-house staff, and they depend on other professionals like CPA to prepare their returns. This dependency becomes a hurdle in meeting deadlines as the company can’t file its taxes without assistance from the CPA.

2. Leonard Ang, CEO of iProperty Management.com

I believe the most common issue that tax preparers face come tax time, is not filing on time. With tax laws constantly changing, it is the responsibility of the taxpayer to know when their taxes are due. This can be alleviated with early payments, and also by hiring sound professionals to do the work instead.

Another common issue involves not reporting all of your client’s income. Make sure your client is upfront about their income, especially if they invest in side-hustles such as the real estate market. Your client may not wish to divulge all of their streams of income, but in doing so, they will avoid future headaches.

3. Dmytro Serhiiev, Tax Consultant & Co-Owner at PDFLiner

In the vast majority of cases, the challenges in the course of tax filling are caused by customers. I don’t want to blame them as they are not professionals in taxation and usually make mistakes unintentionally, but that doesn’t change the truth. Here are some common examples of customer-related challenges that happen before the papers get to the IRS.

Customers fail to provide all the necessary data even though you ask them about everything. This leads to recalculations of entire tax forms.

Customers provide false information to reduce their taxes. I usually spot that as I request original documents. Disputes with such clients can be very complicated.

Stressed clients who can’t be organized enough to collaborate effectively. This is the most common challenge as so many people are extremely nervous about their taxes. Fortunately, most worried people have a heightened sense of responsibility and provide all the docs in time and the best “shape.”

Late filers. Around 2 of 5 clients forget to prepare their tax returns and other tax forms in time or forget about the filing dates at all. That’s where I have to become their caring parent. I add all such clients to my notification list and call them when it’s time to bring me all the papers.

Another common issue for a modern tax preparer

Another common issue for a modern tax preparer is the necessity to learn more than it was needed 20 years ago. The market is changing rapidly, new professions and businesses pop up here and there, and you need to keep all the nuances related to each field in your head to stay efficient enough.

It means that you not only have to spend a working day in the office preparing taxes but also read those horrible update articles on the IRS website to know all the most recent tax tricks. Who else, if not you, a tax preparer?

Finally, a huge challenge is to survive the end of the tax year. It’s when huge crowds of people start worrying about their taxes and start overloading tax preparers. I even have to hire a couple of temporary assistants to keep up the needed pace.

4. Daniela, Founder & Business Development Strategist at FindPeopleFast

• Omissions in Tax Filing

Errors in the tax returns can direct to IRS audit, liabilities, and pause in the refunds. The mistake percentage of e-filed tax returns is 0.5%, as pertained to the mistake rate of 21% for paper returns.

So, filing taxes electronically can underestimate the possibilities of mistakes. Distant from this, reading IRS instructions carefully, double-checking all the estimations, signatures, and data entered are some ways to reduce the chances of omission.

• Absence of papers

Tax season could be steady if all the essential documents expected for tax filing are ready beforehand. Keep up-regulation and keep a folder to protect all the vital documents like income-related documents, personal documents, last year’s tax return documents, etc.

Some company expenditures and charity payments are eligible for tax deductions, so protecting all these documents prepared can be beneficial to avoid the last-minute conflict.

• Safety of Taxpayer data

Tax professionals retain some of the sensitive information of the taxpayer. Conserving taxpayer information is not just a reasonable business exercise but also a law for experienced tax preparers.

Some of the ways to make sure that all the customers’ information is comfortable are developing a data security plan, being detailed about the phishing mail. And keep up to date concerning the notifications published by the IRS.

Conclusion

CPAs and tax preparers will always be in high demand. And they must find solutions to all of the issues discussed above by experts. Those who successfully meet the challenges are more likely to have an advantage over their competitors.

Among others, one of the best solutions can be outsourcing some tedious and time-consuming tax preparation tasks to a reliable, competent firm offering efficient tax solutions.

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