Art of Accounting: Easing tax season workload compression | Edward Mendlowitz, Accounting Today

Last week I conducted a breakfast meeting of the Withum Partners’ Network and I was asked a question that was not answered, so I’ll answer it in this column.

Before I start, this meeting used a format I had never employed before. It was a “show and tell” roundtable in which each participant would raise practice management issues they had and would also share best practices they use successfully. The two hours seemed to fly by and everyone seemed to leave with ideas they could immediately implement. I know I did.

A question raised early on is why tax season is always so busy that it necessitates everyone work humongous hours almost three months a year. Here is some of what I should have said:

• As long as you want to prepare tax returns, there will be workload compression. It’s a reality, so let’s figure out how to deal with it as well as possible.

• Dropping clients will ease the pressure, but many small practices generate up to 40 percent of their income from tax season, so I don’t think dropping clients is a good strategy.

• Based on the type of practice, smaller individual tax returns might not fall within your model or future plans. These returns can be sold to generate some cash while reducing the workload, but this too is not a strategy most can do or would want to do.

• Hire temporary or per diem people and paid interns to reduce the pressure on your permanent staff. This can be successful if you have a reasonable training method and organized system.

• I do not believe filing extensions is a viable strategy, so I don’t recommend that.

• Maximize the use of technology—use smart scanners, workflow software, client portals and video calls and become a paperless office. Each of these, and others, will reduce staff time, make client contact more efficient and effective, and in some cases elevate the performance level of staff.

• Outsource return preparation to other firms or to offshore preparation organizations.

• Smarter scheduling of return preparation, coordination with reviewers, and the timing of clients submitting their tax information with preparer availability.

• Do not start work on a return until you are sure all the information has been provided.

• Work on new and complicated matters before tax season starts—try to work on these issues and have them reviewed when they come to your attention. This requires being in contact with your clients before the end of the year and not waiting until the information shows up with the regular tax data. Examples are alimony payments, sale of a residence or vacation home, inheritance of stocks that were then sold, or real estate where there will be a step up in basis.

• Push down some of the reviewers’ work to lower-level preparers. This will reduce bottlenecks at the reviewer level, elevate the performance of preparers and permit a smoother flow within the office.

• Better and more deliberate training of staff. I know, everyone says to do this, but it works. The problem is that too many accountants are too busy doing the work to take the time to train. Pretty stupid!

• Closer supervision. It can’t take more than a half hour a day to walk through your office three or four times. I always did that, and even if I didn’t notice a lack of movement the first or second trip through the office, I finally noticed it and was able to get the person unstuck. This was an issue raised at the breakfast, and I was surprised how many left their staff on their own for long periods and then were disappointed with the results. This is called MBWA (management by walking around). This also includes touching base with virtual staff.

• I said better training, but you also need to adopt a culture that doesn’t tolerate errors. Reducing errors can save five or six hours a week per person. Five hours a week for a 10-week tax season is like adding a person for one full week for each person working for you. This is not a problem solver, but it certainly will reduce pressure

• Part of your training must be to have the person who makes an error fix it themselves. Otherwise the error remains embedded in the skull of the person who made the error forever.

• Pay for the previous week’s overtime in the next paycheck. This won’t reduce the workload, but it will definitely make overtime more satisfying for the staff. It also will create an ally of their spouse or partner instead of a complainer about their work conditions. Money talks! A post-tax season “bonus” doesn’t do it.

• Tax season hours should not be imposed until there is tax return work that needs to be done. Do not use “tax season” as an excuse to have staff work on regular assignments late or on a weekend.

• For firms that have extensive non-tax season work, days should be scheduled in which only tax returns are worked on, and reviewers should be available to work on those person’s returns as completed.

• There are many advantages of tax season. These should be played up and a culture of excitement should replace one of drudgery.

I have many more suggestions, some of which are included in my annual tax season checklists, but the above represents the first time many of these suggestions are posted in one place.

It is what it is, and we need to do the best we can. From what I’ve seen, we can all do better.

It might seem the timing of this column is not right for this information, but now would be the time to start planning your tax season,