Tax practitioners are already anticipating challenges going into the 2025 tax season with the top three being IRS communication, workload compression and boundaries around client expectations, according to an AICPA survey of approximately 2,500 respondents.
Use these anticipated challenges in your tax season preparations. Proactivity now can not only prepare you for a smoother tax season but also bolster your client relationships and enhance your workplace culture.
IRS communication: Better than before but not ideal
Communicating with the IRS and overall delayed response times have been challenges and these will likely remain pain points in the upcoming tax season. Last tax season, some practitioners waited upwards of 90 days to get a substantive response, according to an annual AICPA survey on IRS customer service. Another common complaint on IRS communication was if the customer service representative on the Practitioner Priority Service hotline answered the correction correctly without needing to transfer the call.
Improvements for the 2024 tax season were an acknowledgment from the IRS that communication and services were lacking in years prior. Compared to 2023, the IRS answered more than one million more taxpayer phone calls — totaling more than 7.6 million. The IRS is set to bolster its workforce to help ease these communication delays.
Despite the improvements, communication is a highly anticipated challenge going into next year. Additionally, we’re hopeful that the IRS will make even more electronic options available to tax professionals, but these do entail the taxpayer authorizing use with an online account and that could be a potential challenge.
Two ways to ease the compressed workload
Current filing deadlines have created a compressed workload in the first quarter of each year and this “crunch” causes stress and overwhelm. While changing filing due dates could ease the pressure, you might not want to wait on the federal government for a fix. There are steps you can take now to reimagine your tax practice and ease the stress during tax season.
What would happen if you and your staff committed to working fewer hours? The stress of tax season may have you believing this isn’t an option, but an intentional shift to change your firm’s culture could help you and your employees log fewer hours and have more fun as a result. In the “Reimagining Your Tax Practice Series,” you can lean on the guidance from two tax practitioners who successfully shifted their culture away from long working hours in this recorded webcast.
As you prepare for the 2025 tax season, now would be a great time to rethink your business model and your client base. Ask yourself some tough questions — does hourly billing truly serve your firm or would another pay structure bring more benefits? Who is your ideal client and what clientele is your practice best situated to help?
Value-based or subscription-based methodologies put more focus on quality rather than quantity and adjust pricing based on client’s needs. And it may be time to right-size your firm as you deal with ongoing constraints and challenges. Restructuring your client base around staff capacity and overall strategic goals increases both employee and client satisfaction, and the Right-Sizing Your Client Base Toolkit, created by the Whetstone Group Inc. and AICPA® & CIMA® Private Companies Practice Section (PCPS), provides valuable tools.
Boundary setting as part of time management
Boundary setting isn’t just for family members or colleagues — sometimes clients need firm boundaries, too. I’ll admit boundary setting is hard; it takes a lot of practice.
The goal is to manage your workload and clients, not to have them manage you. In the tax practitioner-client relationship, boundaries look like clearly communicating expectations, working hours, acceptable forms of communications, scope of practice and more. You can hold yourself and your clients accountable by being proactive and communicating in a clear and straightforward manner.
If you’ve clearly articulated your working relationship and expectations with your client, you can better manage the workload and last-minute problems that may arise.
Uncertainty caused by tax legislation
U.S. tax code is deeply complex, and practitioners need to be ready for legislative proposals and mid-season changes.
Provisions within the 2017 Tax Cuts and Jobs Act (TCJA) will be expiring at the end of 2025. The most significant expiring provisions include the increased standard deduction, individual income tax rates, the child tax credit, deductions for small business income, alternative minimum tax and estate taxes.
In January 2024, the House of Representatives passed the Tax Relief for American Families and Workers Act of 2024. The legislation’s intent was to provide tax relief and additional support to American families and workers through tax credits, business breaks, affordable housing allocations and more. The bill is currently with the Senate for consideration; however, because control of the Senate could change in November, the fate of this bill remains unclear.
Being proactive is the best way to mitigate the uncertainty caused by tax legislation. AICPA Tax Section resources and updates help you plan for tax changes and the sunsetting of TCJA’s provisions.
Rewards, risks and ethical considerations of AI
Although not a top challenge among tax practitioners, it’s important for artificial intelligence (AI) to be on our radars. AI has been instrumental in changing how accounting and finance professionals approach both mundane and laborious tasks.
The list of how tax practitioners are using AI is growing. AI provides a great starting point for client and IRS correspondence and can aid in creating standardized processes and procedure manuals. Bots can scan, organize and save documents. Client education resources, marketing materials, social media posts and other content can also be generated through AI.
It’s even a great tool for tax research, but it’s important to verify the answers found.
As more and more software solutions add AI and generative AI into their products, it will be important for tax practitioners to understand the risks, rewards and ethical considerations associated with using the technology.
Challenges turn to opportunities
When we overcome our profession’s challenges, we take our lessons and turn them into opportunities to help our clients. We are trusted advisors, and we pride ourselves on positioning our clients for prosperous futures.
Being a tax practitioner is challenging but very rewarding. How we respond to and mitigate these challenges can ensure that our workload remains manageable, our stress levels low and our firms are future ready.
Whether you want to learn more about the implications of AI or how to cull your client base successfully, the AICPA Tax Section has resources, toolkits and guides designed for today’s evolving tax firm. Join the AICPA Tax Section today to finish the year strong and go into the 2025 tax season confidently.