Always another deadline: Preparers share their pre-October priorities

Normal plans for this time of year might have been thrown by a (second) tax season like no other, but the priorities before fall still wait for no firm. With the October deadline for extended returns looming, practitioners are wondering how best to fill the time between now and the infamous second season.

“First I want a vacation,” said Terri Ryman, an Enrolled Agent at Southwest Tax & Accounting, in Elkhart, Kansas. “Of course, I must get the extensions done.”

Ryman’s original list of 52 extended returns to complete has grown to 66.

“Job security,” she added. “And three new clients have come in after the deadline.”

Other priorities before mid-October?

“Making sure tax preparers are currently reporting the tax strategies we implemented for 2020,” said Bruce Primeau, a CPA and president at Summit Wealth Advocates, in Prior Lake, Minnesota. “For example, reporting back-door Roth IRA conversions or the buy and hold of company incentive stock options.”

“Professionally, preparing gift tax returns is a top priority this summer,” said Jonathan Curry-Edwards, a CPA and principal of the Private Client Tax Services Team at Friedman LLP in New York. “During 2020, we advised clients on making gifts to utilize their remaining lifetime exemptions before year-end. This resulted in an increase in gift tax returns that need to be filed compared to the prior year.

“I’m looking forward to taking time off, seeing family and friends in person,” Curry-Edwards added. “We’ve worked through two extended tax seasons during the pandemic, and that can lead to burnout and fatigue.”

More than historians

It is, of course, yet another seismic year in tax change — and with no change to that pattern in sight for the future. David Levi, a CPA and Minneapolis-based senior managing director at CBIZ MHM, sees one priority as being able to work with clients on 2020, 2021 and future tax matters “given the uncertainty of future tax legislation,” he said.

Big issues are sure to include decisions on whether and when to sell assets because of possible changes in capital gains rates, potential changes in the gain recognition rules related to assets held at death, and the possible end of certain tax-free distributions of appreciated assets from partnerships and trusts.

“We want to work with our clients as advisors and counselors, not just as historians,” Levi said. “We’re in a period where nobody really knows where tax policy will end up, nor do we know effective dates of possibly significant changes. We need to be in touch with our clients and their other advisors on income and estate tax matters, being prepared to act on a moment’s notice.”

“Given the many tax law changes being proposed by the Biden administration, it will be helpful to focus on completing the 2020 pass-through business and individual income tax returns for clients as soon as possible,” added James McGrory, a CPA and shareholder at Drucker & Scaccetti in Philadelphia. “This will not only help to provide a baseline to compute 2021 estimated tax payments … but it will also help to keep a client’s tax situation front of mind.”

To-do list

The American Institute of CPAs offers a number of productive between-deadline housekeeping tasks:

• Purge files based on your document-retention policy, to cut the clutter and clean your desk. (Consult your professional liability insurer or legal counsel about document retention.)
• Digitize more files to improve flexibility and build on work lessons learned over the past year of work-from-home.
• Review your firm’s data security plans. Consider this AICPA template as a guide.
• If you haven’t recently performed a checkup on your IRS identification numbers, now’s a good time. Safeguard and monitor your PTIN, EFIN and CAF number.
• Track returns filed through your daily e-file acknowledgments. It can be a red flag if you receive more acknowledgments than returns filed. The IRS posts the number of returns filed with an EFIN weekly.
• Review your professional liability and cyber-liability plans.

Even this year, some tax preparers keep their perspective.
“Getting as many extended personal, business and fiduciary returns filed as soon as possible, getting information for clients to fill out and file their Paycheck Protection Program forgiveness docs, the usual bookkeeping review and payroll for clients,” said Brian Stoner, a CPA in Burbank, California. “In other words, the usual.”