We just completed our last seminar on the new tax code yesterday. A full day of review of the code and its implications and challenges. We have taken multiple seminars all year in an effort to become familiar with the massive overhaul of the tax code as we have known it. The tax software companies and the companies that provide our research and reference materials have also worked all year long to adjust their programs and their libraries to provide the tools we need to process 2018 tax returns and be as accurate as we can. Unfortunately, some things are still in flux and we had new legislation as recently as last Friday.
A couple of things to note:
- The presenter yesterday, who uses the same tax software as I do, indicated that returns he had worked with so far still had inaccuracies in the final results, so the tax software is still not completely finalized.
- He suggested that return preparers wait until about a month after the shutdown ends in order to wait for what will most likely be technical adjustments that the government will make to aspects of the code that are in conflict with regulations written which drive our implementation of the new code.
- Some aspects of the new code are complicated enough that the implementation of them is very difficult and it may take some time before we are confident that our software is handling them correctly. This is primarily around the Section 199A Business Deduction that is new this year and very complicated legislation.
- So many other small pieces of the code changed that we cannot rely on our old knowledge of the code and many deductions that seem uncomplicated will still require additional time and research to ensure that we have accounted for all the very small changes to deductions and limitations the new code has changed.
- Keep in mind that there is New Tax Code, which is basically the intent. There is then Tax Code Regulations that specify how the tax code is implemented ( these are sometimes in conflict) then there are Revenue Procedures, Notices, Private Letter Rulings that provide additional guidance on particular aspects of the code. It is layers of the what, the how to, the adjustments, etc. This is then all translated into Research Materials that professionals use to help us understand and comply with it all.
We are working very hard to ensure that we can provide accurate and complete returns, but this year is more challenging than any other year I have experienced in 26 years of preparing tax returns. It will require patience and understanding on everyone’s part.
What this means to you: Our strategy will be to continue to prepare returns and get them to a stage where we think they are finalized. We will then let you know as we have in the past that your return is finalized and send the invoice for the preparation fee. We will not transmit the returns until some time later once we get some assurance that the software will not be altered requiring us to amend returns already submitted. This will, of course, delay some returns and for those of you getting a refund, delay the processing of that refund. It is the only strategy that we think makes sense as amending returns takes additional time and effort on both our parts and we do not want to incur additional fees to amend returns due to something outside of our control. Amended returns often times cannot be electronically filed and when paper filed, take months for the IRS to process.
We still need you to get your tax documents to us as early as possible as we cannot complete everyone’s returns in the last few weeks before the April 15ht deadline.
We are working diligently to provide the best possible service and client experience. However, our hands are tied when we are reliant on technology and resources that are not as current and accurate as possible. It is more complicated stuff than TurboTax would indicate, especially for our clients who usually have more complicated situations than TurboTax is appropriate for.
Thank you in advance for your patience, understanding and cooperation. We will keep you updated as the landscape of Tax Season of year 2018 progresses.