Imagine that you run a local diner. In the past, you’ve had busy times such as the lunch rush or dinner rush where it’s overwhelming, but the busy times come and go and most of the time it’s just “running a diner.”
You serve diner food to patrons who expect diner food at local-hole-in-the-wall prices and who like when the owner stops by each table to shoot the breeze.
Now imagine that the food-service industry has changed. Government regulations have made it so food and dietary standards change … not just once in a while but almost every day.
Most of the government pronouncements are confusing and sometimes contradictory. But you can tell, you need to be serving gourmet meals to your customers, not diner food.
Here’s the problem:
- Your diner is set up to churn out greasy-spoon food to customers. You’re not set up to provide gourmet meals.
- Your customers are concerned about their health and so they don’t really want greasy-spoon food anymore. That’s what they say in surveys anyway — but the reality of what they “want” is actually convoluted.
The Field is Broken — The Tax Pro Side
Most of us tax pros are set up on volume. Get ‘em in, get ‘em out, get paid.
We’re not set up to give “advice” to anyone during this process, nor are we really set up to do a lot of intensive research into anything either. We need volume in order to survive, and that means “churn them out.”
Yet with the complexity and constant changes in tax law, we can’t just churn them out anymore. Even on “simple” returns, there are many different things that I need to think about and verify and look up, and “oh what about this” and “what about that” and “is that box checked?”.
This causes me to expend massive amounts of brainpower on everything.
This in turn means there’s only so much I can do in one day before my brain can’t take it anymore.
This in turn causes workflow to slow to a crawl, which means it takes far longer than I would like to get a person’s tax return done, which in turn causes clients to get mad, and I get mad too because they don’t seem to understand.
The Field is Broken — The Client Side
Some clients want the gourmet meal, yet they want the greasy-spoon price.
Others think the owner of the diner is just whining when he talks about this. They’re paying for a service; it’s not their problem how hard it is to provide the service. The tax pro is a service provider, so the pro needs figure out how to provide the service. (NOTE: I actually agree 100% with this take, it’s just that the “figure it out” part is hazy.)
All of this leads to:
Advisory Services
To try and fix this and make life better for both my clients and me, I am looking at adding advisory services — something higher-level than just preparing the return. So people would pay for the tax return but also pay more for me to give them advice and properly plan throughout the year. I sent out a survey a few weeks ago to my business clients, asking them questions about this.
Considering that national surveys continually show a large number of people slamming their accountant for “not providing advice” (usually the number is 60% on the low side to upwards of 90% on the high side), I was shocked when 2/3rds of the responses to my survey were lukewarm to the idea.
Which Leads Back To:
The field is broken. Tax pros can’t operate on volume anymore, it’s simply not effective … yet most of us do operate on volume.
We need to give advice … but we’re not getting paid for it nor are we set up to do this effectively anyway.
Clients claim to want advice … yet they contradict that continuously with actions that show they really just want the return done and they don’t want to pay extra for proactive advice (but no doubt they’ll take the advice if it’s free).
It’s a broken industry and it’s hard to know where us small operators fit in.
Just Hire Staff
This stuff is so hard anymore .. and it’s not a matter of “hire more staff” because it’s not really the administrative or clerical side that’s the problem; it’s the brainpower involved on EVERY RETURN to make sure I’ve thought of all angles. That’s not something I can just hire seasonal staff for. I really need another professional — a licensed staff person — the problem is, no reputable pro will take a job that’s just a seasonal position, and I can’t afford to hire someone like that full-time.
This is why, in the broken state of the tax field, I think it’s a big-firm game anymore. And I’m not sure where that leaves me or any other solo operator. We care about our clients but it’s getting really hard to properly serve them.
Losing Good People
I have three friends who were all solo operators just like me, who got tired of the insane hours of tax season, the ever-rising risk, and the zillion little things we must think about on every return — all while getting paid tax-preparation prices (which in Iowa are among the lowest in the nation). All three have left the field in the last 2 years.
One of my friends was an enrolled agent with over 25 years of experience. He served in the military and then immediately got into taxes. He built up a practice with over 400 clients. He had two employees and owned a building.
And in 2019, he snapped, for the same reasons I have laid out here. He filed extensions for everyone, gave them their stuff back, let go of his staff and put his building up for sale. And this was in the middle of the season!
He gave the middle finger to the entire field and and flushed away a life’s worth of work.
He didn’t put his business up for sale; he just walked away entirely because he couldn’t take it anymore.
He now works for … the railroad as a maintenance man.
And he tells me he’s finally happy with life.
Be Kind to Us
So the next time you find yourself wanting to slam your accountant for being slow, or not answering your questions or not returning your call or your email or “not communicating with you” (three clients have complained to me recently about me not “communicating with them them as April 15th came and went”), I just want you to stop for just a minute and think about that last story.
This guy is about 10 years ahead of me. His spent his ENTIRE ADULT LIFE building a tax practice. He cared for his clients and wanted what was best for them.
And this guy walked away in the middle of a season because he couldn’t take it anymore and he now works in something totally unrelated to taxes — and he’s actually HAPPY now.
That is what this field does to us solo operators. His story is not isolated — I have two other friends who have walked away in similar fashion, but with a little less drama and much-smaller practices. On social media I see dozens of solo preparers saying this is the worst tax season ever (it is — but this has been true of every season since 2017 or 2018!) and how they’re getting out. Other older preparers have told me they’re biding their time til they can retire and get out in a few years, and their countdown is on.
Be kind to us. I know it’s annoying when we don’t reply to your email, or return your call, or answer all the questions you have in a timely manner.
But remember: it’s not because we don’t care about you. In fact, we care very much about you (and you are probably getting far more from us FOR FREE than you give us credit for).
It’s because the industry — for us solo operators anyway — is broken.
Jason – I appreciate your post as I have been thinking the exact same thing. I am a sole practitioner in Indiana and I am trying to find a solution to the stress.
There have been a number of returns with what seem to be simple 1040s, end up taking hours. I just met with a client this morning that under the advise of a financial advisor took money out of a IRA with the intent to convert to a Roth IRA. We are able to offset the additional income as the taxpayer is paying for his mother’s in home medical care. Great, taxes are saved!! However, the IRA distribution is part of MAGI for social security Medicare premiums, so that is going to go up. Additionally, the extra income prevents the taxpayer from claiming any credits for their son’s tuition. Now I spend brain power thinking of solutions. Can we spread the IRA distribution over three years if it was rolled into a Roth? Can we make a health savings account contribution to reduce AGI (no they are on Medicare). Just running through the scenarios is exhausting.
Another point is the perception that we have a direct relationship with the IRS and the clients refund. I have had 10% of the clients call asking where their refund is and want me to do something about it. Typically you get one or two and you bite the bullet and wait on the phone to help push the returns along, but you can’t for 20 to 30 people. How much can we charge clients to “check” on refunds and stimulus checks? But clients will perceive it as poor client service if we don’t.
I had a client question a bill because it went up significantly. As a percentage, increasing from $375 to $475 is a 26% increase in fee, but is about 42 minutes of time. I spent an extra 42 minutes on your return. His response was that he had that all before. Well, we probably undercharged along the way, as one extra statement isn’t call for an increase, but another one slides by and then another one, and then add a small farm with one income number and one expense that shouldn’t cost anything extra. Once you evaluate it, a long time client has accumulated a lot of work without much of a price increase over the years. My best explanation was that while you have had things like health savings accounts and market place insurance, the IRS has added complexity to those forms and calculations. It is taking longer to prepare returns with the same information, which is true.
Additionally our cost are going up. The cost of tax software, the need for portals and electronic signatures, information security are all cost of doing business. Clients like these conveniences they get from other services and they are all great features, but they cost money.
Again, thank you for sharing your story and confirming we aren’t in this alone.
Josh – I apologize for being 2 months late responding to your comment. That shows how the tax season went I guess…. I agree with you about just running scenarios is exhausting. My mind is mentally shot. I have a record number of returns on extension now, and they’re all mind-bending returns, many of them with major problems that need worked through. You are right, you are not alone, though I think the number of solo operators such as us are dwindling….
[…] Tax Professionals Are Unhappy. Jason Dinesen, an Enrolled Agent in Iowa, penned a piece titled “The Tax Field is Broken.” I don’t completely agree with the article, but much of what he writes is true. Tax […]