Tuesday, December 29, 2015


A reader asked me the following question in a comment to my post “Tax Professionals for Tax Reform”.

How do you project complete tax reform would affect your business?

As an answer let me quote what I have always said –

I believe that a much simpler tax system would not hurt my business, or that of most tax preparers, at all. I sincerely believe that if I did nothing but 1040As all day during the tax season, I would make more money, experience less agita, and substantially reduce the number of extensions {add - and audits - rdf}.

I also believe that my clients would not decide to do their own returns if the tax system was simplified; they would continue to come to me. Most taxpayers who use a tax professional simply don’t want to be bothered with the task of preparing their tax return.

And there will always be the need to calculate business, investment sale, rental, and farming gains and losses on Schedules C, D, E and F and Form 4797.”

The above is from my February 2013 editorial at Accounting Today titled “We Need True Tax Reform”.

I also believe that many taxpayers will continue to use the services of paid tax preparers, even if returns are truly simple, because they want to be sure that they do not miss anything.

The components of the tax profession that will probably be the most hurt by true tax simplification is “taxpayer representation” and “problem resolution”.  Since there will be less items for the IRS to audit there will be less audits, and less problems to resolve.  But my practice has always been preparation, so a simpler tax system would not affect practices like mine.

As a point of information - my specific business situation is unique.  I am winding down my practice as I head toward retirement after being able to say I have been preparing 1040s for 50 tax seasons (5 more to go), and I am actually trying to “thin the herd”.   

Fellow tax pros – how do you think true tax simplification would affect your business?

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