Optimizing Tax Production in 2005
by Roman H. Kepczyk, CPA, CITP
Before the busy season is in full swing, it is time for firms to evaluate their current tax production processes and making adjustments to optimize performance. The profession's transition to a digital environment and new capabilities within tax applications provides firms with new opportunities which can streamline production and positively impact the firm's bottom line. This article outlines today's best digital tax production practices.
PDF Tax Files — Firms should generate a PDF image of each final tax return rather than storing a paper copy, a s this provides better access, delivery, and security at a lower cost. Firms should also store an image file of supporting documents, so the complete tax file is digital. When the information is needed, it will be faster to access.
Verify Backup Capacity — Firms should ensure that their backup systems have adequate capacity to quickly backup all data with minimum downtime of the network. Digital files are significantly larger, so firms should evaluate the impacts of implementing redundant or newer, higher capacity tape drives, as well as archiving older and minimally accessed files to other media such as Web-based pro viders, CD/DVD drives, or hardware appliances.
Standardize Due Date Systems — In the past, firms utilized manual methods of tracking due dates ranging from hand-written lists to spreadsheets. Firms today should utilize the tools found within their practice management or tax application to track due dates so the information can be updated digitally when each task is completed. The increased capacity of today's computers and accounting applications allow all users in the firm to be in these applications at all times and generate reports in real time.
Maximize Screen Capabilities— Firms should standardize on dual monitors for power users such as those performing onscreen tax return review and billing. The focus of reviewers should be on doing all that is possible to complete and “push forward” the return, rather than sending back the return for corrections, unless it is absolutely necessary. While many firms will still utilize paper “source” documents for the review, all notes and changes are made online.
Invoice with the Return— For all tax-return-only clients, firms should get in the habit of having a completed invoice go out with every return. The majority of firms today bill based on the previous year's invoice and add a s mall increase, yet create major administrative accounting processes to handle minimal charges such as collation/assembly time, e-filing, copies, etc. Firms should consider entering a fixed charge to cover administrative costs when the return is checked in, based on the return classification, and have an invoice provided when the return is signed, which the signer can either approve or modify. Promoting collections at the time the return is picked up minimizes the billing process.
Communicate Digitally — Centralize all client email addresses so it is easy for preparers to ask questions via email or to inform clients of tax law changes. Emailing clients drafts of returns will shorten the approval time for e-filing and provide the client a digital version to store electronically. Going to digital invoices will also allow the firm to email statements to clients, which delivers the invoice immediately, while at the same time eliminating administrative costs.
Organize Tax Knowledge — All firms should have a tax page on their intranet, which documents current issues with accounting software and firm standards. Tax engagement procedures, document templates, Web site favorites, and other best practices should be organized on this tax page, along with any custom forms, so it is easy for all personnel to go to one site for all tax information.
Re-evaluate Tax Licenses — Firms should have one primary tax research and forms application to minimize redundant costs and training. In addition, for specialized programs such as tax projection applications or unique tax portfolios, firms should annually re-evaluate the number of licenses required for each program to verify the expense is justified.
Standardize Support — Firms should identify a primary and backup champion for each firm application and post this information on the intranet along with hours of operation, Web site links, licenses or passwords, and any additional contact information that might be needed.
Re-Evaluate Support Contracts — With today's dependence on the network infrastructure for tax production, firms should annually review support contracts to ensure minimum downtime in the event of a disaster (including the updating of the firm's business continuation plan). Discussions should be held with the firm's network integrator to understand different recovery scenarios, as well as increasing support coverage during the busy season.
Firms should take the time now to re-evaluate their production processes and procedures to ensure they are optimized and standardized as the new season begins.
Roman H. Kepczyk, CPA, CITP is president of InfoTech Partners North America, Inc. He can be reached at roman@itpna.com.
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