There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Roger Harris: Hello everyone. Welcome to another federal tax update podcast 2025 first recording in 2025. And I'm joined, as always by Andy Schwab and Happy New Year. How are you doing?

Annie Schwab: Happy New Year to you too. I'm doing pretty good. I'm not going to say I didn't already have a snowstorm come through Dallas, but hey, [00:00:30] we're here. We're we're making it work and tax season is on the go. We're ready.

Roger Harris: Yeah. Surprisingly. You you had a snowstorm in Dallas. I'm in Georgia. We had snow. So we have more in common than a podcast. We both had to survive a what for us is like a major ordeal, but for people in other parts of the country, they're probably laughing at both of us. I know.

Annie Schwab: I know, but, um, it's nice and sunny today, so I'm just glad the snow has melted. My kids are back in school. Life is grand. Let's say [00:01:00] that.

Roger Harris: Yeah, yeah. Hopefully 2025, you know, got its worst part off when it when the snow came. Well, I thought Annie and I thought we just kind of jump around and touch on some old topics, some new topics. We're kind of starting a year. It's going to be an interesting year for our profession. We've got obviously a new administration coming in. We've got, uh, courts interfering in our day to day activities on certain things that we do. So we're going to kind of jump around, touch on a few [00:01:30] things. And I guess, uh, again, depending on when you listen to this, we're almost a week from a new administration starting, though the Congress has already been sworn in, and it's going to have a big impact on our life. Annie, in terms of we all know we've got a tax bill that's expiring and something's got to happen.

Annie Schwab: Well, I hear the chatter. You can hear it from both parties. You can hear, you know, potential for one piece of legislation, two bills. We've heard about the debt ceiling. [00:02:00] We've got all the tax reform coming up. So I imagine it's going to be pretty busy and pretty kind of, well, curious. Let's say it'll be it'll be interesting to see what what unfolds here.

Roger Harris: Yeah. And Andy mentioned a couple of things I think. And I'm pretty sure we've covered probably till you're sick of hearing us about all the parts of the Tax Cuts and Jobs Act. That's up for exploration, renewal, whatever you want to call it. Right. And we'll touch a little bit on that. But I think what's going [00:02:30] to be interesting this year, because we're in the first year of a new administration, is really the process or the procedures and how to watch that, to give you some indication of, of when and what might happen. And, and it's not as easy to do something as politicians.

Annie Schwab: Sometimes I feel like you have to learn a certain dance in DC in order to get something passed, you know.

Roger Harris: Yeah. And I don't even think at times they know for know for sure what's going to happen. I think we probably, if you've listened to [00:03:00] and probably after the election, you're all sick of listening to what's going on in Washington. But but Annie alluded to what you're hearing a lot of right now, not specifically about taxes, but it's got to taxes play a big role in it. As President Trump has said, he wants one big, beautiful bill to be passed very quickly. You hear other people, particularly those in the Senate, talking about two bills. So what does that have to do with taxes, I guess [00:03:30] is is part.

Annie Schwab: Of the bill's tax reform has to be a part of it at some point.

Roger Harris: Somewhere.

Annie Schwab: Yeah. But you know, could you, could you set something aside and get maybe something that's more, uh, easier to get through Congress first and then go back to tax reform or like Trump said, you know, are we going to fight for one big, beautiful bill that, you know, You know, encompasses tax reform that encompasses energy, immigration, defense. I mean, there's so many, [00:04:00] so many topics that you hear about. How much can you, you know, put in a single bill and actually get it going, done. Right.

Roger Harris: Yeah. And that's really what kind of there's two parts to this. Number one, what happens in the tax bill. What is included in it, what's not included in it. What gets added to it. I mean, if you think back to the election, we heard Trump promise no tax on tips, no tax on overtime, no tax on Social Security. Those are not part of the Tax Cuts and Jobs Act. [00:04:30]

Annie Schwab: So no that would be something separate. But it's still considered tax reform right.

Roger Harris: So you would have to figure out how to put that in, even if you just are looking at Re-authorizing the Tax Cuts and Jobs Act, a big part of the Tax Cuts and Jobs Act, if we all remember, and we've lived with it now for I guess ten years is the Salt deduction in.

Annie Schwab: State and local tax. Yep.

Roger Harris: State and local taxes are limited at $10,000. Well, if you just extend the law, that's what gets extended. But many [00:05:00] Republicans, particularly in high income tax states, want the salt to either go away or be increased or whatever. So we have the technical parts of the tax bill. But then, as only Washington can do, we have the procedural part of it and how to get anything passed. Because if nothing gets passed, the law expires.

Annie Schwab: And we revert back automatically.

Roger Harris: To where we were before, which means individual tax rates jump. [00:05:30] And a lot of, you know, you can argue good and bad. You know the 199 deduction would go away. Some of the corporate stuff was permanent. So we're going to talk a little bit about why the one bill versus two bill matters. What it has to do with timing and when we might actually get some indication. Because the preference I think the Republicans, if we if we first of all of all look back at the election, the Republicans now control 53 seats in the Senate. Correct. It takes 60 votes to overcome a filibuster. [00:06:00] So we don't have a filibuster proof Senate. The majority in the House is very narrow, even narrower than the election, because a lot of the Trump cabinet designees were House members. So they've now moved and resigned their seat in the House or will to move over into the cabinet. And until such time as they get replaced, either through an election or appointment. The Republicans have a very narrow [00:06:30] majority and tax bills start in the House. So so when you start a tax bill, you start in the House. So we start where the Republicans have the least amount of leeway, if you will. So you really can't lose any votes.

Annie Schwab: You got to have a strategy here. There's there's there's no there's no give and take. This has got to be very thought through.

Roger Harris: Right. So 1 or 2, I call them rogue Republican House members [00:07:00] could kill it. So you start by saying, what can we get through the House first? This is where the two bill versus one bill battle is really going to be fought. The Republican speaker wants to take this, and Trump's preference is to have this one big bill. Let's fight one battle from the get go, ram everything in it. You would ram in tax reform along with a debt ceiling increase along with immigration policy, energy policy, defense policy. Let's just have one big fight [00:07:30] and be done. Be done. Now that sounds good, but how long.

Annie Schwab: Would that take?

Roger Harris: Yeah. And if you get it through the house you still have to get it through the Senate. So clearly the Republicans would prefer to have that one big fight. Well, let me say the House Republicans. Let me be clear because it is a difference. Get everything in one bill. However long that takes. Now the the so-called experts say to [00:08:00] do that could take 6 to 8 months. So a new administration would come in and not really be able to claim victory on some of the things that they campaigned the most about the immigration, fixing the border. You'd be restricted to government executive orders. You couldn't you'd have no legislation, energy policy, things like that. So do you want to trade one big bill for 6 or 8 months? Then you still got to get it through the Senate. And the more stuff [00:08:30] you have to vote, the more likely it is that you could lose votes because you're going to make somebody angry. Whereas the Senate Republicans say this, there's there's energy policy. There's immigration policy, probably some defense policy that you could put in a bill right out of out of the gate. Get it passed out of the house. Get it over to the Senate. Get it passed. Have some victories. Right. Right.

Annie Schwab: Celebrate something that you know. Celebrate accomplishments.

Roger Harris: Right. And then kick tax reform [00:09:00] into a second bill. And the reason we're talking about one bill versus two bill. And again I apologize. We're in the weeds here. But it's really important to the tax reform discussion. I mentioned earlier the Senate has 53 Republicans. It's not able to overcome a filibuster without seven Democrats voting along with them. I don't think forget who's in the majority or minority. I don't think there's been seven votes against with the other party, you know, for many things. So [00:09:30] there's something called reconciliation, which can bypass the filibuster for bills that meet certain requirements, budgetary requirements they have to have targeted and and tax would meet that all these things could be done that. But you can't do that for that. For every bill there's a limited number. So basically the the long try to make a long story short, what we need to watch first is, is the strategy one big bill, which means we may not know what tax reform [00:10:00] looks like until the middle or the latter part of the year, but it runs the risk of being thrown out because it's a big bill and somebody doesn't like energy policy. And the tax bill gets trashed because it's all in the one bill versus is it kind of a second bill where we've gotten some of the good stuff out of the way? We're probably going to be mid to late year before we know the final parts of the bill either way. But if it's one big bill, again, it doesn't take a lot of people to [00:10:30] sink the whole thing and you're back to ground zero. So when you hear the discussion of 1 to 2 bills, tax reform is going to either be in a smaller bill where it's the driver, or it's going to be a piece of a huge bill All where who knows where the opposition comes from?

Annie Schwab: It'll be interesting.

Roger Harris: Yeah, and that's the process. Other than that, you know, we do have to watch. I think you're going to definitely see some salt tax changes.

Annie Schwab: Child tax credit is a big one. R&d is a big one.

Roger Harris: R&d credits [00:11:00] the 199A deduction is a big thing with Republicans. I feel pretty confident it'll stay there. Stay there.

Annie Schwab: Yeah.

Roger Harris: Uh, then you have the whole idea of deficits and spending. And if you add all those other things like no tax on tips, Social security, uh, overtime, how do you pay for that? You know, what does that cost the government? How broad could that be? Would you restrict certain amounts of tips, certain amounts of overtime? You know, could you change the Social Security from 85% to 50? I mean, [00:11:30] that's where the haggling will come in from a budgetary standpoint. So we're going to have to watch it. I think it's pretty safe to say that more than likely there'll be some sort of extension of the Tax Cuts and Jobs Act.

Annie Schwab: And it doesn't have to be all in one. They can piecemeal it. Some some might get it anyway.

Roger Harris: They might figure it out and however they figure out to do it. I think we will see a change in the Salt tax deduction. I don't know if it will go from 10 to 20. I've seen that. I even saw one the other day to 200. Now [00:12:00] again you got to pay for it. But I think you'll see a Salt tax deduction. I think 1099 A is probably safe. I think expensing of R&D is probably good, because that was something that most people believe when and what else. Who knows.

Annie Schwab: But that might be brand new things we haven't even thought of yet or seen yet come through any of the. You just.

Roger Harris: Never know. I am sure there will. And and the other thing we'll have to watch for a lot of people. And we're going to touch a minute on boy because it's an ever changing thing. But IRC [00:12:30] changes, which we'll talk about. Boy changes a lot of things, is that aren't what you and I would think tied directly to it, or looking for a vehicle to latch on to. Right to get their positions there. A bill like this might be one of them.

Annie Schwab: Yeah, I yeah, boy, I feel like that's, you know, I hate to to jump to it, but we've we've discussed it in so many, so many previous podcasts. I mean it's like and the month of December was just crazy. [00:13:00] You know, there was there was injunctions and then lifting of injunctions and then this court case and then this put it on hold. And then we had, you know, this random January 13th that was going to be the deadline. And then that got put on hold. And, and now we're kind of still even waiting. Um, there's a court case that's, um, what is it, March 25th, I believe, um, is the next court hearing, but things could happen before that. Um, and the poor public and the small business owners are like, am I doing it? Am I not doing [00:13:30] it? What's the deadline? Do I have to do it? Yeah. You know, and all of.

Roger Harris: You that were enjoying Christmas, Hanukkah and the New Year and weren't paying attention to and Annie. There were, it seemed like daily. It wasn't that, obviously.

Annie Schwab: No, but it was several announcements in the month of December. Um, and then January 6th, then.

Roger Harris: Yeah. Any kind of walk through all the things that happened in December in terms of dates and extensions and cancellations and this and let's kind of get to where we are currently. And then we'll talk a little bit about [00:14:00] what could happen going forward. But for those that hopefully we're doing something during the holidays. But following boy. Uh, talk about what all happened and kind of where we sit today. And then we'll talk about what might could happen. Because again, as everything is true, politics and the election may play to this as well. But let's wait. Let's get everybody caught up before we worry about.

Annie Schwab: Right. So prior to, let's say prior to December, we had, you know, the deadline was was set. So, um, businesses that had been in existence prior to 2024 [00:14:30] had to file by January 1st. And so we had been on multiple webinars saying caucuses could happen, things could happen. But you know, you can't wait till the last minute. Anything, right? But, you know, don't wait till the last minute. Talk to your clients about it. Get the information. Um, be ready to to file, you know, meet the deadline. Talk about, you know, well, what happens if changes come to your application? How do you deal with all of that? And then, of course, you know, December 3rd was really the first, um, like, [00:15:00] eye opening. Okay, wait, maybe this really isn't a go. Um, that, you know, that's on January 3rd, there was a district court in Texas, actually, that issued an injunction preventing the enforcement of BOE. So we sat on on that idea, although we were still encouraging our offices to continue to communicate because there's just such a lack of knowledge about what's going on here. So, you know, then then we're sort of like sitting waiting for this court case. And on the 23rd of December, there was [00:15:30] the appeals was lifted, an appeal lifted the injunction. So then all of a sudden we were like, oh, the January 1st is back.

Annie Schwab: So here we are, you know, just weeks before the new year. Um, and they said, January, you know, you're not required to comply by January 1st. We'll give you until January 13th. Okay. Give us an extra 13 days. Right. Well, three days after that, um, that was that position was reversed. Um, and there [00:16:00] was an injunction preventing preventing the enforcement of of. Boy. So we, you know, we sat on we sat on that thinking, okay, well, now now we're back to we're on hold again. Um, and then on December 31st, they actually filed an emergency application with the Supreme Court asking, um, a stay of the district court injunction. And so the just a few weeks ago, they had to respond. And now, uh, the DOJ had to respond. And now we are currently [00:16:30] waiting for the next court case, court hearing, which is set for March 25th. However, there things could happen between now and March 25th. So that's like right now, that's what we're looking forward to. But anything could happen, right? I mean, Supreme Court could decide to do something. The new administration could decide to do something maybe. I mean, I don't know. That boy is on the top of the Republican's to do list for the first week that they that they take over. But I mean, it's possible [00:17:00] you never know.

Roger Harris: Yeah. So we sit here today and we're still under an injunction that says boy cannot be enforced.

Annie Schwab: You can still.

Roger Harris: Volunteer. You can still voluntarily file. But but you're under no legal obligation to do so. And he said, which is true, the Supreme Court could step up and do something. A new administration and a new Congress could step up and do something. We could go all the way to the hearing on the 25th [00:17:30] and see what happens and happens and how long that takes to be fully vetted and ruled on. So but what we've learned with boy is you almost have to wait day to day and not be surprised by anything that may or may not happen. The the odd or unique things about it. The Department of Justice is the one that files the appeal. The Department of Justice is changing hands with the new administration. So we're going to have the Republicans [00:18:00] running Department of Justice versus the Democrats. The the the regulatory people at FinCEN don't necessarily change. Those are career employees. So their mentality towards this doesn't change with the administrations, except the people at DOJ sitting above them may change now, or or the people at DOJ are going to come in on their first day in office and make a stand, because you're still seeing people who just want to [00:18:30] delay, and some people who want it want it completely repealed.

Roger Harris: And and I doubt that with everything going on in the world, I doubt a new administration, as you mentioned and referred to earlier, is going to think that boy is the most important thing. And then they need to take a stand. It is going to be interesting that the plaintiff in the boy case that started all this is the NFIB, which is pretty much assumed to be a big supporter of Republicans, that you could have this interesting dynamics that a Republican administration is in [00:19:00] court fighting a Republican leaning business group over. Boy. So yeah. So, you know, so again, if it wasn't for change of administrations, new congresses, we would say we're just sitting here waiting on the courts to finally tell us what to do. And they could say that this is going to go to trial. And we're going to determine, you know, whether this is the whole argument is whether this is constitutional or not. Right. And both of them have good arguments.

Annie Schwab: And shockingly, [00:19:30] Vincent, I feel like given all the bad publicity about this and how unfair it is and how the penalties are so high, and how the public's lack of of knowledge about it really have not budged. Um, you know, I haven't seen I mean, yes, they've offered additional education and there have been talking it up, but they haven't exactly budged on, you know, the, the time frame of having to make changes, you know, the 30 days or the 90 days or, [00:20:00] or the penalties associated with it. And that's really what's so harsh in my opinion.

Roger Harris: Um, well, when the injunction got lifted and they went out to January 13th, they basically added exact number of days.

Annie Schwab: Days?

Roger Harris: Yeah, the injunction had been in place instead of what I think most of us hoped and wished is they would take the advantage, take the opportunity, because of this delay to say, all right, let's give everybody 90 days, let's give everybody 30 days. Let's, let's go crazy over the rest of the year, and let's figure all this out and let the dust [00:20:30] settle. But instead, they just said the injunction was in place for 13 days. We're going to give you 13 days. So to your point, I haven't been very flexible.

Annie Schwab: No. And the compliance rate is still extremely low. I don't I mean, I don't want to give a percentage, but before the end of the year it was still shockingly low. The number of people who had complied. Um, and and I.

Roger Harris: Think they expected a bump at the end of the year. But all this confusion, who knows how many people filed or didn't file. [00:21:00] So, you know, we're still in a very confusing position. I think, Annie, I think we would say our advice is still the same. Yeah. Gather information. Be prepared to react quickly if and when we get. I'll call it a final judgment. I don't know that anything is final, but, I mean, literally, we could we could be told as we were not too long ago, you get 13 extra days or you get ten extra days, but you still have to do it. You don't want to be gathering information [00:21:30] and explaining it. You want to have got all that behind you. And if a client wants to go ahead and file, let them go ahead and file. I mean, it.

Annie Schwab: Is free to file. It does start your clock though. You know there's that the timer starts. So if there's changes that need to be addressed, you know that that could, you know, make a difference. But, you know, I feel sorry for tax practitioners who are going to be in the middle of tax season wondering what happened on the 25th, what's now, you know, did I miss something because I could it's like doubling the work, [00:22:00] you know, tracking down stuff for Bouye, plus preparing tax returns and dealing with, you know, regular old tax season issues. So I don't know.

Roger Harris: And what happens if you form a new entity. Remember. Yeah if you formed an entity in 24 you had 90 days supposedly when you formed a new entity in 2025, you were back to the 30 days?

Annie Schwab: Yes. Well, now A hold.

Roger Harris: We don't even know what to do. If I'm an attorney and this is a [00:22:30] pitch to say, if you're not an attorney, don't do this.

Annie Schwab: Don't do this.

Roger Harris: Leave it to them. What do you do if you form a new entity? There's you can voluntarily do it. But if you don't do it, how much time are you going to have if and when this injunction gets lifted or the courts make a ruling? So we're all just in a really confusing place heading into our busiest time of the year.

Annie Schwab: Exactly.

Roger Harris: I think there's one last hanging thing before we actually start [00:23:00] talking about some other things. The employee retention credit has not gone away.

Annie Schwab: No, and there hasn't been much movement though either. We're kind of stuck in the waiting position.

Roger Harris: We're stuck right there.

Annie Schwab: Yeah. Waiting on discussions about the statute. Um, we have seen some of the 105 C letters, which are the disallowance letters, and letters, and we've received some guidance from the IRS on on how to respond to those actually with [00:23:30] a very detailed list of suggested items to attach or include in your response letter. And then just last week, I don't I don't know if everyone saw it, but the Taxpayer Advocate came out and with their annual report to Congress and criticized the IRS for the delay in processing of the claims and the degree of fraud, and and really came down hard on them. But even after that, we haven't heard, you know, I haven't heard anything from the IRS kind of on these lingering outstanding [00:24:00] items that that really need to be addressed.

Roger Harris: Yeah. And the whole statute of limitations, you know, are beginning to run out on certain parts of, of the thing. And I think the IRS was hoping Congress would give them some help. There was some some language in some earlier bills that would have helped them, but that didn't pass. I've got Andy didn't even know. I got to tell you a story that just came to my attention today regarding IRC and how this thing may never end.

Annie Schwab: Oh, don't tell me that a [00:24:30] client.

Roger Harris: One of our clients in Paget and we we jumped on IRC early to try to get them, you know, their money during the pandemic when they actually needed it as opposed to now, um, filed all their 941, got paid a little over $20,000. They've gone ahead and amended the tax. They've done everything they should have. Well, somewhere and this so this was all done back in 2021. So somewhere after that one of these mills contacted the client. And of course, the client, as [00:25:00] clients do, didn't have any earthly idea that they'd already gotten the money. So they sent the information to the mill. And this week they got another IRC check from what the mill had filed. No, for the same quarters that the IRS had already paid them.

Annie Schwab: Wow.

Roger Harris: And so Now they have a check for ERC claims for quarters that back in 2020 they already got paid for. So they [00:25:30] called the IRS and said, what do I do? And the IRS said, well, we wouldn't have sent it to you if it wasn't legitimate.

Annie Schwab: Oh, well thank you.

Roger Harris: So when I got brought into it, I said, well, of course the IRS wouldn't have sent it to you if they didn't think it was legitimate. But it's not because it's the same quarter that you'd already been paid for. So don't run.

Annie Schwab: To the bank.

Roger Harris: So what that told me is the IRS system can't [00:26:00] even catch the fact that the same quarters had already gotten. Now, that's part of the problem is you don't have to tell them when you amend a 941, because there's nothing that identifies that the amendment in 2020 or 2021, whenever it was done, was actually ERC, because you just put numbers on lines. So when another one came in amending that one, I don't know where they got the first one. I don't know where they got numbers from, but the IRS believes the second claim is also legit.

Annie Schwab: They need to go buy a lottery ticket. That [00:26:30] client needs a lottery ticket.

Roger Harris: Yeah, so.

Annie Schwab: We've got people waiting for money who do have legitimate claims. And then this person gets it twice.

Roger Harris: Gets it twice. And I have no idea what they're going to do because they've been told that you're not eligible and you got everything you were eligible for four years ago. I don't know why the IRS thought it was legitimate. I don't know why they told you it was legitimate, but we're telling you it's not right. So you can return the check before you cash it. And that's what you should do. [00:27:00] I don't know what they're going to do, but there was a new twist that literally I was dealing with this morning. So it just it's never going to end. Oh, and here's the other one again. These aren't even on our outline. This is this has been my morning. Uh, another call about. Do you remember? I think it was last week, maybe the week before the IRS said, we're mailing out all these, uh, rebate checks from 2021 for people who didn't get it.

Annie Schwab: Somebody got [00:27:30] it twice.

Roger Harris: Got it in 2020 and got a check today. What are they supposed to do?

Annie Schwab: Wow. Okay, then watch your mail.

Roger Harris: You might be getting a rebate check even if you already got it. Who knows?

Annie Schwab: So some have my address.

Roger Harris: Yeah. Somehow the IRS had had already paid them and paid them again. So there you go.

Annie Schwab: So. Well, those that that second one didn't make it to the the Taxpayer Advocate's annual report of the top ten complaints. But I bet it will next year. [00:28:00]

Roger Harris: Yeah. If they do too many of those, if they start sending out checks to everybody that already got their rebate, uh, they'll it'll make it. I'll talk a little bit about what the annual report to Congress is, and then go through some of the suggestions and comments there, because every year the Taxpayer Advocate, which is an independent part within the IRS, is required to issue a report to Congress on basically on the IRS. They're kind of the watchdog, internal inside watchdog, though they are independent and say, [00:28:30] here is what we think the IRS is doing right, doing wrong, and here's what they're supposed to change. Interestingly, if you look at this report, some things seem to be in it every year, meaning the problems are the same and the fixes aren't there. But in certain years you see something new pop up, particularly as they spend money. So. So that's the background of what the taxpayer advocates report to Congress is. And he talked a little bit about what was in and [00:29:00] those reports come out I think it came out in December or early January. So it's recent. Yeah. So it's recent talk about what they kind of the problems they pointed out and some maybe solutions that they proposed.

Annie Schwab: Yeah. So it's I mean it's not all negative They're there. What? There was a heavy concentration on. You know. Delays. Delays in processing IRC claims, delays in resolving identity theft cases. They gave an average was over two years. And they were they said the goal should be more like 90 [00:29:30] days. Now, how to make that happen? Um, you know, is going to take some money and some time and some and some manpower. Um, there was some positive. There was definitely some taxpayer service and tech tech upgrades that were implemented. Um, we've talked about some of those before. Um, but then there was also some commentary that more needs to be put, you know, pulled from enforcement. Um, which has been kind of controversial and maybe put more into, you know, forward facing client, taxpayer [00:30:00] facing. Um, technology and upgrades. So, you know, I imagine every year we continue to hear things like IRS delays and return processing and frustrated taxpayers. Um, you know, things causing delays in their refund. Part of that could also just be, um, identity theft associated. Um, I there wasn't really a fix to that. Um, I think that's probably one that you see every year. Yeah. Um, another one you see [00:30:30] every year is, is going to be, you know, IRS has trouble hiring. They have trouble retaining their employees. And even when you do hire, um, you know, there's challenges in retaining them and training them and getting them up to speed. We we saw that, um, there was a large hiring of workers at the IRS, but yet it took so long to see improvements on the phones because the customer service, you know, they had to go through the training. So those are some.

Roger Harris: Um, [00:31:00] customer service is always in there. It's either gotten a little bit better, it's gotten a little bit worse or something.

Annie Schwab: Times get hung up on, you know, refund delays. I mean, I feel like those are I mean, is there a universal fix to all of that? Probably not, you know.

Roger Harris: No. And I think the IRS takes the report seriously and they try to fix things that they can. But as you mentioned, some of it's budget related, some of it's people related. I mean, yeah, the problem's not [00:31:30] a surprise. The challenge is in fixing it. One thing that has consistently been in it, and we can talk a little bit about it, because it's something that a lot of these confusing things we've been talking about are manifested and made worse by. The advocate continues to advocate for some sort of regulation of return preparers. So that.

Annie Schwab: Minimum competency, kind of.

Roger Harris: Minimum competency, however you get around, you know, the loving case or whatever. And, um, and just think about just [00:32:00] the few things that we've already talked about and how confusing and complex they are, you know, getting duplicate ERC checks or what to do about, boy, what to do, you know. Again, not knowing that the people that businesses or individuals are relying on have any minimum standards, uh, to be giving advice in these areas is kind of scary.

Annie Schwab: Yeah. And what do you do? You know, there has to be a process. And this was a recommendation. You know, there's got to be a process to revoke [00:32:30] these these poor tax preparers or uneducated tax preparers. But, um, right now that doesn't seem to be happening or happening enough. Should I say it doesn't.

Roger Harris: Have to be bad enough that we take you to court because it's fraud or some crazy thing like that, but just not being good at what you do. You know, it's not like if you're I don't know if you're really bad at cutting hair. I guess they could pull your barber's license or something. But, [00:33:00] you know, uh, here, you know, unless you go to the extreme where we're going to go after you for fraud or something like that, there's not much we can do. And and we don't even require everybody to have any minimum standards to understand some of the things that, you know, that you folks that are listening to this podcast and attend CPE sessions and take your business seriously and try to to make sure that you're serving your clients properly. There's there's a large group of people who do none of that, and they're giving advice kind of based [00:33:30] on TikTok, I guess, I don't know.

Annie Schwab: Well, yeah, I mean, I guess where they're getting.

Roger Harris: Legal today, I don't know, as a court, you know.

Annie Schwab: Or or or, you.

Roger Harris: Know, whatever.

Annie Schwab: Something, something along those lines. Yeah. That that is something that we're going to need to focus on. I do think that that's going to become something that is looked at a lot closer, maybe with, um, suggestions or programs or something has to be outlined to make the profession. [00:34:00] You know, the taxpayers have to trust that when they go to a tax professional that they're getting a professional who knows what they're doing. Um, and and right now, that that's hard to come by.

Roger Harris: Yeah. And maybe years ago, taxes and everything wasn't as complicated and as difficult. And there was a perception or a belief that we didn't need to regulate it to the extent. But I think I think today there's I'm going to say way over 50% [00:34:30] of the people believe this is something that's necessary. Um, that's different than saying we can get something done because ultimately the IRS is limited. If those of you that have followed this long enough know there was something called the loving case a few years ago. The IRS actually tried to do this on their own. People by the name of loving took them to court and said, you didn't have the authority to regulate this. And they won. So Congress is going to have to help the IRS. The IRS is going to be limited to what they can do without congressional [00:35:00] help. So we'll see if this new Congress or something like this could get slipped in to go back to this one big, beautiful bill or these two bills. Could we see something about something about return preparer regulation, uh, tacked into that whole situation? Because it is an issue that I think the majority of people have realized, you know, reasonable minimum standards and some sort of licensing should be, uh, part of it. Certain states have done it on their own. And, [00:35:30] uh, at some point we need one system that works for everybody.

Annie Schwab: Yeah, I agree, I agree.

Roger Harris: All right. We are getting ready to start a tax season. And I guess we should actually let's let's focus on some things that are we need to start thinking about as we roll into a tax season. First and foremost, again, depending on when you're listening to this, when will you actually be able to file tax returns?

Annie Schwab: So the the IRS has announced that the tax season will start on Monday, January 27th. I felt that seemed [00:36:00] so late. And then I realized that was only days away when I when I heard it. But but it's common you know mid to late January is common. So you know there's nothing nothing shocking there. Um, as always, they're encouraging taxpayers. You know, the fastest way to get your refunds is to e-file and use direct deposit. Um, and then just, you know, similar reminders that from years to years, um, you know, state filing season could start at a different time. [00:36:30] Um, the state filing forms may not be ready yet. That's always kind of a pain. Um, so, you know, probably everyone out there is using some sort of professional tax software, and the software usually does a pretty good job of letting you know if the form is, you know, in draft form or pending both for federal and state. Um, state usually piggyback a little bit. So if you're, you know, if you're in a state that maybe has some tax changes, don't be shocked if, if, you know, on Monday, January 27th, everything's not ready to go. [00:37:00] Um, but yeah, I mean, you know, I think probably mid-February gets to be the the real busiest time of of submissions. Um, we've seen I don't know how many disaster extensions last year. Um, again, we're going to see some this year. I just saw some of the California, um, like got pushed payments, fires. Some of those payments are already to October 15th of this year. Um, so just keep that in mind, especially if you're filing in a state that's not, you know, your [00:37:30] regular common state, if it's a, you know, a one off. But hopefully, hopefully the software companies will get the forms ready. And and every everybody, you know, we always were waiting on those 1099 the brokerage statements, you know, amended k-1s and all that kind of stuff. But you can only do what you have. So if you, you know, are waiting on a document, if your client's waiting. Um, then it is what it is.

Roger Harris: Yeah. I think software does a pretty good job of keeping [00:38:00] you from trying to file something. But be careful before you promise a return will be filed by a certain date. Because unless you've checked. Because again, a lot of forms aren't approved by September 27th, particularly on the state level. And so, yes, you may can go in and do the return. And the software will say you can't e-file it. So just be careful before you make a promise of a.

Annie Schwab: Yeah. Then they say two weeks for for refunds if you e-file and use direct [00:38:30] deposit. But we do know that, you know er sorry. Um, earned income credit or child tax credit. There are some items on the tax return that sometimes can cause a bit, a bit longer than the two weeks. So you know, don't don't you know, what you don't want is telling your class, oh you should have it in two weeks and then two weeks in a day. Everybody's calling you and you're having to answer the phone and say, where's my money? Where's my money? So, you know, just be, you know, 2 to 3 weeks or something like that. Um, should should probably be better.

Roger Harris: But you [00:39:00] know, what are some other things as we get ready to start again. For some of us, this is more tax season than we can count. For some of us, it's still early. You know we're sitting here again mid January. What should we be thinking about. What should we be doing. What should we be preparing for.

Annie Schwab: So by now by mid January hopefully you're using some sort of client organizer or way to gather data from your clients. You've you've indicated to them you know how to get that information [00:39:30] to you. You've sent out engagement letters. Um, I would hope by now you would have some sort of estimate of what your workload is going to be like. Um, you know, how you know who usually brings stuff in early, who's always on extension, what staff member may be assigned? Um, maybe new clients need a little bit of special handholding. Um, you know, but but for the most part, you've you've got an idea The of being able to anticipate your workload, track [00:40:00] the progress of the returns. You've got a system set up in your office where you know who's assigned to it. Is it in review? Is it waiting on items? Has it been e-filed? Um, you know, some kind of agenda for you and your staff? You know, what is my day going to look like? Who has bandwidth? Um, you know, is it taking us two weeks to to turn around tax returns, or is it more like 3 or 4 weeks? And, you know, can we identify bottlenecks? Um, a lot of times we get into tax season and everybody's head is down [00:40:30] and you're just the next return comes in and you're going, going, going, going. But if you, you know, take a minute and take a deep breath and think about, okay, are we duplicating efforts. Where's the bottleneck. Is it that the clients aren't getting it to us, or are we, you know, overstaffed and understaffed and overworked? Um, so try your best to to track the progress so that it becomes manageable. I know that's hard to say in tax season, but the goal is to keep it manageable and to keep the returns [00:41:00] coming in and going out of the doors like a well oiled machine. But that's easier said than done. I mean, there's always going to be hiccups. So just, you know, I feel like January, end of January, early February is when you kind of have you need your game plan and everything.

Roger Harris: Yeah. And a lot of you may have there's a lot of really good apps and software to help you manage and track things. You know, again, hopefully you're listening to this in mid to early end of January. Make sure your staff understands them. So the benefits that you want to get [00:41:30] out of these things, everybody understands it and knows how to track it and how to record things and process things so that you can in real time. Or looking back at the end of this tax season, get a real good indication of where your bottlenecks were, where you. Was it client? Was it staff? Was it technology? You know, where was it. Because you don't have to accept Except 80 hour workweeks during busy season. Um, I think we sometimes wear that [00:42:00] as a badge of honor to say that unless we're working 80 hours a week, you know, from now till April 15th, we're not worthy. I think the opposite is true. I think if we do our jobs, utilize rules, technologies, get rid of clients that aren't good in terms of what they pay us and how they respect our way of doing business. You can. You can also maintain a good, healthy lifestyle during tax season. In fact, you should force yourself to do it. You [00:42:30] should. You should set parameters as to how many hours you're willing to work. And don't break those rules because you know your family and your health shouldn't have to be an added cost to a tax season. Um, and, and it's amazing that if you set rules and say, I'm only going to work this The decisions that you'll make differently because you're faced with either breaking that rule, which [00:43:00] if it's important to you, you should never break, or changing the behavior that put me in this position. And it's easier and better if you make people change their behavior or you change yours, but set rules. Um, what other from a technical standpoint, that's kind of again, a work life balance thing. Just please guys, stop bragging about how many hours you work.

Annie Schwab: Actually brag about how how early you got to go home or or, uh, you know, where you went to dinner that [00:43:30] night or or something like that?

Roger Harris: Yeah.

Annie Schwab: Well, a few other things. I know we're running out of time here. Um, I do, I do encourage, um, all of our, all of our offices to look at your, your research tools. Um, for example, you could have something like that sits on your desk, like a desk book or a quick finder or the Or the federal tax handbook. Those are real common, not very expensive, easy to come by. You could also have a robust like online research subscription. [00:44:00] Um, a lot at Padgett we use Checkpoint Edge, which is a Thomson Reuters product. But I know CCH has something called Answerconnect and I'm sure there are more options out there. Um, another suggestion would be to get on the IRS website, FinCEN website, state websites, social security. A lot of those sites have email notifications, so you could sign up to get like important announcements, um, from from those sites as well. It's a good place to go for [00:44:30] FAQs or um, just, you know, a quick research type thing. I know that Google is like super popular and everybody just Google it. I mean, my kid told me the other day, mom, just search it up. And I was like, okay, you know, but I don't mind saying use Google to help you identify additional search terms. Or maybe a better way to word a question. Um, but I don't recommend using Google as a standalone research [00:45:00] option.

Annie Schwab: I also love ChatGPT for helping you, um, like prepare emails or respond to clients. But again, there is absolutely no one. There's no confidence there that all of the information is accurate. It's ChatGPT and the like are more helpful in putting your words into into something together, not necessarily giving you the answer. Um, like a research tool. And for me, please, please, please, [00:45:30] social media is not your go to spot for tax research. I've seen so many posts, especially during, uh, during tax season. You see it about, you know, the most commonly missed tax deductions that you need to know about or, you know, all these TikToks and Instagrams and all the social media that, you know, have the little blips of somebody who figured out a way to take this deduction or avoid paying tax on this. Um, those are fun. They're entertaining. [00:46:00] Um, but I would say proceed at your own risk. And please do not rely on what you see on social media as an authoritative source. Um, I know we've had clients who have been like. But I saw on TikTok that if I do this, then I can do this. And and so just, you know, I get it. Social media is super awesome fun for for so many things, but not for tax research.

Roger Harris: Um, basically the saying you can't believe everything you see [00:46:30] on the. There you go.

Annie Schwab: That's that's a good that's a good way to to wrap it up.

Roger Harris: And I know there's some of you out there who can quote code sections, chapter verse. Most of us, the tax laws have gotten so complex and so many of them. I think it's not. It's not a sign that you're not good at what you do, that you need reference materials and research things. And I think, you know, many times in my years I've taken out a book [00:47:00] in front of a client and said, look, I don't profess to know, you know, this amount for this year, so look it up, because it's better to be right than to try to fool people and say something because you don't have the resources. So spend a little money and a little time developing and a good library of resources for for what you need help with. Because again, things just get complicated and no one expects you to know everything, but they do expect you to have a process to get them the right [00:47:30] answer, even if it takes research.

Annie Schwab: Especially for your staff, to like, you don't want them knocking on your door with all these these questions. Let them learn it themselves by researching it themselves. So I agree with you, Roger. I think it's important to important to invest in and resources, so that's good.

Roger Harris: It's also a good time. And Annie talked a little bit about this. The IRS is really pushing online accounts for individuals and businesses. As we see our clients during tax season. It's a good time to [00:48:00] make sure they all have accounts. Why? Why should we push our clients to have online accounts if they don't? So first of.

Annie Schwab: All, it's free and easy to do. And the the client can access it. So let's say they can't get a copy of their W-2 or any transcripts or like they've misplaced tax documents, they can log in there and get it, instead of waiting for the employer or waiting for the brokerage house to resend it. Plus, it has prior year information. So if you a client comes in is like, oh man, I, I forgot. I probably did have [00:48:30] this mortgage statement last year and I forgot to give it to you. You know, if you need to go and amend or you need to get a copy of something or they're misplaced or lost a document, that's a great place to go. Plus, the client can go in there and make payments or change payments. Amounts set up estimated tax payments, deal with IRS notices. So, you know, how many times have a client been like, I got this IRS notice, but I don't know if it's legit or if this is a scam. Well, if it's in the client [00:49:00] portal, then it's for sure legit.

Annie Schwab: But you can also, you know, change your address. You can look and see what your balances are. What balances do. Um, it's it's a great resource. And the IRS, that is definitely one of the improvements that the IRS has made. And we're seeing them start on the business side of things as well. Business accounts, online accounts so that small business owners can also also get on there. The the the IRS is also encouraging and has been this is not new. [00:49:30] Um that taxpayers get IP pins against very easy to do. You can go online. It's basically like a security pin. So you enter the IP pin before you e-file the returns kind of Kind of validating the the return. Um, and so that has cut down on identity theft. So that's another, you know, simple free doesn't take long to, to get on the website. Both the IP pin and the individual accounts. Um, so if you haven't talked to your clients about that, maybe implement [00:50:00] that in your tax season conversations. Um, and, and hopefully some of them will start doing it.

Roger Harris: And kind of as we wrap up, one thing all of you are supposed to have is a wisp of an information security plan. Uh, make sure you and your staff all know what it is, how to follow it, what to do. Because again, we're running into a time of year when the bad guys are going to try to do everything they can to get access to our information. And um, again, you [00:50:30] have to have one. But having one isn't as important as understanding it and having a good one and having one that your staff knows and what the procedures are. So if if you haven't reviewed your Wisp recently, take the next couple of weeks and make sure it's still where it needs to be, and make sure your staff knows how to follow it and you know how to identify fake emails and all the things that are going to happen this time of time of year. And I guess the last thing I would say, Andy. And then we'll see if you have any kind of [00:51:00] as we wrap up the demand for us, if we're doing our job properly and we have the knowledge that clients expect to us, uh, is growing every day and we need to make sure we're charging for our value. You know, we're shouldn't be as cheap as we were last year or as affordable as we were last year.

Roger Harris: Our costs are going up. Our the things that we're expected to do are getting more and more difficult and more piled [00:51:30] on to us. We need to be compensated for that. So take a good, hard look at how you price your work And make sure that you're getting not just based on the time it takes you, but the value that that time gives to the customer. Because if you just base charge based on time or forms or something like that, you're going to lose out on the fact if you get more efficient or get smarter, and it doesn't take you as long to do [00:52:00] something if you're good at something, I hope you are better at doing it than someone who's bad at it. So get paid for that. So look at your pricing how you price what you price. Also, examine your client list and decide if the clients that you have or the clients that you need going forward. Because if you're if if you're one who says, I'm too busy to take on new clients, you need to fix that problem. And the first thing I would tell you to do is get rid of the clients that are taking too much of your time for too little reward, [00:52:30] so you can take on the new clients who will pay you what you're worth. So that's kind of my last.

Annie Schwab: I just I agree, I agree, and I know it's a difficult conversation and it doesn't feel good to raise prices, but believe me, um, raising prices. You'll be surprised how many people stick around. Um, you know, everyone's like, I can't raise my prices. I'm going to lose clients. You'll be shocked at how many clients you retain.

Roger Harris: You'll be shocked. Yeah. And you know, if at the end of the day, you [00:53:00] have fewer clients and more revenue, that's not a bad thing. No. So. So that's okay too. Any other final words, Andy?

Annie Schwab: That's it. That was a lot of information. I'm sure we'll be coming back to you with more tax reform talk and what's going on in DC and how tax season's looking. So stay tuned for another federal tax update podcast. And that's really all I've got today Roger.

Roger Harris: Yeah. And I think our next podcast we're actually going to talk to the the [00:53:30] current or outgoing chairman of Rsac. And again talk about some of the things. These are private sector people who come in and in and advise the IRS on issues, and it'll be interesting to see how what they see compared to what the Taxpayer Advocate sees. And their perception will be very interesting how that works. And I think that's next up on our agenda. But regardless, thank you. Thank you for listening today and hope you found this hour, uh, a good prep for heading into tax season. Good luck to all of you as we head into our busy season. [00:54:00] Hope you'll be able to find time to listen to our podcast during tax season again. Take some of that free time and listen to another Federal Updates podcast and recruit a friend.

Annie Schwab: Well thank you Roger.

Roger Harris: Thank you Andy. It's always good to see you and appreciate you being here and appreciate you listening. And we'll be back soon with another Federal Updates podcast. Bye everyone.