june2021 - 9

FROM THE TRENCHES
there are many useful tax advisory
offerings from tax planning to
estate planning to tax resolution
to cryptocurrency and more. While
this column intends not to guide you
on building an advisory practice but
rather just a few advisory offerings,
make sure you take the time to learn
how to create an advisory practice
with resources like Upward Spiral
North America, Oodles, or Advisory
101. We also have Advisory course
content at K2 Enterprises on our
online website.
Remember that advisory services
are proactive and not reactive and
involve more recurring client advice
and less consultation. Tax planning
and estate planning are proactive
advisory services, and one could
make the case it is hard to build a
tax resolution advisory service.
We'll be covering many of these
tax advisory tools in our Technology
Lab Podcast, including several of the
products named below. We will also
discuss some of the tax planning
and cryptocurrency tools in The
Technology Lab Podcast.
Notice handling can be timeconsuming
for your practice, and
many of you are handling notices
for clients without charging for the
service. When Jim Buttonnow and
others formed New River Innovation
and created the Beyond 415 product,
we were pleased with the amount of
expertise they brought into a product
to handle notices. We were happy
for them and sad for you when this
product was sold to H&R Block. Some
of you offer a tax guarantee service
to handle any notices or appearances
before the IRS and charge for this
service with every return. The retail
tax services of Liberty, H&R Block,
and Jackson Hewitt readily talk
about their guarantees, but you are
handling far more complex tax matters
at most CPA professional firms
than the simple returns processed by
most retail tax providers. Providing a
fixed fee advisory service for handling
aggressive tax clients provides some
protection for the firm as well as for
the client. However, with so much
money to be made and saved by
the client, contingency fees are not
uncommon in tax resolution. Tax
resolution may not qualify as an
advisory service with this strategy.
That said, tools for handling tax
notices include Canopy Tax Resolution,
which has sophisticated notice
handling, IRS Transcript retrieval,
collections, and other post-filing
cases. It would be best if you looked
for features that support your tax
resolution practice, including step-bystep
resolution instructions, access
to transcripts, letter templates for
responding to the IRS, form autopopulation,
and IRS call guides. With
the average hold time for the past
year with the IRS at 18 minutes, you
need to be ready when you finally get
to an agent. Plus, the agents are just
as worn down and stressed out as
your team has been with extended
tax seasons. Canopy's competitors of
IRSlogics, IRS Solutions, PitBullTax,
OIC Tax Planner Tax Resolution
Software, and Tax Help Software have
similar capabilities with different
approaches used in each product.
You can see a feature comparison
in the sales-biased comparison chart
from PitBullTax (www.pitbulltax.com/
competition.html).
TAX PLANNING AS
ADVISORY SERVICE
Let's turn our attention to tax
planning. For years, we have used
tools from the major publishers or
developed our own strategies and
simple )guidelines and spreadsheets
to make recommendations. If we
had more sophisticated clients, we
would use BNA Income Tax Planner
from BNA Software. We could use
Planner CS from Thomson Reuters
or ProSystem fx Planning from CCH,
a Wolters Kluwer business, for less
complex situations. The models we
could build were not very interactive,
and the scenarios were limited. A few
new tools, such as Tax Planner Pro,
created by Christopher Ragain, came
along to help small business owners
that were using QuickBooks Online
or Xero. Christopher has positioned
this tool as an advisory offering with
Accountant Portal and Registered Tax
Planner (RTP) designation.
The most impressive new product
we have seen in any category in
some time, Corvee provides simple,
sophisticated tax planning. If you
only take away one thing from this
column, you should look at Corvee.
Firms that add Tax Planning Advisory
services experience an 88.82% growth
rate over four years compared to
the profession's average 4.2%! But
the key is what proper tax planning
does for both your clients and firm.
Most small firms make around 80%
of the revenue from tax, and larger
firms make approximately 40% of
their revenue from tax preparation.
Suppose you adopt a tax advisory
service delivery model. In that case,
you'll flip this to around 20% of your
revenue coming from tax service
delivery in a small firm, increasing
value to your clients while increasing
profit to the partners. If you can
save a client $25,000 in estimated
tax savings, the steps of planning,
implementation, and preparation can
let you charge much more than a few
thousand dollars for a tax return. The
question is, how much value can you
provide the client? You'll discover
that Planning fees from $2,500-9,000,
Implementation fees of $1,000-10,000,
and Preparation fees of $3,000 ($2,000
for a business return and $1,000 for a
personal return - BTW, my preparation
fees were much more than these)
can become common.
Some common problems in a tax
practice include:
■ Massive delays sending & receiving
signed engagement letters (if one is
even sent)
■ Delays in processing payments
on engagements (and sometimes
starting work before payment)
■ No structured onboarding process
■ Files and requests are being sent
back & forth via email (unsecured)
■ No reporting on the outstanding
requests per client
■Wait ing unt il last-minute tax
deadline for all files causing spikes
in the workload
■ Clients are local and submitting
files in person
■ The sales and onboarding process
is taking up 50% of billable hours
(that are not billable)
While tax planning is hard, we
often:
■ Don't know which questions to ask
■ Can't accurately calculate tax
savings
■ Can't discern how much would it be
if you toggled between strategies?
Entities? Years?
■ Don't know all the tradeoffs with
entities and retirement
■ Find creating the tax plan and making
it consistent takes a lot of time
■ Find it's hard to calculate savings
on a call with confidence
■ Find managers and staff can't create
estimates, proposals, or plans on
their own
■ Discover that I might know 90
strategies, but I don't have time
to apply them to my clients even
though I'm charging $5-10K
■ Don't know the actual tax savings
when each strategy adds deductions
and lowers taxable income across
tax rates
So, using the right tax planning
tool will allow you to:
■ Save clients more (most important)
than you previously believed
■ Collect all client information in
one place so you can see the status
■ Only start the return when you have
everything to finish it in one sitting
■ Automate 80% of the collection,
process, and deliverable creation
■ Focus on the questions and inputs,
and let the savings calculate for you
■ Add your own strategies and
override calculations when needed
JUNE 2021 ■ www.CPAPracticeAdvisor.com
9
http://www.pitbulltax.com/competition.html http://www.pitbulltax.com/competition.html http://www.CPAPracticeAdvisor.com
june2021

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