Change is inevitable, especially in the tax world…

It’s been a wild ride for the past two years in the magical land of Taxlandia.

We’ve seen shifting IRS enforcement priorities, endless debate about the Bush-era tax cuts, burdensome new reporting requirements, and the dawn of IRS oversight of non-U.S. financial institutions with the passage of FATCA. Who would have thought we’d see a day where Swiss banks lifted the secrecy provisions they’ve maintained for eons, let alone see the devaluation of the Swiss franc?

We’ve seen five European nations declare the insolvency of their financial systems. Here at home, we’ve enacted an individual health care mandate that will be enforced through the IRC, and operated our Federal government without a firm budget solution for two entire fiscal years now.

In tax resolution, we’ve witnessed the bankruptcy or regulatory shutdown of the five largest national tax resolution companies, creating massive market opportunity for smaller firms. The IRS has expanded streamline resolution criteria, and fixed what I considered to be the most egregious flaw in the Offer in Compromise program, the remaining income multiplier for calculating RCP. Who would have guessed that they would ever actually fix that problem?

On the marketing side of things, we’ve seen the debt settlement provisions added to the Telemarketing Sales Rules, which gave us all momentary pause until the temporary exclusion of tax debt settlement was announced, but which still leaves many people asking questions since it’s not really settled yet.

When James and I first sat down two years ago to create a web-based platform for cost effectively delivering tax lien sales leads to tax practitioners, the TSR debt settlement provisions hadn’t been announced. The month we went live with this web site, the provisions came into force, causing a slight shift in our own long range business plan.

Acknowledging that change is inevitable is healthy. Looking to the future, what sort of changes can we expect to see that directly impact those of us that make our living through tax services?

This year’s PTIN requirement already eliminated tens of thousands of tax preparers from completing returns, and the examination requirement for next year will thin those numbers even more. I see this as nothing but a good thing for licensed professionals.

We have yet to see any enforcement at all of illegal telemarketing by unlicensed salespeople, but I think that is very soon to change. And yes, it is illegal for an unlicensed person to telemarket to solicit for tax representation work, and has been since 1982 (see Revenue Procedure 81-83, Section 8). But since we help the IRS with collections, they haven’t seemed to mind so far. Once they start enforcing this, however, you’re going to have to shift your marketing to other methods if you currently engage in telemarketing with unlicensed openers/closers.

I’m sure you’ve noticed us creating new resources for you to do these other types of marketing, and this is precisely why.

Due to problems in the tax resolution industry, we’ve also seen several attempts at creating industry trade groups. Several of these groups have been started, and most of them did not go far. Some, such as ASTPS, have survived and turned into successful businsses themselves. We saw a recent national conference gathering in Washington, D.C., which managed to put a good symposium together and even draft proposed legislation to Congress (although, to be honest, the entire legislation proposal is a copy and paste of Circular 230, so doesn’t really change anything). Efforts are being made to get rid of the bad apples in tax resolution that give us all a bad name, and it will be interesting to see where those efforts lead.

The Supreme Court upholding the Affordable Care Act last week promises to introduce new challenges for even the smallest tax practitioners within the next two years. Expiration or extension of the Bush cuts are still up for discussion in Congress this year, effecting client tax planning today. Federal budget issues, telemarketing enforcement, potential swings in Congress and the White House…all sorts of potential changes face us just within the next 6 months.

Being prepared for change is an essential part of managing a successful practice. Be sure to have a plan to respond to major changes in regulation, legislation, and enforcement. And definitely don’t have all your eggs in one basket, be it your service offerings, client sectors, marketing matrix, IT solutions, or anything else. Diversify, plan, learn, grow.

Adapt for change – don’t let change force you into a corner.

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