Tax season may be “over” in the symbolic sense that April 15th has passed, but as any practitioner knows, the work never stops. If you kept your head down during filing season, you might have missed significant developments that could impact your practice. And now that you’ve hopefully reintroduced yourself to your family and taken some time to recharge, it’s time to think about what comes next.
Hosts Roger Harris, EA, and Annie Schwab, CPA, tackled these issues in a recent Federal Tax Updates podcast, covering everything from mid-season regulatory changes to the practical steps firm leaders should take to prepare for whatever comes next.
What You Might Have Missed During Tax Season
First, Harris and Schwab discussed federal tax developments practitioners might have missed during busy season.
Employee Retention Credit Changes (Again)
The ERC saga continues to create headaches for practitioners. On March 20th—right in the thick of tax season—the IRS released three new FAQs that changed ERC reporting.
For years, the guidance required taxpayers to amend returns from the years when wages were paid to reduce wage expenses. But the new FAQs shifted course dramatically. “Now they’re saying you can report it in the year that you receive the funds,” Schwab explained. “So that means not going back years, potentially, and amending returns.”
This change addresses the statute of limitations that taxpayers ran into when they waited to amend returns until they received their ERC refunds (if they got them at all, given the IRS’s processing delays and moratoriums).
The March guidance tries to treat all ERC recipients equally while getting around the statute problem. But it raises questions about legal enforceability. As Harris noted, “Somebody will probably test it. And I know we’ve had some of our own people say this doesn’t seem legal.”
For now, the IRS stated what they want practitioners to do. “Until something other than a theory is out there, we’re telling our folks to put it in the current year,” Harris said. If you want to challenge this approach, make sure your clients understand the risks involved.
Beneficial Ownership Information (BOI) Reporting Put on Hold
Remember BOI reporting? The filing requirement that had everyone scrambling earlier this year? Well, the Treasury is no longer enforcing it.
“Treasury has found that it is not enforceable,” Schwab explained. The new administration decided to stop charging penalties and stopped fighting court cases to make people comply. The law is still on the books, but there’s no penalty for not filing.
Schwab suspects this isn’t the end of the story. “I don’t personally think it’s over. I do think it could return in some form or fashion, maybe focusing more on foreign entities.” But for now, that burden has been lifted from practitioners’ plates.
The IRS Situation: Cause for Concern
Perhaps the most troubling development is what’s happening at the IRS itself. The agency is going through massive upheaval that affects everyone who deals with federal tax matters.
Since Commissioner Werfel resigned when the new administration came in, the IRS has cycled through four different acting commissioners. There are no confirmation hearings scheduled for the nominated permanent replacement, Billy Long.
But the staffing situation is even more concerning. Harris shared details from his recent meetings at the IRS that paint a grim picture of agency morale. “Every Friday, one department gets its notice, and you don’t know when your Friday is until it arrives.”
That means every Friday, people find out whether their department is being eliminated, reduced, or restructured. “You find out on Friday this is your department, and sometime that day you will get some sort of communication telling you what your options are.”
Harris has even received calls from IRS employees looking for career advice or job opportunities. “I had a call from someone at the IRS asking for our opinion or help looking for a job.”
This is happening while Congress works on extending the Tax Cuts and Jobs Act through budget reconciliation. The real work is just starting, since the House hopes to have their plan done by the end of May, with everything resolved by July 4th. That may be aggressive, especially considering how much revenue various proposed changes would cost.
Time to Evaluate Your Business
Now for the good news: while external forces create uncertainty, this post-April 15th period offers an opportunity to strengthen what you can control.
Take a Hard Look at Your Software
Summer is prime time for software evaluation. “This is the time of year every software company bombards you with incentives to move to their company,” Harris noted.
But don’t make decisions based on price alone. “You shouldn’t pay a lot of money for software that has stuff in it you don’t do,” Harris said. “But by the same token, don’t try to work with something that’s less than what you need just because it’s cheaper.”
Get your staff involved in this evaluation. They often spend more time in the software. Consider complexity requirements, conversion capabilities, and the learning curve for any switch. If you decide to change, now is the time to do it so you can learn the new system while working through extensions.
Analyze Your Client Portfolio
While the software evaluation is fresh on your mind, take a hard look at your clients. Get input from your staff about which clients are profitable and which ones are problematic.
“Ask your staff, ‘Who are the clients we’re not making money on?’” Schwab suggested. “Who are rude to you or drive you crazy, or never return emails or phone calls?”
If you identify clients that don’t fit your practice, have an honest conversation with them. “Have the conversation,” Schwab said. “We’re no longer a good fit. I’m going to give you a disengagement letter. I’ll be happy to work with your new tax preparer if they need copies of returns.”
Pricing: The Ultimate Client Filter
Schwab’s rule of thumb: “If you haven’t lost a client by raising your prices, then you haven’t raised your prices enough.”
This principle makes sense in today’s market. Harris pointed out, “If you have people lined up at your door to use your services and you won’t let them in the door, then you better have the perfect client list.”
You can use pricing strategically. Tell existing clients your rates are going up by a specific amount or percentage for next year. They’ll either pay the higher rate (increasing your revenue) or move on (creating space for better clients).
Find New Revenue Opportunities
Look for opportunities to turn compliance problems into advisory relationships. Many of these opportunities hide in plain sight.
Consider clients who consistently owe large amounts at tax time or get huge refunds. “Those are easy discussions,” Schwab said, “because I don’t know a client that wouldn’t say, ‘oh yeah, I want more money in my paycheck’ or ‘tax season scares me because I always have to write these huge checks’.”
Harris provided the economic framework: “If you have people paying $800 in estimated tax penalties, they should pay you the $800 and not pay the penalty. It’s not going to cost them any more.”
Other opportunities include:
- Entity selection discussions for Schedule C businesses
- Reasonable compensation planning for S corporations
- Employee vs. contractor classification reviews
- Quarterly tax planning meetings
These aren’t just add-on services; they’re solutions to problems your clients are already paying for through penalties, missed opportunities, or inefficient structures.
The Bottom Line: Act Now
The key is to do this analysis while the tax season experiences are still fresh. As Harris warned, “If you keep doing the same thing, next year’s tax season is not going to change. It will probably get worse if you don’t make changes.”
External factors will continue to be unpredictable. The IRS situation may get worse before it gets better. Tax law changes are coming, and we don’t know what they’ll look like. But you can control your software, clients, pricing, and service offerings.
The firms that use this post-April 15th period to improve these areas systematically will be better positioned for whatever comes next. Those who wait until next tax season to make changes will find themselves in the same stressful situation they just finished.
Take some time off first—you’ve earned it. But then work on making your practice stronger, more profitable, and more resilient. Listen to the full Federal Tax Updates podcast episode for more detailed strategies and insights to navigate this evolving landscape. Your future self will thank you for the time you invest now.