A recent item at TheStreet.com on the effects of possible tax simplification on the H+R Block stock told us -
“BTIG analyst Mark Palmer writes that ‘some clients have ‘expressed concern’ about ‘the possibility that the U.S. government will embark on a new program of tax simplification that would obviate much of the need for tax preparation assistance’."
I do not think tax preparers have anything to worry about. It is true that increased complication does increase business (The Tax Reform Act of 1986, a major rewrite of the Code, was properly nicknamed “The Accountant’s Full Employment Act) - but the opposite is not necessarily true.
While I have little hope that there will be true substantial tax reform or a true simplification of the mucking fess that is the Tax Code in 2013, I, a veteran tax professional, would truly welcome it. I have said over and over again that dramatically simplifying the Tax Code would NOT affect my business.
If I were to spend each day during the tax season preparing nothing but 1040A forms, I guarantee that I would bill more fees, spend less money, reduce my potential liability, and have less agita to deal with both during and after tax-time. While I obviously charge a higher fee for more complicated returns, I make less profit per hour on these returns. I honestly believe that a truly simple Form 1040 would increase both my efficiency and my bottom line.
If tax returns were much easier to prepare I do not see my clients leaving me en mass to do their own returns. Many of my current 1040 clients could probably prepare their own tax returns under current law. They come to me because they do not want to be bothered with the task of doing it themselves. Because my fees are reasonable it is easier, and more cost and time effective, to have me do it. Plus they want to be sure they do not miss anything.
And with any tax simplification there would still remain enough complexity in certain areas of the Code to keep us busy. We would still need to prepare a Schedule C for business income, a Schedule D for capital gains and losses, and a Schedule E for rental income.
So tax professionals should not fear tax simplification. We should embrace the possibly and actively campaign for it.
What do you think?