The IRS Can Help You With Client Retention
As IRS post-filing compliance initiatives and notices continue to increase, improve service and efficiency in your tax practice with IRS Form 8821.
December 8, 2011
Sponsored by Beyond415
by Jim Buttonow, CPA.CITP
With tax season quickly approaching, most tax practitioners are focused on providing tax preparation services for their clients. Clients expect you to get their tax returns right each year, and they don’t expect to have problems after filing. But compared to 10 years ago, that picture is changing, as all major areas of Internal Revenue Service (IRS) post-filing compliance are up.
With the IRS sending more than 201 million notices a year to 156 million individual and business taxpayers, the likelihood of IRS interaction after you file your client’s return is high. In fact, compared to 2001, it is up more than 570 percent.
The IRS notice represents a potentially tenuous practitioner-client interaction, and tax professionals face a complex problem:
Given the increase of compliance by notice, it’s time for practitioners to change the way they serve their clients. This represents an opportunity to strengthen client relationships and solidify yourself as your clients’ year-round trusted tax advisor.
IRS Form 8821, Tax Information Authorization, allows you to receive copies of your client’s IRS correspondence, including all IRS notices and letters, at the same time your client receives them.
With Form 8821:
When you receive the notice at the same time your client does, you’ll have more time to resolve the issue and avoid premature assessments, erroneous IRS actions and the resulting second and third notices.
Avoiding the second and third notice is key. Receiving subsequent notices is largely due to IRS processing delays. The IRS processes post-filing mail on time in only 19 percent of accounts management cases. Receiving the notice well before the deadline helps you complete all of the details necessary to resolve the issue on the first response. It also alleviates client concerns about how you’re working with the IRS.
Receiving client notices with Form 8821 also allows you more time to scope the engagement, including billing. A recent independent study of accounting firms found that firms spend, on average, 67 days a year on post-filing activity — but they can bill for only 28 percent of this time. Scoping the work involved is important. If notices are delayed, you’re more likely to be rushed and not formalize the engagement. This can lead to hours of unexpected, unbillable time.
Form 8821 also represents less risk than Form 2848, Power of Attorney. Form 8821 does not permit you to advocate your client’s position to the IRS. However, it allows you most of the options you need for your firm to provide year-round service:
Here’s how to introduce Form 8821 to your clients:
All major areas of IRS post-filing compliance activity are up and will continue to increase. Form 8821 is a client service opportunity for practitioners to be proactive when their clients receive a notice, leading to better client retention and efficiency when working with the IRS.For more information, visit Beyond415.