Rubbing the 2023 Tax Season Crystal Ball

If you follow #taxtwitter at all, you know there was A LOT of talk about how this year was “The WorSt tAx seASon In a gEneRAtioN!”

It was so bad, that a lot of people jumped the tax preparation ship without hesitation. Maybe that’s you.

Funny thing is, I was talking with a client the other day, and he told me that he and his office had one of the BEST tax busy seasons in memory — smooth systems, greater profit, good leads flowing like water, and more profitable than ever.

So, why the disparity?

There are a bunch of reasons to account for widely divergent experiences, relating to positioning, client communication (or lack thereof), pricing, staffing, and more.

But no matter what kind of practice you operate, you will be struck by industry and market forces out of your control during busy season.

After 19 years in the accounting and tax industry, I’ve learned to see where things are going FAR better than I used to be able to (with some input from those in the industry). And I want to help those in the professional accounting and advisory industry see what’s coming, too.

My good friend Andy Frye (Pronto Tax School) and I recently rubbed our 2023 Tax Season Crystal Ball and here’s what we saw taking shape… and how you can navigate it.

1) A lame duck Congress will bring chaos (again) to the early part of tax season. But this chaos spells an opportunity for you to serve your client base and marketing area… and bring in some profit. Be nimble – finalize your marketing and operational plans before year-end. Make the changing policy and your ability to navigate it a selling point in your marketing.

2) If you have excellent client relationships you’ll continue to bring in as much business as you can handle. But practices that haven’t built a year-round communication plan with their clients will face price pressures, departures, and flat growth. Develop a strategy now to deepen client relationships through consistent, education-based communication.

3) The new 1099-K rules regarding CashApp, Venmo, and other electronic payment programs will create profitable chaos for pros who are prepared for it. Have ready-to-go answers for all your team members when client (and prospect) questions come your way. Make it easy, fast, fun, and enjoyable for your clients in navigating these things.

4) Previously ancillary service lines will become essential and good clients will seek a practice that offers them. If you’re a “short-form warrior,” augment your practice. Prepare for the eventuality of pure tax preparation becoming less and less popular. Get certification and training in tax planning, resolution, and business advisory services.

5) Practices that serve business owners year-round will sustain BIG growth. Business owners as a particular population will a) be frustrated with their existing solution if someone isn’t communicating (change, chaos, big credits expiring—ERC, transfer to someone who does them well) and b) those who have done it in-house will need some help. Develop a plan for a business service category. Determine your monthly retainer and charge extra for tax preparation.

6) Affordably-priced, reliable, independent 1040 tax preparers, aka “short form warriors,” will retain and regain significant market share. So, develop and fine-tune a budget-friendlier tax prep option (e.g. “C Note Special”) that junior team members can fulfill without involvement from senior team members. Use tax prep as a loss leader.

7) State tax issues will drive people to hire a tax professional instead of DIY’ing their own returns. There are a lot of state tax changes happening and ERC businesses will be facing state payroll tax chaos. Study up and get more confident in dealing with the most common state tax issues (e.g., multi-state, remote workers, move-outs, move-ins, business income apportioning, etc).

Now, one last thing I’ll mention here. My team and I (along with the team at Pronto Tax) are hosting our first, live and in-person event in San Diego in less than a week. We created the Knowledge Share Extravaganza to help you establish connections, walk away with progress made, and develop a PLAN for ENJOYING your tax career no matter what the future brings.

Whether you come or not, I know, that if you’ll prepare now for what’s to come, you’ll enjoy less stress and more success when busy season arrives. And it’ll be here before you know it. So, start planning.