Mid-stream assessment of tax season.

Editor's note: Mr. Holub chairs the AICPA Tax Division Tax Practice Management Committee. Mr. Muirhead is a member of the committee.

If you would like additional information about this article, contact Mr. Muirhead at [phone] or TCMUIRHEAD@ PMCH.COM.

Performing a mid-stream assessment in the middle of a practitioner's busy season can be critical to the overall success of that tax season. By appraising the situation, tax professionals can check the status of their practices and put measures into effect--even if temporarily--to combat any perceived shortcomings. Obviously, as time is short, any significant changes in firm matters are best left to the post-tax-season months. However, there are some things that can be done even at this stage without too much fanfare that can facilitate the remainder of the crunch period.

Reevaluate Technical Tax Resources and Line up Reinforcements

Most tax professionals realize all too well that, no matter how well-qualified they are, they cannot be experts in every phase of the tax law. The changes brought about by the Taxpayer Relief Act of 1997 have probably made their work this season even more challenging than anticipated. Perhaps the standard sources for tax information--the Code, regulations, paper or on-line tax services--aren't enough. It is not too late to make use of alternative research aids to cut down on time spent investigating unfamiliar or time-consuming topics. If you have not yet made use of them, consider tax-related Websites. Most of these sites are incredibly user-friendly, and many use the same search methodologies as tax research CD-ROMs. Using these sites may make the difference between a happy client and an ex-client. Further, for those who do not care to surf the Web, there is the AICPA's Tax Information Phone Service (TIPS) Hotline. This two-year-old program of the AICPA's Tax Division consists of a group of technical tax managers who will guide tax practitioners or their staff through any tax-related question at the caller's own pace. Open only to AICPA members, the service charges a reasonable fee per minute and is accessible by phone, voice mail and e-mail. (For more information, see the box on page 185.)

Reassess Auxiliary Technology Functions and Operations

Most tax practitioners and their staff probably spent considerable time becoming comfortable with their preparation and research software. In the process, they may have neglected lesser computer concerns. In all likelihood, some of these may have surfaced during the first half of the busy season and are now a source of irritation. While seemingly innocuous, the following technological aspects should not be ignored:

Internal and external client computer data management. Often, before information can be input into the tax practitioner's tax preparation software, a computerized spreadsheet or schedule needs to be prepared. This data can either be internal (i.e., generated by the practitioner or staff) or external (i.e., prepared by the client and submitted to the CPA firm for review and finalization). If practitioners or their staff are still having problems with data workflow despite system upgrades or changes, this may be the time to review the who, what, where, why, when and how of these two elements, as well as other ancillary matters.

* Who is responsible for maintaining client data (e.g., the staff member who directly works on the data, the senior who reviews it or the manager in charge of the client)?

* What client data should be saved (e.g., should client's original data be preserved as a protective measure)?

* Where should client files be saved (e.g., on the designated staff person's hard drive, a network drive or a floppy kept in that client's files)?

* Why (i.e., in what instances) should old data be saved (e.g., clients exceeding a certain threshold or in a particular industry who are more likely to be audited)?

* When should old files be purged from the computer (assuming a hard copy exists) to free up computer disk space and/or to recycle disks?

* How should client data files be organized on the computer (i.e., separate directories for correspondence, billing, tax research, versus on the network under each client or company name)?

Decisions on these issues should help staff professionals cope with the discrepancies that are sure to exist and allow them to focus on technical tax matters. Additionally, when dealing with external data management, if the transfer of client computer information is expected to take place during the remainder of the tax season, the compatibility of the client's software with that of the practitioner should be determined beforehand. And, as always, the importance of checking client-received disks for viruses cannot be overstressed.

Access to computer paraphernalia. Perhaps you've already experienced a near-crisis resulting from an internal control breakdown over computer accessories. Maybe it was the return that could not go out when promised because the printer ran out of toner and no cartridge could be found. Or the key computerized schedule that was lost because no floppy disk could be found to make a back-up copy. Whatever the experience, it is important to realize that while keeping control over auxiliary supplies is necessary, servicing clients should not be impeded. No one wants to waste precious time hunting around for a new toner cartridge (or floppy disk or co-axial cable, etc.). All staff should be made aware of who has access to what, and where the "emergency" supplies are kept. Further, if mobile computing is going to take place during the remaining time-frame, ensuring that your computer system will work at the client's location before the appointed day is a must. Consider having on hand a standby mobile computer bag (complete with extension cords, extra floppy disks, and cables for plugging into your client's printer) for the occasion.

Internet and Web-related items. First of all, if you still do not have Internet access, arrange for it immediately! The plethora of Websites available to assist tax professionals is mind-boggling, and new ones are being added constantly. From electronically downloading IRS forms to specialized tax research sites, the Internet has the potential to increase efficiency dramatically, if used correctly. Regardless of the extent to which the Internet has played a supporting role in your busy season so far, firms should review:

* Additional software and hardware needs: If a firm expects to download forms or instructions from Websites, other software may be needed to complete the process (e.g., Adobe Acrobat is needed to get forms from the IRS Website). While these Websites often provide free downloads of the software, these versions are usually for temporary use (not to mention the time that must be spent on the downloading). Purchasing the required software may be warranted. To take full advantage of the Internet, it is important that your computer hardware be up to the task. When information is downloaded from a Web site, the time necessary to accomplish this (and in some cases, whether it is possible at all) will vary greatly based on your hardware configuration. Check with your computer specialist to determine if an upgrade of your present system (i.e., processor, RAM, video card, modem) would help you to realize the full potential of this valuable resource, or to run other programs more efficiently.

* Website reliability: How accurate are the Websites that staff have been or will be accessing for information? You may wish to indicate which Websites have been previously approved, or establish a way to monitor which Websites your staff uses. The Websites listed below have proven their mettle; use them as a starting point for a Web library until you develop your own favorites. (For a list of some tax-related Websites, see the box on page 186.)

* Website accessibility: In conjunction with reliability, you may want to have staff bookmark certain firm-approved Websites before-hand for increased efficiency.

* Internet abuses: For all the benefits Web access provides, its abuse (or potential for abuse) cannot be over-looked. Be prepared to take action against the browsing of nontax-related sites (and the reading of tasteless jokes and other Internet junk mail) that will not be confined to non-work hours. Many firms have adopted formal electronic media and services policies, and require a written acknowledgment from staff persons. By signing, the staff person agrees to be bound by this policy, which will include penalties up to (and including) dismissal for failure to comply. Adoption of such policies can go a long way in curtailing abuse.

Reassess Miscellaneous Ancillary Personnel Needs and Policies

For seasoned practitioners, crunch time is just another notch in the busy season belt; for new staff or even staff with just a few years under their belts, however, it can be a harrowing experience. Examine how the staff is coping with what has transpired to date. Is the level of overtime sufficient to get all of the work to be done out the door on a timely basis? Indicate to the staff your decisions in this area and make sure they understand why the level of hours indicated is necessary.

Now may be the time to call a mid-season staff meeting both to commend them for their hard work so far and to allow them to air grievances and/or make suggestions. Be prepared to discuss some of the "unwritten rules" and other gripes common to the staff:

* When overtime meals can/should be taken.

* Where overtime meals can/should be ordered from.

* If staff members are expected to contribute to any meals (e.g., bringing in bagels on Saturday mornings).

* What to do about any downtime.

* Preferred methods of communicating with superiors/managers (e.g., in person, e-mail or voice mail).

* Frequency and time length in communicating with superiors/ managers (e.g., detailed voice mails versus limited-time voice mails, daily contact versus checking in on project stage completion).

* Handling of priority clients (e.g., when can a nonpriority client's work be put off or is it a true first-come, first-served system), and who has the authority to make such decisions.

* Documentation policies that can and cannot be relaxed (e.g., what can really wait until after busy season).

Reexamine Administrative Staff's Role

This may also be a good time to take a look to see if the administrative staff is being used to its capabilities. Perhaps they need an upgraded computer system or enhanced software. Technology has changed many of the tasks and responsibilities of our professional staff, including in many cases what was once done exclusively by a secretary (computerized cover letters and invoices are good examples); once the new system has been in place for a few weeks, the administrative staff may find itself with additional time on its hands. In such cases, a shift in tasks may be warranted. Thanks to user-friendly computer software, technologically astute administrative or clerical workers can more easily be taught low-level professional staff functions, freeing up professional staff for more cost-effective matters. From filling out schedules and work papers on the computer to basic on-line tax searches, administrative personnel may be the tax practitioner's secret weapon to a winning second act.

The March-April 15th stretch is, without a doubt, a stressful period. Although the season is more than half over, there is still a lot of action to follow. By following some of the guidelines and suggestions discussed in this article, the chances that your 1998 busy season will have a happy ending should be much improved.

RELATED ARTICLE: TIPS

The AICPA's Tax Information Phone Service (TIPS) is geared up to help members with the current tax season. TIPS is staffed by experienced tax professionals who can assist members with their tax issues. TIPS can be reached via telephone at [phone] (option 3) or online at www.aicpa.org. The cost of the call is $3 per minute ($2 per minute April 16-July 31 and October 16-January 14; prices subject to change). TIPS accepts MasterCard, VISA and Discover cards. For mare information, call [phone].

RELATED ARTICLE: Tax-related Websites

www.aicpa.org--           The AICPA's Website, rated highly by
                          professionals and non-CPAs alike. This
                          site gives AICPA Tax Division members
                          access to the online version of The
                          Tax Adviser.

www.taxsites.com--        Probably the only other tax Website
or                        you'll really need, since either is a
www.el.com/elinks/taxes   "metasite" (a site whose sole purpose
                          is to provide links to other Websites
                          of the same topic).

www.irs.ustreas.gov--     Homesite of the Internal Revenue Service,
                          helpful for accessing and downloading
                          Federal forms, instructions and other
                          IRS materials.

www.ssa.gov--             The Social Security Administration's
                          Website, which includes the text of
                          totalization agreements the U.S. has
                          with various foreign countries.

www.mtc.gov--             This site is a must practitioner who
                          service multistate clients. Here, the
                          Multistate Tax Commission keeps you
                          informed on state uniformity of nexus
                          issues.

www.ipl.org--             Even the Internet has a public library,
                          and this is it. A great source for links
                          to background information and numerous
                          on-line publications.

The Big Six and           Although designed to market the firm's
national firms            products and services, these sites offer
                          useful information with their respective
                          tax pages and links:

sites--                   www.arthurandersen.com
                          www.colybrand.com
                          www.us.deloitte.com
                          www.bdo.com
                          www.gt.com
                          www.kpmg.com
                          www.ey.com
                          www.pw.com

Other sites--             The larger firms aren't the only ones in
                          the game; some smaller practitioners are
                          offering their own blend of creative and
                          informative tax sites. Some to try: www.
                          taxman.com; www.taxwizard.com

By T. Chris Muirhead, CPA, Porter, Muirhead, Cornia & Howard, Casper, Wyo.