Seasonal workload increases for small practitioners.

A nationwide survey of 1,449 CPAs conducted by the American Institute of CPAs tax division found the workloak for CPAs has shifted significantly since the Tax Reform Act of 1986 was passed. More than 96% of the responses were from sole practitioners or local firms. They indicated a 20% increase in the CPA's workload in the January 1 to April 30 period since 1986. Moreover, the number of firms that generate between 50% and 60% of their billable hours between January 1 and April 30 rose by 36%; the number that generate 60% to 70% more than doubled; and the number that generate over 70% almost tripled. In short, the historically heavy workload of the traditional tax season has now come close to the breaking point for many CPA taxpayer advisers.

The TRA has forced many small businesses to switch from fiscal to calendar years, thereby increasing the tax season workloak for CPAs. Responses to the survey indicate only 1 out of 10 partnerships, 1 out of 5 S corporations and 1 out of 3 personal service corporations that operated on a fiscal year before the TRA remain on one now. CPAs believe that many clients would return to a fiscal year if section 444 were liberalized and simplified (see exhibit 1 on page 18).

The AICPA has recommended a revenue-neutral approach to modifying the tax laws to make fiscal years available to small businesses. The Institute argues the uneven workload affects not only tax but auditing and accounting practitioners as well, because financial statements normally are due 90 days after yearend. Moreover, Congress has recommended implementing staggered filing of returns to lessen the processing problems that have plagued the Internal Revenue Service in recent years.