Tax Season Post-Mortem
Here’s an old photo of us from 2019. Our team has grown so much since then but we haven’t been able to get together in person yet because of the pandemic. L > R Will, Shane, Matt, AJ, and Alexa.
TL;DR: COVID made things incredibly difficult but we’re proud of the work we did with small businesses to get relief but we could have been faster to respond to messages and been more realistic about timelines.
Nobody likes paying taxes.
That much we know. At Brooklyn FI, we aim to make the process of filing taxes as easy and painless as possible. We’re tax nerds, we just LOVE this stuff: all the rules and regulations and tips and tricks and we do our best to make it a positive experience for those of you who are not tax nerds (literally everyone who doesn’t work at an accounting firm). There’s no easy way to play a game of telephone between your highly classified SSN-riddled tax documents and the IRS who uses computers the size of your air conditioner, but we spend a lot of time thinking about how to make this process better and easier for you.
If we only see you once a year, it’s hard for us to catch up on everything that’s happened in your life (new house, stock sales, new job, new family member, etc). If you’re not already meeting with us on a regular basis as a financial planning client or an outsourced accounting client, you haven’t yet felt the truly awesome synchronicity of having your taxes, books, investments, and financial advice all come from one place.
There’s no way around it: This tax season was absolutely bonkers and we’re so grateful to our clients for their patience as we navigated TRULY uncharted waters. The IRS called this tax season “UNPRECEDENTED.” Oh joy.
Transparency is one of our core values so we wanted to share our thoughts on how this tax season went. We reflect on what was beyond our control, what we did well, and what we could have done better.
What follows is a post-mortem on tax season 2020.
What happened …OR… Wow, that really threw us for a loop:
A pandemic resulting in major disruptions in work (did you hear?).
The IRS basically shut down and an already understaffed and underfunded agency was in a difficult position. It was almost impossible to get responses in those first few months and any existing issues are in a giant pile of unread mail (estimates are close to 5 million returns waiting to be read and processed).
We waited on the edge of our seats for local and state governments to confirm the new tax deadlines and the penalties associated with not meeting them.
We lost crucial workdays right around the first tax deadline to implement data security measures as our staff packed up their computers and went to work from home. We’ve since successfully built a 100% virtual practice with staff members all over the country.
A lot of our clients lost jobs or watched their businesses shut down so we pivoted our resources (time) to help those clients receive lifelines in the form of stimulus checks, Paycheck Protection Program loans, and SBA loans. There was a sudden spike in the need for financial advice and it was too late to hire quickly. Congress leaned heavily on accountants to help businesses access these funds and we allocated a lot of our resources to just that. We’re truly sorry that your tax return may have taken longer to get processed. Really, we are, and as you’ll read later, we’ve taken large strides to make sure that doesn’t happen again. We had to do some triage and make some choices based on our core values as business owners and human beings.
·The CARES act created new tax rules we had to understand and apply quickly. New tax legislation has been passed about every three weeks since March. We’re still waiting on some major updates and changes related to PPP loans.
The extended deadline from April 15 was good news for some folks but it really just dragged out the deadline and extended our busy season by three months
What we did well:
We got over $1,000,000 of PPP loans for our hard-working clients out the door in record time. We helped almost 100 business owners get a lifeline to keep their businesses afloat and their staff on payroll. There were emotional ups and downs but we’re proud of the work we did and the education we provided to our clients.
We communicated every step of the way – we tried a new email system that notified our clients each step in the journey of the tax return. It was our first go at it and most clients reported they found it helpful. We hear that most clients don’t hear from their accountant often enough or don’t know the status of their tax returns. Our automated email system was intended to keep you up to date. We’re striving to make those more personal and clearer in the future.
When news came about the Economic Impact Payments or “stimulus checks” or “that free $1,200” we quickly reached out to clients and combed through every 2018 and 2019 tax return to make sure our clients could qualify for the benefit.
We transitioned our staff of 7 to fully remote work in 48-hours. We heard sad stories of accounting firms that simply had to stop work because they could not make the transition to remote work.
Because there was so much new information coming out so quickly and there was so much financial turmoil, we wanted to share our findings with our clients so we hosted our first webinars – we think they went pretty well!
We staffed up! We hired a Tax Manager Emily right in the middle of all this – she brought tons of experience and a watchful eye as a reviewer. We’re excited to have her! We also added John, Jason, and Bridgette to our financial planning team.
What we could have done better:
We overpromised quick turnarounds in January that quickly became unrealistic when the realities of COVID set in.
Taken a break when we needed it – our management team and most of our staff have been working 6-7 day weeks since January and we got burnt out. Usually, we take some time off after the crunch of tax season but due to the constant deadline shifts, we didn’t do that. We’re all doing great now though now that it’s all over. We took some time off in late December.
In an effort to keep you up to date on the status of your tax return we implemented automated emails that went out whenever someone on the tax team worked on your return. Those emails will be much better and more targeted to your experience in the future.
A fully digital practice is more reliant on software and when that software breaks, we’re paralyzed. One of the pieces of software we use failed us very close to the deadline which caused some delays. We’ve since migrated our data and replaced the weak link.
Some clients waited too long for responses to status updates and questions in the portal– this is NOT the outcome we wanted and we have taken steps to make sure this doesn’t happen again. Thanks for your patience and understanding.
Shane’s plate became way too full way too early in tax season to handle the CARES act response. We couldn’t have planned for a pandemic and resulting tax legislation but with hindsight, we should have had another senior tax person on the team at the start of the year. We hired Emily in late May. It’s not easy to hire high-quality tax people in the middle of tax season :). Emily is very high quality and we’re lucky to have her.
How we’re going to be different next tax season
Staffing – we’ve hired an “air-traffic controller” – this person is going to make sure no return is stuck in one stage for too long. Her name is Alexa San Roman. This will not only speed things up but will ensure fast and accurate responses along with status updates.
This year we saw just the beginning of the CARES act and all the relief it provided – in 2021 we’ll have to reconcile all of the things that happened in 2020. Even now, a brand new and much-needed stimulus package making its way through congress. Our team will be spending the next six months devouring everything there is to know and providing you with timely and easy to digest updates.
We take your feedback very seriously. No one likes paying taxes and no one likes to hear that they owe money. We do our best to be transparent and communicative with you. The complaint we hear most often from most new clients is that their accountant went MIA or wasn’t transparent about costs and ran up large hourly bills. We aim to have transparent pricing and communicate with our clients through every step of the tax return’s journey.
We have some exciting stuff coming down the pipeline. Thanks for working with us this year and we’ll be in touch soon.
-AJ + Shane + The Brooklyn FI Tax Team
November 2020