Tax & Accounting Blog

Lessons from the Front Lines: A Look Back at Tax Year 2015

Accounting Firms April 19, 2016

As tax season comes to a close, those of us in the accounting profession may be breathing a sigh of relief heavier than in years past. With the continued incidents of tax-related identity theft and the impact of new legislation on businesses and individuals, tax year 2015 was certainly one for the record books.

While there is no doubt identity theft will continue to be an issue and regulations will continue to evolve, the use of technology can ease the burden on accountants. As proof, let’s take a look at the events of the 2015 tax year and how technology helps in addressing the related challenges.

1. Tax-related identity theft and related scams

Tax-related identity theft continues to be a major threat to taxpayers across the country, both from a state and federal perspective. Most states have slowed the state refund process as they work to combat identity theft and the IRS has issued numerous alerts on a variety of tax scams, with a recent alert indicating a 400% increase in email tax scams this filing season over the last filing season. Further, while it’s common knowledge that tax return preparers and other tax professionals must constantly be on guard against hackers, several “phishing” schemes aimed specifically at tax professionals gained steam this tax season.

Couple these issues with the fact that the IRS is taking an average of 278 days to resolve identity theft cases and it’s clear that the process of receiving assistance if your client is a victim is a slow one.

How technology is helping

Not only has the IRS recently added more than 20 new data elements to help authenticate taxpayer information, they are also requiring tax software providers to adhere to certain authentication standards to minimize criminals’ ability to take over an individual’s account. And together, the IRS and tax software providers, states, and others joined forces starting last summer to combat tax refund fraud via a public-private partnership.

2. The Affordable Care Act

The passage of the Affordable Care Act (ACA) has brought major change to the accounting profession as individuals and companies are increasingly turning to accountants and tax preparers for help in complying with new health care mandates, understanding health insurance decisions, and assistance in completing a series of new tax forms. As a tax practitioner, it is now your job to not only verify that your clients have health care coverage, but also to help them determine if they are exempt from the requirement for health care coverage, and calculate the Premium Tax Credit, if it applies.

How technology is helping

Whether you’re working with an individual or a small business, upgraded ACA-specific software tools and online resources can help you provide guidance to clients that results in a more optimal outcome when it comes to their health insurance decisions. For example, enhanced software tools can help you quickly and easily compare the penalty for not having health insurance with the cost of buying coverage for your clients. These tools can also provide clients with a worksheet detailing whether or not their coverage is affordable.

On the business side, there are payroll products that you can exercise to better advise small businesses to identify how many full-time employees they have and whether they need to provide health insurance. You can use these same tools to help those businesses make informed hiring decisions that impact their bottom line and help predict future costs.

3. Same-sex marriage

The 2015 Obergefell decision paved the way for consistent filing status between federal and state income tax returns for same-sex couples legally married under state law, regardless of their state of residence. With these rulings comes equal tax treatment, the implications of which are now becoming clearer for tax and accounting professionals.

How technology is helping

With these momentous changes now in effect, accountants must make sure they are utilizing software that is updated to reflect recent legislation and case law and that offers specific data entry procedures for numerous client scenarios. This allows you to provide valuable advice to same-sex couples and process their returns in an accurate and timely manner, and minimize the couples’ tax burden.

Preparing for next tax season

While it may seem early to be thinking about next year, the time you invest in implementing or upgrading your firm’s technology is the key to turning the challenges of next year’s tax season into opportunities. Firms that embrace technology have the ability to analyze a taxpayer’s situation, look for tax savings opportunities, and help them plan strategically for the future.

So, once you’ve caught your breath, take some time this “off-season” to research how technology can help your firm get a jump on next year’s tax season and better serve your clients.

Share your story

Has technology helped you this tax season? If so, I’d love to hear about it. Share your story in the comments section below.