As a trusted advisor to your clients, you understand the importance of having access to credible tax research sources to help you keep pace with today’s complex regulatory environment. This includes both primary and secondary sources of tax laws.
Oftentimes, this may be easier said than done given that many of today’s practitioners are so strapped for time considering rising client demands and expectations, as well as staffing constraints. In fact, the most recent Top Firm Issues Survey by the AICPA found that “keeping up with changes and complexity of tax laws” continues to be a top issue for most CPA firms.
It is important that practitioners leverage up-to-date tools to ensure they are getting information from authoritative primary and secondary tax law sources as easily and quickly as possible. Let’s take a closer look at how firms can spend less time on tax research without sacrificing accuracy, quality, and efficiency.
What are the primary sources of tax law?
Primary tax authority comes from statutory, administrative, and judicial sources. This includes, but is not limited to:
- Internal Revenue Code
- Revenue Rulings
- Financial Accounting Standards Board (FASB)
- U.S. Tax Court
- Supreme Court
- Circuit Court of Appeals
- Tax Treaties
- Treasury Regulations
What are the secondary sources of tax law?
Secondary tax authorities are unofficial sources of tax information such as journals, tax services, and newsletters. More specifically, sources include, but are not limited to:
- IRS publications
- Tax journals and newsletters
- Tax services
- Press releases
- Annotated services
Analyzing tax authorities
Once accounting professionals have located their tax research sources, they must then assess and analyze the tax authorities. This can, perhaps, be the most time-consuming and challenging aspect of the tax research process.
Why? Practitioners must determine whether the tax authority actually applies to the facts and issues of their client’s particular situation, and assess the importance. This isn’t always straightforward.
For instance, even if staff turns to a trusted source like IRS.gov or a state website for information, it can still present inefficiencies because they must then apply that information to the specific situation their client is facing. Plus, guidance on these sites can sometimes be difficult to fully understand.
That’s why leveraging a tool that can scan thousands of primary sources and editorial interpretations to quickly surface relevant information is important.
How to conduct tax research
Conducting tax research is a multi-step process that, without the right tools and resources in place, can soon become tedious and time consuming. Let’s take a closer look at some of the key steps.
- Establish facts and circumstances: You need to determine which tax laws pertain to your client’s specific situation. To do so, begin the tax research process by establishing the facts and circumstances provided by the client.
- Determine all tax issues: The second step is to determine all of the tax issues affecting your client’s situation. This step in the process can be like peeling back the layers of an onion, especially when it comes to complex tax issues.
- Identify tax research sources: The third step is to identify the tax research sources that pertain to your client’s tax situation. This means sources that both support and contradict the scenario. This process usually begins with primary sources of tax law such as the Internal Revenue Code, Treasury Regulations, U.S. Tax Court, Supreme Court, etc.
What is the best way to research tax issues?
While turning to primary tax research sources is obviously very important and a key step in tax research that mustn’t be overlooked, it can still present inefficiencies because practitioners must then apply that information to the specific issue their client is facing. Plus, guidance on these sites can sometimes be difficult to fully understand.
To research a tax issue, it is essential that practitioners are able to bridge the gap between interpreting tax law and reporting real-life client transactions.
How? This can be achieved by leveraging tax research software that utilizes artificial intelligence (AI). In addition to using natural language processing, which makes conducting searches extremely easy, the solution should have the capability to scan thousands of primary sources and editorial interpretations to quickly surface relevant information. Furthermore, it should continually synthesize users’ questions and search behaviors to learn and improve search results as it is used.
This means practitioners can quickly find specific information pertinent to their client’s tax situation earlier on in the tax research process. This saves time and reduces the risk of errors and misinterpretation of information.
Consequences of poor tax research
Poor tax research can negatively impact firms in various ways. For starters, poor research places accountants at greater risk of misinterpreting information and making errors. This could result in penalties as well as damage to a firm’s reputation.
Furthermore, clients want and expect prompt and accurate answers to their tax-related questions. When firms are unable to deliver on these expectations it erodes client loyalty. This increases the chance clients may switch to another firm that has more robust tax research tools in place and can better meet their needs.
It is also important not to underestimate the impact poor research capabilities can have on staff. Many of today’s practitioners are feeling overwhelmed and strapped for time given the rise in client demands and staffing constraints. Firms that do not leverage technology, including innovative tax research software, to enable staff to work smarter and faster risk losing talent to the competition.
Making the business case for tax research software
Given today’s complex regulatory environment, rise in client expectations, and ongoing staffing constraints, it is more important than ever that firms are leveraging up-to-date tools to ensure they are getting information from quality tax sources as easily and quickly as possible.
To achieve this, consider turning to a solution like Thomson Reuters Checkpoint Edge. Checkpoint Edge is an accounting and tax research tool powered by AI and machine learning to get targeted search results in less time. Time is money, and tax professionals can’t afford to lose time with inaccurate research results.
If you’re concerned about making the business case for tax research software, read “Why pay for a tax research tool?”