Economists generally define a recession as two or more consecutive quarters of GDP contraction.
We won’t know for six months, and I’m not a gambling man, but I feel pretty certain that later this year we’ll be saying, “Yes, that was a recession.”
The prospect of a recession seems to be causing some fear within the ranks of tax professionals.
Fear that they won’t be able to collect from existing clients, thus impacting their own ability to pay the rent, make payroll, or feed their families.
Fear that their own tax practice may go the way of the dodo bird.
Some tax pros are, as a result, heavily discounting their tax prep fees in order to keep people coming in the door. Some are waiving up front fee requirements on representation engagements. Some accountants are intentionally delaying invoicing their clients for work performed, on the misguided assumption that those clients just can’t pay all of a sudden.
These reactions to the pandemic and pending recession are based on fear, and they are the absolute wrong reaction. I’m not going to mince words: If these are the types of actions you’re taking with your fees right now, STOP IT.
Instead of viewing the recession from a perspective of fear, I want to encourage you to view this as an opportunity. Yes, opportunity.
Back in 2008, I was in Chapter 7 bankruptcy and homeless as a result of the Great Recession. By shear dumb luck (or maybe divine intent, depending on what you believe), I ended up taking a job at a tax resolution firm because I needed a job, and they needed a Jassen.
I had never even heard of “tax resolution”, and I didn’t previously come from a tax or accounting background.
But entering the tax profession turned out to be the best financial move of my entire life.
See, during the Great Recession, the number of people with a tax debt spiked. This is common during a recession, and I guarantee it’s going to happen again this summer.
This created a Golden Age of tax resolution from 2008 through 2010, one that I never thought would be repeated.
But in all honesty, this one, in 2020, is going to be even better, for a wide variety of reasons that are beyond the scope of this email.
Heck, it’s not just representation. Tax planning, advisory, ERC, payroll… All of it. This … Continue reading