It’s that wonderful time of year in which I must take a few minutes to remind all my readers about two specific facts that many either want to ignore or simply forget.
Fact #1: Tax prep as a professional service is dying.
Fact #2: Offering tax prep services in your practice is 100% optional.
If you enjoy preparing tax returns, and dealing with those type of clients, then you can just ignore this message.
But if you’re sick and tired of dealing with the returns….sick and tired of dealing with the cheapskates…sick and tired of the procrastinators, whiners, and complainers, then you should keep reading.
In case you’ve had your head buried in the sand, 1040 return preparation, the revenue backbone of most independent tax professionals, is DYING.
Yes, dying. It’s going away. Within 5-10 years, the majority of your clients will NOT be coming to your for their tax returns.
Some uncomfortable information for you…
…the 2019 filing season saw the first drop in paid preparer usage since the launch of e-file in the early 90’s.
…large public accounting firms (e.g., the IPA 100), have been offshoring most of their 1040 tax prep for two decades. There’s a reason that about 10% of all licensed EAs are based in China and India.
…artificial intelligence is already eating in the 1040 prep market. Two AI-driven tax prep solutions launched last filing season, and they’re going to be running even more marketing this year. H&R Block has been using IBM’s Watson AI system for a few years, and they just launched their new mobile app that will serve the majority of simple 1040 customers.
…as more W-2, 1099, etc. data is able to be imported electronically, eliminating the data entry, the software becomes more capable of running without YOU. It’s never been easier to prepare a US 1040 for the vast majority of returns.
…even tax pros are shifting to automation systems, such as Gruntworx and SurePrep, to eliminate the data entry for many returns and insert the right numbers into the right place (and then an AI system double-checks everything).
The role of the professional 1040 return preparer is going the way of the travel agent. It’s happening right now, with or without you, and if you choose to ignore this, then that’s on you.
So, what is a tax professional to do? I offer up two simple, but powerful, solutions:
Solution #1: Niche your … Continue reading