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Written by: Mark A. Luscombe, JD, LLM, CPA

Published: 12 May 2017

Perhaps an even greater surprise for nominees attending the 89^th Annual Academy Awards than finding out who really won the Best Picture Award will be learning that those Oscar gift bags of swag come with serious tax obligations. The tax law does not view these gift bags as true gifts because the motive of the businesses in providing their products or services is to promote that product or service, not because of a philanthropic motive.

If a nominee is in the top federal income tax bracket of 39.6% and receives a gift bag valued at $100,000, the potential federal income tax is $39,600. There could also be additional state income taxes due.  And the gift bag does not include cash to pay the taxes, so the taxes will have to be paid from other resources.

Of course, just because the gift bag is valued at $100,000 or more does not mean that it is necessarily that valuable to the recipient. In fact, there are steps that a nominee can take to reduce or eliminate the potential tax when there is little interest in the items included.

The nominee can refuse to accept the gift bag. By refusing to accept, the gift bag is not received for tax purposes and not subject to tax. However, if a few items catch their eye, they are not likely to be able to pull those from the gift bag and refuse to accept the rest.  It is likely to be an all or nothing proposition.

The nominee could accept the gift bag and then donate to a charity or sell the items in which they are not interested. However, some items in the gift bag, such as gift cards or certificates, may be non-transferable. Some items even a charity may refuse to accept.  In the case of non-transferable gift certificates, the IRS has stated that they are subject to tax if accepted and redeemed. So, failing to redeem them appears to be sufficient to avoid tax.

If the nominee is able to donate some of the items to charities, that may create an offsetting charitable contribution deduction on their tax return.  However, it may not be a full offset. Charitable contribution deductions under federal law are generally limited to 50% of adjusted gross income. That might not be too much of a problem for wealthy movie stars. There is also, however, a phase-out of certain itemized deductions, including charitable contribution deductions, for higher income taxpayers. For 2017, those phase-outs start at an adjusted gross income of $261,500 for single taxpayers and $313,800 for joint filers.  The phase-out is the lesser of: (1) 3% of the excess of the nominee’s adjusted gross income over these threshold amounts, or (2) 80% of the allowable itemized deductions subject to the phase-out, including charitable contribution deductions. A very high income could therefore result in the elimination of all but 20% of the charitable contribution deduction.  Selling the unwanted items to star-crossed fans could result in even more income subject to tax.

Since adjusted gross income is used as a factor in determining the phase-out of many tax breaks, taking the value of the gift bag into income could result in the reduction of other tax breaks to which the nominee may otherwise have been entitled, even if they otherwise qualify for the full charitable contribution deduction.

Another possible action that the nominee could take would be, before accepting the gift bag, to review the list of contents and designate in writing certain items to be donated directly to a charity before the gift bag is accepted. While this certainly eliminates the swag surprise element on Oscar night, this advance planning could avoid the need to take the full value of the gift bag into income. There would also be no charitable contribution deduction for those items because the donation would not be viewed as coming from the nominee.

Nominees, in addition to discussions with their designer and hair stylist, might also be well advised to have a discussion with their accountant.

Mark A. Luscombe, JD, LLM, CPA is the Principal Federal Tax Analyst for Wolters Kluwer Tax & Accounting.

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Written by: Peter J. Scalise

Published: 12 May 2017

In order to optimize your CPA Firm’s overall efficiency, effectiveness, and pro­ductivity in connection to researching and resolving a tax issue and determining the sustainability of a tax return filing position per Circular 230, the appropriate tax research processes must be meticulously designed, implemented, and executed. The subsequent five practical steps will guide you in establishing an all-inclusive tax research effort on behalf of your entire client base while properly ascertaining the likelihood of success should a tax position taken on a tax return be challenged by the Internal Revenue Service (hereinaf­ter the “Service”) upon examination.

Tax Research Methodology

Establish the Facts and Circumstances
The first step in the tax research process is to establish all of the facts and circumstances provided by your client in order to determine which tax laws apply to your client’s fact pattern. At this initial stage, it is imperative not to omit nor overlook any of your client’s facts and circumstances whether appearing material or immaterial. Always be guided by the axiom that facts and circumstances appearing to be immaterial individually may, in fact, be material in the aggregate.

Determine All the Issues
The second step in the tax research process entails determining all of the tax issues af­fecting your client’s specific facts and circumstances and any and all mitigating factors. Normally, complex tax issues evolve through several stages of development. For instance an experienced tax professional, based upon his or her prior knowledge of the tax laws, can normally determine most of the initial pertinent issues in terms of general tax laws. However, after performing an initial search of the authorities to answer the initial issues, a tax professional often discovers that one or more additional specific technical questions of interpretations must be resolved before the initial issues can be fully addressed. Conse­quently, at this stage, a tax professional may also encounter the need to obtain additional facts from the client. Accordingly, the tax research process may have to move back from step two to step one. In addition, you the tax professional may learn at this stage that facts initially not considered to be important may in fact prove critical to the resolution of all of your client’s tax issues.

Identify Statutory, Administrative, and Judicial Authority
The third step in the tax research process entails identifying the specific authorities to support all of your client’s tax issues while appropriately weighing authorities that may be contrary to your supporting position. Generally, this process begins with consulting statutory authority (e.g., the Internal Revenue Code) and quickly expands to encom­pass administrative authority (e.g., Proposed Treasury Regulations, Temporary Treasury Regulations, Final Treasury Regulations, Revenue Rulings, Revenue Procedures, Private Letter Rulings, Technical Advice Memorandum, General Counsel Memorandum, Circular 230, Internal Revenue Manual, Internal Revenue Bulletins, IRS Field Service Advice Memorandum, IRS Determination Letters, and IRS Notices, etc.) and judicial authority (e.g., judicial interpretations decided by the U.S. Tax Court, the U.S. District Court, the U.S. Court of Federal Claims, the U.S. Circuit Court of Appeals, the U.S. Court of Appeals for the Federal Circuit, and the U.S. Supreme Court). In addition, at times, you the tax professional may have to consult the legislative history (e.g., the Public Laws and Congressional Committee Reports from the House of Representatives and the Senate) of a particular Internal Revenue Code section to fully address what Congress’s intent was in passing a particular bill. Lastly, you may also want to consult the voluminous range of editorial interpretations (e.g., Tax Treatises, Tax Journals, etc.) available to assist in the interpretation a particular tax issue. How­ever, it must be duly noted that editorial interpretations are impermissible sources of authority before the Service and the judicial system. For clarification purposes, the subsequent synopsis will elaborate upon the aforementioned statutory, administrative, and judicial interpretations:

Statutory Authority

The Internal Revenue Code
All federal level tax statutes passed by Congress into law are compiled and published in Title 26 of The United States Code. As it should be recalled, Title 26 of The United States Code contains the specific statutes that authorize the Service to collect taxes for the fed­eral government. Generally, the tax research process begins with consulting the Internal Revenue Code and quickly expands to encompass administrative and judicial authorities based upon the complexity of the tax issue under analysis.

Administrative Authority

The Treasury Regulations
The Treasury Regulations provide the official interpretations of the Internal Revenue Code by the Treasury Department and have the force and effect of law. The most com­mon forms of Treasury Regulations include:

• Proposed Treasury Regulations (e.g., binding only on the Service and not the taxpayers);

• Temporary and Final Treasury Regulations (e.g., binding on both the Service and the taxpayers); and

• Preambles (e.g., treated just like legislative histories to demonstrate congres­sional intent and may underlie either type of the aforementioned treasury regulations regardless of status as Proposed, Temporary, or Final).

Revenue Rulings
A Revenue Ruling is an official interpretation by the Service of the tax laws. Initially, Revenue Rulings are published in the weekly Internal Revenue Bulletin. The same rul­ings later appear in the permanently bound Cumulative Bulletin, a semi-annual publi­cation of the Government Printing Office. Revenue Rulings hold less weight than the Treasury Regulations because they are intended to cover only specific fact patterns. Regardless, Revenue Rulings can provide valid precedent but only if your client’s facts and circumstances are substantially identical.

Revenue Procedures
A Revenue Procedure is a statement of procedure that affects the rights or duties of taxpayers or other members of the public under the Code. Similar to Revenue Rulings, Revenue Procedures are less authoritative than Treasury Regulations. However, Revenue Procedures should be binding on the Service and may be relied upon by taxpayers.

Private Letter Rulings
Private Letter Rulings (hereinafter “PLR”) are issued directly to taxpayers who formally request and pay for advice about the tax consequences applicable to a specific business transaction. Such PLR request have been employed frequently by either taxpayers them­selves or the taxpayer’s representatives (e.g., a taxpayers’ representation through a CPA Firm or Law Firm) to assure themselves of a preplanned tax result before they consum­mate a transaction and as a subsequent aid in the preparation of the tax return’s filing position. When the IRS issues a PLR it is understood that the PLR is limited in scope and application to the taxpayer making the request.

Technical Advice Memorandum
A Technical Advice Memorandum (hereinafter “TAM”) is a special after-the-fact rul­ing that may be requested from the taxpayer or the technical staff of the Service. For instance, if a disagreement arises in the course of an audit between the taxpayer or the taxpayer’s representative and the revenue agent, either side may request formal technical advice on the issues(s) through the District Director. Under certain circumstances, TAM’s can be used as a basis for the issuance of a Revenue Ruling and can also be subsequently published as a PLR.

General Counsel Memorandum
General Counsel Memorandum (hereinafter “GCM”) are legal memorandum that are prepared by the IRS Chief Counsel’s Office. GCM’s analyze proposed Revenue Rulings, Private letter Rulings, and Technical Advice Memorandum. GCM’s that were issued after 1981 constitute substantial authority for purposes of the penalty assessed for the substan­tial understatement of income tax.

Circular 230
Circular 230 is an IRS publication that sets forth the requirements and responsibilities of professionals (e.g., Attorneys, Certified Public Accountants, Enrolled Agents, and Enrolled Actuaries) admitted to practice before the Service. It should be duly noted that Circular 230 was most recently revised on June 12, 2014 and all tax professionals admitted to practice before the Service must adhere to this latest version which can be referenced at: http://www.irs.gov/pub/irs-pdf/pcir230.pdf

Internal Revenue Manual
The Internal Revenue Manual (hereinafter “IRM”) is an official compilation of policies, procedures, instructions, and guidelines for the organization, function, operation and administration of the Service. It is not legally binding and the policies are not mandatory. The IRM guidelines do not confer any rights on taxpayers.

IRS Field Service Advice
IRS Field Service Advice (hereinafter “FSA”) are taxpayer specific rulings furnished by the IRS National Office in response to requests made by the taxpayers or IRS Officials.

IRS Determination Letters
A Determination Letter is issued by the IRS at the taxpayer’s request to outline the Service’s position on a particular transaction that has already been completed. Generally, Determination Letters are issued only when a determination can be made on the basis of clearly established rules in the statute or regulations.

IRS Notices
When prompt guidance concerning an item of the tax law is needed, the IRS publishes notices in the Internal Revenue Bulletin. These notices are intended to be relied upon by the taxpayers to the same extent as a Revenue Ruling or Revenue Procedure.

Judicial Authority

U.S. Tax Court
The U.S. Tax Court is an independent 19 judge federal administrative agency that func­tions as a court to hear appeals by taxpayers from adverse administrative decisions by the Service.

U.S. District Court
The U.S. District Court hears civil actions against the United States for the recovery of any tax alleged to have been erroneously or illegally assessed or collected by the Service. Trial by jury is available at the preference of either the petitioner or defendant.

U.S. Court of Federal Claims
The U.S. Court of Federal Claims is a Washington D.C. based appellate-level court in which a taxpayer may sue the government for a refund of overpaid taxes.

U.S. Circuit Court of Appeals
The U.S. Court of Appeals is one of thirteen courts including the District of Columbia and the Federal Circuit Courts, to which appeals from a trial court, such as the U.S. Tax Court, are directed.

U.S. Court of Appeals for the Federal Circuit
The U.S. Court of Appeals for the Federal Circuit hears appeals from the U.S. Court of Federal Claims.

U.S. Supreme Court
The U.S. Supreme Court is the highest appellate court in the federal court system and in most states. The U.S. Supreme Court, under its certiorari procedure authority, reviews the constitutionality of a tax law and a small number of tax decisions by the Court of Ap­peals.

The subsequent chart illustrates the geographic boundaries of The United States Courts of Appeals and the United States District Courts:

Resolve the Issues
The fourth step in the tax research process entails the resolution of your client’s tax issues after identifying, analyzing, and interpreting all of the applicable authorities. It cannot be overstated that you should have provided, as needed, reasonable statutory, administrative, and judicial support to demonstrate that your tax return filing position could be upheld if challenged by the Service upon the fruition of an examination and that you exercised due diligence and acted in good faith. Furthermore, at times, positions taken on tax returns may need to be disclosed on Form 8275 entitled “Disclosure Statement” or Form 8275-R entitled “Regu­lation Disclosure Statement” depending upon the complexity and controversial nature of the tax issue. Noting, by disclosing positions on your client’s tax returns you may be able to avoid paid preparer penalties should your position be disallowed and avoid the appli­cation of the six year statutory period for assessment under I.R.C. § 6501(e).

From a risk management perspective, in order to mitigate or avoid income tax return paid preparer penalties pursuant to I.R.C. § 6694 (e.g., penalties that are assessed on both paid tax return preparers and tax advisers that are deemed paid tax return preparers due to their consulting on matters that constitute a substantial portion of their client’s tax returns even if they were not engaged to prepare nor review the tax return), a “More-Likely-Than-Not” standard should be satisfied. The subsequent standards of the appli­cable levels of opinions should be scrupulously analyzed when assessing your tax return filing position:

• “Will” Standard: Generally, a 95% or greater probability of success if challenged by the IRS. A “Will” opinion generally represents the highest level of assurance that can be provided by an opinion;

• “Should” Standard: Generally, a 70% or greater probability of success if challenged by the IRS. A “Should” opinion provides a lower level of assur­ance than is provided by a “Will” opinion, but a higher level of assurance than is provided by a “More-Likely-Than- Not” opinion;

• “More-Likely- Than- Not” Standard: A greater than 50% probability of success if challenged by the IRS. The • “More-Likely-Than-Not” standard is the highest level of accuracy required for purposes of avoiding the accuracy-related penalties under I.R.C. 6662A;

• “Substantial Authority” Standard: Typically, greater than a “Realistic Possibility of Success” standard and lower than “More-Likely-Than-Not” standard (i.e., 40% probability of success);

• “Realistic Possibility of Success” Standard: Approximately a one-in-three or greater possibility of success if challenged by the Service;

• “Reasonable Basis” Standard: Significantly higher than the “Not Frivo­lous” standard (i.e., that is, not deliberately improper) and lower than the “Realistic Possibility of Success” standard. The position must be reason­able based on at least one tax authority that can be cited as valid legal authority;

• “Non-Frivolous” Standard: Approximately a 10% chance of being upheld upon examination by the Service and accordingly under no cir­cumstance should a tax professional ever render services with this level of comfort; and

• “Frivolous” Standard: Approximately a percentage less than a 10% chance of being upheld upon examination by the Service and accordingly under no circumstances should a tax professional ever render services with this level of comfort.

It should be duly noted that each of the aforementioned standards above has a relevant meaning to both the taxpayers and tax professionals when evaluating a tax position and the related disclosure requirements. Noting, the percentages listed for “More-Likely-Than-Not” and “Realistic Possibility of Success” are specifically provided for and dis­cussed in the treasury regulations. In contrast, the percentages for “Substantial Authori­ty”, “Reasonable Basis”, “Non-Frivolous”, “Frivolous” have been developed based upon their relative importance in the hierarchy of standards of opinion as principally provided for in congressional committee reports. Moreover, while not mathematically calculable, the percentages are still practical in demonstrating the relative strength of one level as opposed to another level.

Communicate with Your Client
The fifth and final step in the tax research process entails communicating the conclusion to your client. Your client, of course, must ultimately make the final decision concerning what course of action to take, even though the client’s decision is guided by and often dependent upon the conclusions reached by you, the tax professional. It is strongly rec­ommended that this tax advice be rendered to your client in a written format, as opposed to verbal communication, and preferably in a formal tax advice memorandum format (e.g., Facts & Circumstances Section; Issue(s) Section; Analysis Section; and Conclusion Section) meticulously discussing the applicable statutory, administrative, and judicial authority to appropriately document your due diligence in assessing the tax issues(s) and resolving them satisfactorily to reach a strong tax return filing position (e.g., “More-Likely-Than-Not”, “Should”, “or “Will” filing positions). Finally, caveat language in the form of a disclaimer should be documented within the tax advice memorandum for any areas of the tax law that were not within the scope and application of your tax research services (e.g., the scope and application of our tax advice memorandum is in connection to the U.S. Federal-level tax consequences only and does not provide any advice or analysis in con­nection to any U.S. Multi-State tax consequences nor any advice in connection to Financial Statement Reporting purposes under U.S. GAAP nor IFRS).

Conclusion
By following the preceding all-inclusive practical steps in the tax research process you should be able to render your tax research services to your entire client base in a more efficient, ef­fective, and productive manner while adequately weighing risk management concerns in connection to tax return filing positions. As a final reminder, the guidance contained in this article should be applied with due professional care including seeking further professional advice from a subject matter expert should it be deemed warranted based upon both the complexity and contentious nature (e.g., taking a tax position contrary to a Treasury Regulation on Form 8275-R, etc.) of the tax matter under review.

Peter J. Scalise serves as the Federal Tax Credits & Incentives Practice Leader for Prager Metis CPAs, LLC, a member of The Prager Metis International Group. Peter is a BIG Four Alumni Tax Practice Leader and has approximately 25 years of progressive CPA Firm experience developing, managing and leading multimillion dollar tax advisory practices on a regional, national, and global level. Peter serves on both the Board of Directors and Board of Editors for The American Society of Tax Professionals (ASTP) and is the Founding President and Chairman of The Northeastern Region Tax Roundtable and The Washington National Tax Roundtable, both operating divisions of ASTP.

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Written by: August Aquila

Published: 12 May 2017

The larger the firm, the more rational succession planning is. Partners in large firms know from the beginning what the process is like, when it takes place and who makes the decisions. They are trained from day one on what to expect and when.

In smaller firms (three to 10 partners), just the opposite happens. Usually, no one talks about succession until it becomes an issue. Partners are not sure of the process. And, the major offenders are usually the founding partners or those with large books of business.

What Should Small Firms Do?

There are several things that small firms should do in order to safe guard the continuation of the firm. Many firms fear competitors, technology or not being able to retain qualified staff, but the major threat to smaller firms is the lack of succession planning.

1. Realize that succession is an emotional event. Partners, especially founding partners, spend their entire professional life acquiring clients, training staff, being part of the community. Succession asks them to step away from all of that.

2. What will I do now? Whether a partner retires at 66 or 70, they still have a long life ahead of them. If they have not developed outside interest or a plan on how they intend to live the next 20 years, they will feel a lot of fear and even loss. They need to begin to separate themselves from the firm.

3. What might the firm do? You may not want to throw out a useful asset. If the partner has valuable connections in the community, can still bring in business or mentor younger associates, then you should find a way to keep him or her.

4. Start the process early. The biggest mistake that a firm can make is to wait until the year the partner is going to retire. At a minimum lay out a five-year plan which outlines year-by-year what you want the partner to start doing. For example, clients will need to be transferred to others in the firm.  This is a multiyear process.

5. Make sure you have a partner retirement agreement. This should outline when a partner retires, the required notice (at least two years), what happens if the partner does not transition clients, and so on. Each partner should be responsible for developing his or her successor.

6. It’s the firm and not the partner that makes the decisions. Small firms run into problems when they don’t have a written plan or when they let individual partners decide when or if they will retire. What happens is that each partner negotiates his or her retirement. It’s not that unusual to find partners well into his 70s still working at firms, whether they are productive or not.

7. Make sure you take into consideration your buyouts. Succession planning is just about the individual, it also affects the entire firm. Review your current buyout agreement and make sure that it still makes sense for the firm. If not, don’t be afraid to modify it now.

8. Be sure compensation system isn’t a hindrance. It’s critical to have your compensation plan aligned with the partner’s succession plan. If you ask the partner to transfer clients and your compensation plan is based on billable hours, there is misalignment.

9. Develop a culture of accountability. If your firm lacks a culture of accountability, then partners know that whatever they do or don’t do, nothing will happen to them. Hence the same will happen when it comes time to start their succession. They think, “Nothing will happen to me if I postpone it for another year or so.”

Don’t Let This Happen at Your Firm

Here is an example of what commonly happens when you don’t take the time to address succession and develop a process. Sam is the managing partner of a five-partner firm. The firm has grown over the years and it is now $4.5 million in revenue. Sam was one of the two founders. The other founder had to retire because of medical reasons. Sam owns 30% of the firm and according to the current buyout; he will receive $1.35 million. Sam is also the highest paid partner. By the way, Sam is 66 years old and has no intention to retire anytime soon.

The other partners realize that they cannot afford to pay Sam 100% of his buyout. The firm has no written succession document. The partners ask Sam if he would consider renegotiating his buyout. He says, “Absolutely not!” The partners find themselves in a no-win situation and the war begins. The other partners start a process of forcing Sam out and refusing to pay his retirement unless he reconsiders. Sam’s feelings are hurt. Didn’t he provide these partners their current positions? You probably know how this ends. Sam is forced out of the firm he helped found. There are a lot of bad feelings and it’s a terrible way for someone to end their career.

All of this can be avoided with proper communication. This is an emotional topic for partners to discuss, but it is one that needs to come up at partner meetings. Your succession planning efforts need to be communicated positively; otherwise it will be subject to negativity, fear, and possible sabotage. Using an independent advisor can keep emotions in check and help get everyone’s ideas and concerns expressed.

August Aquila is CEO of AQUILA Global Advisors, LLC. He assists firms in the development of succession plans, the design of compensation plans, buying or selling a practice and strategic planning. He can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it. or 952-930-1295.

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Written by: Joshua Fluegel

Published: 11 May 2017

Website Builder Roundtable

CPA’s website is the proverbial greeting handshake for many potential clients. It forms a person’s initial opinion of the firm. This importance has led many to speculate on the best way to construct and maintain a website. CPA Magazine approached thought leaders on the subject to get their views on mistakes CPAs often make when creating what website and what feature every CPA website should have.

DAVE RUTAN CEO of CPA Site Solutions

What is a mistake you see tax professionals often make when creating and running their websites?
Enticed by the low-cost and easy DIY claims, many tax professionals attempt to build their own website. They soon realize that proper website creation involves much more than inserting contact information and a few pictures. Professionally designed websites should be more than aesthetically pleasing. A well-designed website should be created to convert visitors into clients by incorporating search engine optimization elements, properly placed calls-to-action and engaging, educational content. It’s also critical that tax professionals keep their website updated. Aside from turning off prospective and existing clients, websites that lack fresh content and user-friendly features are penalized by search engines, resulting in poor rankings and ultimately a decline in business.

What is a feature you think every tax professional’s website should have?
There are a number of must-have website features that will benefit accountants. The first is engaging, educational content. Not only does the right content inform visitors about the services you offer, but it also helps increase search engine results rankings. And, since the vast majority of Internet searchers don’t go past page one of results, your firm’s ranking is a key factor prospective clients’ ability to find you. Your website should also showcase positive reviews and testimonials to help prospective clients know what it’s like to work with you and your firm. It’s also important to have a secure portal that allows tax professionals to conveniently exchange files with clients via their website. Finally, an updated “Contact Us” page with request forms allows you to gather information directly from your website 24/7.

ROBERT TENNER CEO of Accounting and Financial Site Builder from Tenenz

What is a mistake you see tax professionals often make when creating and running their websites?
The heart of any website is the content. In order for a website to be successful the content must be relevant, timely, and useful to a firm’s desired audience (whether it’s existing clients or potential leads). Professionals that want to properly leverage their website must put some time into thinking through their content: how they describe their practice and services they provide, what resources they want to provide to clients (such as articles or calculators), and critically, how often they are willing to update and refresh content. This is often more difficult than people guess, but having direct access to modify and update their website’s content is key to help eliminate obstacles on maintaining the most important aspect of their website. Going through a third-party every time you wish to change something is not only a hassle, but eventually is exhausting and results in stale and out-of-date content. We also see too many firms paying fees for services they don’t need or use. We believe a better solution is providing a web platform that allows the firm to just add and pay for the services and features that work for them, not the website provider.

What is a feature you think every tax professional’s website should have?
It seems not a month goes by without another big new story relating to a new online security breach. Any tax professional starting to embrace digital tools must realize that email is not a secure channel to send private information. Professionals must offer a secure file-sharing portal for their clients to keep their information safe. Emails travel across many different servers, some of which may or may not encrypt the message as it goes. Just like a postcard, that means prying eyes could see the information as it travels. A secure file transfer portal lets clients and tax professionals securely upload, store, and download sensitive documents at any time.

DR. CHANDRA BHANSALI Co-founder and CEO of AccountantsWorld

What is a mistake you see tax professionals often make when creating and running their websites?
When it comes to running their websites, many accountants fail to take full advantage of the time a visitor spends on the site. It is like leaving money on the table. A good website must provide quick answers to the questions visitors may have as well as make visitors aware of additional opportunities they could be interested in, including tax saving, tax planning and other add-on services. Especially during tax season, the home page itself should become the landing page to capture leads as well. In order to ensure leads are captured accurately, be sure your site encourages visitors to fill in basic contact details that are submitted and captured by the firm.

What is a feature you think every tax professional's website should have?
Every tax professional’s website should be shoppable. In today’s digital-first world, prospective clients have access to the information and tools to do their own research and to shortlist their choices. If your website content is compelling enough and fits their needs and wants, they are ready with their criteria to buy. “Where to buy” needs to be more obvious and prominent on your site. Most websites offer free consultation, contact us forms and other similar features. But surprisingly, more often than not, the shoppable feature, or the “buy button,” is missing. Not having a buy button means not giving immediate buying opportunity to the interested prospect, which can result in a prolonged sales cycle and even potential loss of interest from the prospect. A 10%, limited time, web-only discount along with a buy button can add to your sales.

HUGH DUFFY Chief Marketing Officer of Build Your Firm

What is a mistake you see tax professionals often make when creating and running their websites?
One of the mistakes we often see is most tax accountants find themselves struggling with the dilemma of choice. They are either very interested in having a website with a lot of tools or they are looking for a website that will assist with their marketing efforts and generate new leads. Accountants that focus on tools are hyper-focused on getting a website that comes with all the bells and whistles like hundreds of pre-written articles, email newsletter tool, social media posting tool, secure file sharing tool, payment processing, online portal connectivity, calculators and access to tools that have nothing to do with accounting and tax. Accountants that are more concerned about marketing tend to be focused on a search engine optimization, posting online reviews and reputation management, having professionally-written content, social media marketing and effectively communicating their firm's branding. The mistake is failing to realize in order to have a truly effective accounting website, tax accountants should be investing in a website provider that offers answers to both these needs.

What is a feature you think every tax professional's website should have?
There is no need to settle in today's online world. We truly believe that accountants shouldn't have to trade-off tools versus marketing in their website presentation. Instead, we recommend choosing a website provider that understands the needs of accounting firms and understands the difference between an enrolled agent versus CPA, QuickBooks versus Xero, and provides tools that enable accountants to operate more efficiently, and within compliance. Not to mention, a provider that doesn't put your firm into a box and instead gets to know your firm and can provide a website that clearly defines what you offer and what makes you unique. With the evolution of websites designed specifically for accountants, you should expect the core tools to be well designed for peak performance, a visual presentation that effectively brands your firm and paints the picture you want to embed in a prospect's mind, and motivates the prospect to call your office and meet with you.

LEE REAMS II CEO of ClientWhys

What is a mistake you see tax professionals often make when creating and running their websites?
It takes much more than a website to stand out online. If no one can find your website, what is the point? To showcase your experience, tax pros need to be active on all of the major social media profiles, actively share knowledge on their blog. We often see what we call a “dinosaur” website, where the professional tried to save money and built a site that was never updated after it went live. That strategy just doesn’t work. You need to be present where your clients are spending their time online. Be active on social media and engage with your audience through your email newsletter. A lot of what is said about you occurs online. Let’s make sure it is positive.

What is a feature you think every tax professional's website should have?
Social proof and client recommendations should be front and center on a tax professional's website. Times have changed. Consumers no longer rely on the recommendation of one. They do their research and make better choices based on the opinions of many. So building up a stockpile of reviews and testimonials makes it easier to convert web leads and those referred by others. You also have already planted the seed of trust by what others have said about you. They are more likely to follow your advice, refer others, and maybe, just maybe, pay more for your services.

JEFF DRAKE President of CPASites, LLC

What is a mistake you see tax professionals often make when creating and running their websites?
The biggest mistake we see accounting firms make is creating an interactive website and then not being active with it. When we first began building tax and accounting websites, there were very few options for creating an interactive site. But over the years, as blogs and Twitter apps became prevalent, more professionals jumped on the bandwagon and began viewing their website as an active marketing tool they can use to stay in touch with their clients. The problem however, is after the initial excitement of their new website “toy” has worn off and the drudgery of everyday work resumes, their blog entries and tweets begin to taper off. We repeatedly warn our clients that a blog or Twitter app that hasn’t been updated in weeks or months is far worse in appearance than not having one at all. Our experience has been that unless there is someone in the firm that has maintained an active blog and/or is passionate about online communication, it is best to simply maintain content for their clients that is updated external sources.

What is a feature you think every tax professional's website should have?
With the increased focus on security and confidentiality, we think it is now imperative that all tax professionals maintain a secure client portal that can be used to store and transfer files with their clients. Many tax professionals are still using standard email for exchanging tax information and the risks are enormous. They seem to assume that it’s no more risky than mailing a return to a client but they fail to realize that, unlike information sent via email, packages sent through the U.S. Postal Service cannot be intercepted and copied by anyone around the world. Since tampering with a sealed and mailed document is easily evident, often traceable and subject to severe domestic criminal penalties, the mail services are considered an acceptable level of risk. Tampering with emailed documents however, can leave behind no evidence, be completely untraceable and if done outside the country, be completely exempt from domestic law. Email is a highly unacceptable risk for a tax professional.

SEBASTIAN LEE President/Owner of Service2Client

What is a mistake you see tax professionals often make when creating and running their websites?
Not taking the time to create a great bio with high quality images. On a larger topic, learning and being willing to spend money on marketing.

What is a feature you think every tax professional's website should have?
It sounds simple, but a beautiful photo of personnel or landscape and a Free Consultation offer. Further on this topic is a video from one of the partners.

JORDAN C. KLEINSMITH Sr. Product Manager, Tax & Innovation at Thomson Reuters

What is a mistake you see tax professionals often make when creating and running their websites?
You cannot afford to write-off the importance of aesthetic appeal. Many of you probably think along the lines of what you would like to see on a tax professional’s website and overcomplicate your sites for the average non-tax-minded visitors, leading to a cluttered appearance and confusing navigation structure. Less is truly more in many cases. You are likely correct in saying you gain most of your new business by word of mouth, but you may be failing to recognize that the first thing a referred prospect is going to do is search for your website online – very, very few prospective customers will make a cold call to your office or email you before taking this step. Once they arrive at your site, you have mere seconds to make a good impression and influence them to reach out and make contact. If your site looks “cheap” or unprofessional at a glance – or is not formatted to display correctly on a mobile device, which is what the majority of new prospects will use to look you up – you will likely lose the opportunity to gain a new client. Aesthetic appeal is one of the only tools at your disposal to make such a positive impression in such a small window of time.

What is a feature you think every tax professional's website should have?
An absolutely critical feature to any tax professional’s website – beyond a clear brand promise of the quality service you pledge to all clients – is a method of contact to your office that does not involve making a phone call. This could include something as sophisticated as a live chat capability to an on-call member of your office, a submission form requesting a prospect’s contact information and service(s) desired, or as simple as a link to an email address at your firm. You may not realize it, but there’s a major paradigm shift underway in how prospects select service professionals based on communication preferences: whereas the old litmus test was “I’m not doing business with any company I can’t call for service at a moment’s notice”, the new requirement is “I’m not doing business with any company I have to call for service at a moment’s notice.” This extends to self-service capabilities like secure access to tax returns and other documents online, but begins with prospects shopping for a new tax preparer.

NAKE SAKANDER Product Manager at Wolters Kluwer Tax & Accounting

What is a mistake you see tax professionals often make when creating and running their websites?
A mistake I see — not just from tax professionals but across the board — is building a website without a clear goal of what you want to accomplish. Having a website just to have one isn’t good enough anymore. You must have a definitive goal or vision of what you want to accomplish, whether it be to educate, sell a product or service, or any other goal.

What is a feature you think every tax professional's website should have?
I believe every tax professional’s website should be built on technology (responsive design) that optimizes the user experience based on the device type they are using to view the site. If a site doesn’t work on the user’s mobile phone, chances are that the user will not engage any further. So much of our technology consumption and engagement is on “mobile” devices, phones and tablets, that not having that experience optimized is a nonstarter!