A CEN­TURY OF SER­VICE Tax re­form as a spring­board to deeper re­la­tion­ships

Wal­dron H. Rand’s long his­tory of or­ganic growth is ripe with lessons The Tax Cuts and Jobs Act of­fers ac­count­ing firms an op­por­tu­nity to go be­yond their tra­di­tional com­pli­ance ser­vices

Accounting Today - - Front Page - By Roger Rus­sell

The once-in-a-gen­er­a­tion tax re­form leg­is­la­tion that was en­acted last De­cem­ber has cre­ated a once-in-a-gen­er­a­tion op­por­tu­nity for tax prac­tices to go be­yond their com­pli­ance rou­tine to en­hance client ben­e­fits and bond­ing.

“Tax re­form can cer­tainly con­sti­tute a jump from com­pli­ance to value-added ser­vices,” said Kyle Brown­lee, CEO and se­nior wealth ad­vi­sor at Wymer Brown­lee Wealth Ser­vices. “Tak­ing a proac­tive ap­proach by iden­ti­fy­ing clients that need ad­di­tional ser­vices not only in­creases a firm’s value but also is in the best in­ter­est of the client.”

The firm has seen the start of surg­ing de­mand for holis­tic ad­vice that en­com­passes both tax ad­vi­sory and wealth man­age­ment for high-net­worth in­di­vid­u­als.

In re­sponse, Wymer Brown­lee is kick­ing off a strate­gic growth plan to dou­ble its client as­sets un­der man­age­ment, and in­tends to add up to seven new staff mem­bers to help cap­ture the rapid growth op­por­tu­ni­ties that are emerg­ing in the post-tax re­form land­scape.

“We have been proac­tively iden­ti­fy­ing clients that will be most af­fected by tax re­form,” said Brown­lee.

“Be­fore the end of the sum­mer, we will be pre­par­ing a large num­ber of tax pro­jec­tions to help clients un­der­stand how the re­form will im­pact their own re­turns,” he added.

Brown­lee sees tax re­form as

a dou­ble-edged sword.

“It will pro­vide ad­di­tional work, which means more rev­enue. How­ever, it will also re­quire ad­di­tional re­search and train­ing,” he said.

“Our goal is to un­der­stand the Tax Cuts and Jobs Act in­side and out so we can bet­ter an­swer client ques­tions and al­le­vi­ate con­cerns through tax pro­jec­tions,” he said. “Tax re­form has started a di­a­logue with clients about the value of tax plan­ning ver­sus tax prepa­ra­tion, which sets every­one up for greater suc­cess when next tax sea­son rolls around.”

“Firms need to be pre­par­ing now — and help­ing their clients pre­pare — for next tax sea­son,” Brown­lee ad­vised. “If you are not ready, next tax sea­son could be very chal­leng­ing.”

Start­ing with ed­u­ca­tion

“Tax re­form has cre­ated op­por­tu­ni­ties for us to work more closely with our clients,” agreed Sabre Li­na­han, se­nior man­ager in tax at At­lanta-based Smith Howard. “As a full-ser­vice ac­count­ing firm, we pro­vide tra­di­tional ser­vices in the tax and ac­count­ing area. As a re­sult of the Tax Cuts and Jobs Act, we had to make sure that we had ini­tial and on­go­ing con­ver­sa­tions with our clients.”

“We started those con­ver­sa­tions very early,” she said. “Most of them had heard about the new law, but we had to make sure we ed­u­cated them about their par­tic­u­lar sit­u­a­tion.”

“What most had heard about was that de­duc­tions were go­ing away,” she said. “But when you put it all into a blender, most will see a re­duc­tion in their over­all tax dol­lars.”

Li­na­han works closely with high-net­worth in­di­vid­u­als and pri­vately held com­pa­nies head­quar­tered in the South­east that en­gage in busi­ness na­tion­wide. “In ad­di­tion to talk­ing to our clients, we make sure we col­lab­o­rate in­ter­nally, es­pe­cially be­tween the tax depart­ment and other de­part­ments,” she said. “Our au­dit and ad­vi­sory groups are out in front of clients, and they need to be aware of what things on the in­come tax side will af­fect the clients.”

“Our main fo­cus is on ed­u­cat­ing both our staff and clients, and mak­ing sure that we’re work­ing to­gether across all de­part­ments to en­sure we con­tinue to serve our clients well,” she said.

A run­ning start

Mem­bers at Tron­coni Se­garra & As­so­ci­ates be­gan reach­ing out to clients even while tax re­form leg­is­la­tion was be­ing drafted, ac­cord­ing to Alyce No­taro, se­nior tax man­ager at the firm.

“As the new leg­is­la­tion gained trac­tion, we be­gan draft­ing an ad­vi­sory, which we up­dated al­most in real time as the pro­posed leg­is­la­tion was chang­ing,” she said. “The ad­vi­sory was sent out to our clients shortly af­ter the leg­is­la­tion was signed into law. And we in­cluded in­serts with key pro­vi­sions of the law in the or­ga­niz­ers we sent to clients.”

“With the leg­is­la­tion [com­ing] right be­fore tax sea­son, it was dif­fi­cult to ad­dress ev­ery as­pect of the law for ev­ery client,” No­taro said.

“To max­i­mize our reach and im­pact, while deal­ing with fi­nite re­sources — both peo­ple and time — the firm iden­ti­fied in­ter­nal sub­ject mat­ter ex­perts for var­i­ous top­ics. Those sub­ject mat­ter ex­perts were re­spon­si­ble for spear­head­ing the firm’s ini­tia­tive on that topic, and keep­ing our as­so­ci­ates up to date by pre­sent­ing in­ter­nal CPE ses­sions and alert­ing as­so­ci­ates to new de­vel­op­ments,” she ex­plained.

Top­ics were pri­or­i­tized by ur­gency or time sen­si­tiv­ity, and the firm set out a time­line for ad­dress­ing var­i­ous as­pects of the leg­is­la­tion.

“For ex­am­ple, Code Sec­tion 965 [on deemed repa­tri­a­tion] needed to be ad­dressed right away, as pay­ment of tax po­ten­tially needed to be made in March or April,” No­taro ex­plained. “We sent a com­mu­ni­ca­tion to our clients to let them know that we were in the process of study­ing the leg­is­la­tion, and we would be reach­ing out to them on any items of im­me­di­ate ur­gency, and then fol­low­ing back up with them dur­ing the com­ing months, and through­out the year, to do a com­pre­hen­sive eval­u­a­tion of their own spe­cific tax sit­u­a­tion.”

Af­ter fil­ing sea­son was over, the firm’s pro­fes­sion­als en­gaged in com­mu­nity out­reach by giv­ing pre­sen­ta­tions to lo­cal busi­ness, trade and pro­fes­sional or­ga­ni­za­tions.

“Some of the projects we reached out about and per­formed, spe­cific to the new leg­is­la­tion, in­clude en­tity choice and struc­tur­ing anal­y­sis of C cor­po­ra­tions ver­sus S cor­po­ra­tions, gift­ing strate­gies and es­tate plan­ning, cost seg­re­ga­tion

C stud­ies, and plan­ning for the new Sec­tion

M 199A qual­i­fied busi­ness in­come de­duc­tion,” No­taro said.

“We’ve also en­gaged in plan­ning for item­ized de­duc­tions, in­clud­ing tim­ing for

MY cer­tain tax pay­ments and char­i­ta­ble con­tri­bu­tions, as well as con­sid­er­ing the

CMY po­ten­tial ef­fects of new state-spe­cific

K leg­is­la­tion re­lated to the $10,000 cap on the de­duc­tion for state and lo­cal taxes,” she said.

No­taro noted a large in­crease in con­tact with Cana­dian clients and prospects, who are ex­plor­ing op­por­tu­ni­ties to ex­pand into the U.S. due to the new lower cor­po­rate tax rates.

“We’ve taken the op­por­tu­nity to lever­age the re­la­tion­ships we’ve built over time in our cross-bor­der prac­tice,” she said.

“Given the un­cer­tainty and lack of guid­ance so far for some of the leg­isla­tive pro­vi­sions, we’re very con­scious of the need to bal­ance the risk of be­ing overly ag­gres­sive, while not be­ing par­a­lyzed into in­ac­tion by that un­cer­tainty,” said No­taro. “To ef­fec­tively serve our clients, while deal­ing with this un­cer­tainty, the abil­ity to draw on our ac­cu­mu­lated ex­pe­ri­ence and pro­fes­sional judg­ment is cru­cial.”

“At the end of the day, the big­gest im­pact of the new tax leg­is­la­tion on our prac­tice is that it serves as a cat­a­lyst to re-en­gage our clients,” she said. “Even if we don’t end up do­ing a project di­rectly re­lated to the new leg­is­la­tion, it’s still a good op­por­tu­nity to reaf­firm a client’s cur­rent tax strat­egy. In a num­ber of cases, the di­a­logue with our clients has even re­sulted in var­i­ous other, un­re­lated projects, which may not have come up oth­er­wise.”

Re­form re­sources

Peo­ple want an­swers to their ques­tions, and they want to deal with CPAS who have the an­swers, ob­served Donna Erbs,

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