Reform Adds to Stress of Accountants : Tax Law Confusion Makes Usually Hectic Period Even Worse

For Los Angeles accountant Dennis K. Wynbrandt, tax-filing season normally means working long nights at the office, seeing little of his wife and kids. But this year, it’s even worse.

Thanks to tax reform and the new problems and confusion that it has created for clients, the workload is the worst in memory, he said.

“If other accountants have contemplated getting out of the profession, this might be what breaks the camel’s back,” said Wynbrandt, adding that his nearly 70-hour workweeks last month--10 hours a week more than in March last year--were like “working a whole extra week.”

Tax reform wasn’t supposed to affect 1986 tax returns and wasn’t supposed to complicate the tax-filing process. But accountants and other tax preparers say they are finding just the opposite on both counts.

The need to give clients more advice to plan for tax changes and to answer their myriad questions about tax reform has added 15% to 20% more work to the typical accountant’s already overburdened tax season load, said Robert A. Petersen, a Menlo Park, Calif., accountant and president of the California Society of Certified Public Accountants.

The added work--which most practitioners say they would rather do without--seems to be more acute among smaller accounting firms. But even Big Eight firms and tax-preparing firms say the load is abnormally high this year.

Considerable Confusion

“There seems to be a considerable amount of confusion among taxpayers this year,” said Thomas M. Bloch, head of the tax division at Kansas City, Mo.-based H&R; Block, the nation’s largest tax-preparing firm. “They are asking questions about what the changes are, how they will affect them, when they will go into effect.”

Further straining the workload this year has been the need to help clients file the complicated new W-4 withholding forms. Also, clients this year have delayed meeting with their accountants, resulting in even more bunching of work into March and early April, experts say.

Many accounting firms are dealing with the added work by hiring extra help or by increasing their already growing use of computers.

Others are charging higher fees to pay for the longer hours, a prospect that could particularly hurt individual clients, because tax reform makes accounting fees more difficult to deduct starting with 1987 returns.

Some firms are simply filing for more extensions because they can’t complete clients’ tax returns before the April 15 deadline.

Accountants also fear that clients, particularly small businesses, will suffer lower-quality service this year because practitioners won’t have enough time to fully bone up on the new law and advise clients of the numerous dates when provisions take effect. Some older practitioners, not wanting to make that effort, are simply retiring early. The greater stress comes at a difficult time for the accounting profession. The industry is having problems luring college graduates into accounting, said Samuel Hoyt, spokesman for the Washington-based American Institute of Certified Public Accountants.

Indeed, some industry officials worry, talented business-oriented college graduates are increasingly lured to investment banking and other fields where the pay and glamour seem greater.

Those who do enter accounting are increasingly selecting the field of internal management accounting for single businesses rather than public accounting, where tax work is done for outside clients.

Management accounting generally pays more at entry-level positions and is regarded as less stressful and time-consuming, said Arthur W. Bowman, editor of Public Accounting Report newsletter in Atlanta. Some corporations, finding that tax reform has increased their need for management accountants, are raiding CPA firms for top talent--offering to double their salaries in some cases, Bowman said. “CPA firms are having trouble competing with that,” he said.

Starting Salaries Boosted

To counter that trend, Price Waterhouse, the nation’s fifth-largest accounting firm, recently announced that it is boosting starting salaries at least 20%, a controversial move that could trigger a bidding war for top young talent.

Tax reform threatens to strain public accounting firms even more next year. It requires that most partnerships, so-called S corporations and personal-service corporations, make their fiscal years conform to the calendar year, starting in 1988.

The step, designed to eliminate a method for business owners to legally defer income and taxes, means these businesses’ returns must all be filed by April 15 rather than throughout the year.

That, some accountants fear, could as much as double their workload during the critical Jan. 1-April 15 period.

“It’s already physically impossible to complete all tax returns by April 15” under the old law, complained Irwin Pomerantz, a Los Angeles CPA. He said about 30% of his clients’ returns will be placed on extension this year. The changes under tax reform could force accounting firms to be more creative with their personnel management, newsletter editor Bowman said.

He suggested giving accountants longer vacations during slack summer months, increasing their access to computers and providing more paraprofessionals to do routine work. Firms also might try to lure people into accounting who only want to work six to nine months a year, he said.

But hiring more people won’t solve the problem entirely, said Petersen, the Menlo Park accountant. “If you hire more people to handle the March and April crunch, what are you going to do with them the rest of the year?” he asked. But he noted that he recently added two full-time accountants to his staff to keep up with the growing workload.

Accountants also are finding other ways to cope. Patricia J. Cain, a Los Angeles CPA, said she is taking advanced courses on taxation in her spare time. “They have to tell you about the new law as well as the old,” she reasoned.

But others are not quite so energetic. One 63-year-old former accountant from Plainview, N.Y., said he decided to retire two years earlier than originally planned out of depression arising partly from his increased stress under tax reform. “There are so many changes in such a short time, it’s very hard to keep up,” said the now-retired accountant, who said he did not want to be identified because he might try to return to the profession in the future. “I don’t think that’s giving a fair shake to the clients.”