Accounting Today - February 15 -March 14 2010

Vol. 24 I No. 2 I Feb. 15-March 14, 2010

The 2010 filing season promises to be unique both in the amount of advice sought by clients, and in the volume of analysis and planning necessary to service them.

“It will be like none that we’ve ever seen,”
promised Lewis Taub, tax director at the
New York office of RSM McGladrey. “We’re
at a crossroads. The economy is recovering
but not all of our clients are recovering. It’s
very important to be cognizant of clients’
situations where they’re kind of recovering
but still showing wounds.”
“There will need to be increased planning
as a result of the tax law changes we’ve al-
ready seen, and the ones we expect to occur
during the year,” added Greg Rosica, CPA,
tax partner at Ernst & Young and a contribu-
tor to the Ernst & Young Tax Guide.

As a result of changing economic condi-
tions and the Tax Code, preparers have to
ask questions they never had to ask before,
Taub noted. “Typically, you don’t ask ques-
tions like, ‘Did you restructure your debt
this year?’” he said. “Now you have to ask
that, because it can be a taxable event. The
client doesn’t realize that it has very signifi-
cant tax implications.”
“For example, a company owes the bank
$10 million, it goes to the bank and restruc-
tures the loan to $8 million. The $2 million
difference is forgiveness of debt, which is
a taxable event,” he explained. “Now the
payments on the debt are less, but the
business is hit with a tax bill of 35 percent,
or $700,000. Code Section 108(i) says you
can make an election to defer that income
to the year 2014. Not only do you not have

2010 Tax Season Preview

Expect an unprecedented demand for tax advice

A tax season like no other

BY ROGER RUSSELL

See TAX SEASON on 29

Better ways to get paid

Start with being clear about what you’re charging

BY LIZ GOLD

When it comes to communicating your firm’s fees, don’t dish out surprises.

billing and collections process works.

It may seem like an obvious tactic for keeping clients happy and paying, but talking about fees while maintaining a client relationship can be delicate, especially in an economic climate that has left many businesses struggling.

“Many CPAs will send that bill and it
is a surprise because the client wasn’t
expecting it,” she explained. “There was
additional work, and although they spell
it out on the invoice, they don’t have the
conversation.”
“We don’t talk thoroughly about fees up
front,” said Rita Keller, president of Keller
While many firms will add collection
language into their engagement letters,
Keller recommended a tactic for new cli-
ents that she used in her own firm — en-
close a collections policy statement along
with a point person’s direct phone and a
welcome letter. This is important because
legally, a firm can’t call a client for collec-
tions unless that client is made aware of
that firm’s collections policy.

Instead, she recommended, at the very
least, having a discussion up front about
the work being done and how your firm’s
“The biggest mistake is not having an
agreement that lets the person know how
you want to be paid,” said Michelle Dunn,
president of American Credit and Collec-
tions Association in Plymouth, N.H., and
author of 12 books on the subject of collec-
tions. “Being specific is very important.”