Key points of the plan were outlined to be:
- Reducing the marginal tax brackets from seven to threee
- Doubling the standard deduction for each filing status.
- Repealing the Alternative Minimum Tax.
- Eliminating the additional 3.8% capital gains tax created by Obamacare.
- Eliminating all itemized decutions except for mortgage interest and charitable giving.
- Repealing the inheritance tax.
- Slashing the corporate tax rate from 35% to 15%.
If these changes were to become law, then Steve Mnuchkin’s promise of creating an environment where most taxpayers could file their taxes on the back of a (large) postcard, could become a reality.
Add that to the impending explosion of blockchain managed accounting, and the tax preparation industry would become an endangered species, except for those firms who already prepare an existing base of corporate and other artificial entity returns.The tax preparation industry could become an endangered species Click To Tweet
In a recent podcast, leading tax marketing expert, Chauncey Hutter, warned that the potential for change is so drastic that tax preparers should begin planning by looking at alternative streams of income, a topic he will be covering at his annual Crash Course Success Summit in Charlottesville, Virginia, on June 1through 3, 2017.
Practitioners have limited options.
First of all, they should begin an SWOT analysis of their existing customer base to assess the revenue their threats and opportunities in relation to their strengths and weaknesses. Especially the proportion of individual and business engagements. That should be followed by an examination of client lists to see which clients would most likely be affected by the changes and be at risk of leaving. This should all be done well in advance of the next filing season, in case the proposed legislation becomes law.
Firms who plan for these changes have a large opportunity to seize, while others who fail to prepare may find themselves subject to a significant reduction in compliance revenues, leading to contraction and possible failure.
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