12 Top Tax Season Challenges: A Survival Guide for Tax Professionals

During the tax season for accountants, staying on top of constantly evolving tax laws and regulations becomes even more challenging, especially in today’s fast-paced, tech-driven world.

As Robert J. Wood Jr., CPA, CGMA, VP of the American Institute of CPAs (AICPA), aptly put it, “The biggest challenge faced by tax professionals in the new era world is the ever-changing tax laws and regulations. With the increasing globalization of business and the rapid pace of technological change, tax professionals need to constantly learn and adapt to keep up.”

Navigating this shifting landscape requires continuous learning and adaptability. Beyond staying updated, tax professionals must manage client expectations, handle complex returns, and maintain accuracy under pressure.

Let’s explore the major challenges tax practitioners face during tax season—and how to overcome them.

12 Tax Season Problems Accountants Face while Tax Filing

1. Tax Filing Deadline Pressure

Generally, the annual tax filing deadline in the USA is April 15th, and it can be a stressful time for tax practitioners and CPAs as they face greater challenges in balancing compliance activities and workflow management. This is especially true in recent years, with the increasing complexity of the tax code and the growing number of multi-state taxpayers.

One of the biggest challenges is that all states in the USA have their own tax preparation rules, which means that tax professionals need to be familiar with each state’s tax laws in which their clients have business operations. It can be a daunting task, especially for small tax firms that may not have the resources to hire tax professionals with expertise in over forty states.

Optimizing workflows for tax pros is crucial during tax season, helping accountants manage complex filings, stay compliant, and meet tight deadlines efficiently.

Solution: Tax software hosting that streamlines tax preparation, saving time and money

Tax firms can consider using tax software such as Drake, ATX, Lacerte, and more to simplify the process, as it automates many of the tasks that tax professionals perform, such as data entry, calculations, and form preparation. Tax software can generate electronic returns, which can be filed quickly and easily. Thus, it helps tax professionals to meet deadlines and reduce the risk of errors. A well-structured tax preparation workflow helps accountants streamline tasks, reduce errors, and stay organized during the busiest time of the year.

Moreover, many businesses consider hosting tax software on the cloud to enhance its benefits. Hosting tax software of cloud servers brings accessibility, multi-user collaboration, security, data backups, and more. Simply, it allows you to assess your client’s accounting data from anywhere, making it convenient when your team works from different clients’ locations.

2. Managing Workflows

Complex workflows are one of the greatest blockers in faster tax filing. Tax professionals often have to juggle multiple tasks and projects at the same time. Many tax professionals still rely on manual processes to manage their workflows.

This can be time-consuming and inefficient, and it can also lead to errors. Though CPAs use point solutions for workflow management, these solutions don’t scale as per different business requirements.

Solution: Use tax preparation software and opt for a workflow management system

Finally, tax professionals should use technology to their advantage during tax season. There are a number of technology tools that can help tax professionals to manage their workflows more effectively. For example, tax professionals can use tax preparation software to automate the tax return preparation process and e-signature tools to collect electronic signatures from their clients.

A workflow management system can help tax professionals automate their workflows, track their progress, and ensure all deadlines are met. A workflow map is a visual representation of all of the steps involved in a particular task or project.

Creating a workflow map can help tax professionals identify areas where they can streamline their processes and improve efficiency. They should have the process flows for specific big-ticket items like Advance child tax credits, refunds or other carryover information, cryptocurrency transactions, IRS service issues, etc.

The workflows let them get the maximum information from their clients for financial reporting while meeting tight deadlines in tax season.

3. Growing Threat of Cyberattacks

The tax season for accountants brings intense workloads, tight deadlines, and ever-changing regulations, making efficiency and organization more critical than ever.

The taxation industry is always on the radar of threat actors who continuously prowl on data from different networks, especially during tax season. Tax firms have access to a wealth of sensitive data, including Social Security numbers, bank account numbers, and financial information of multiple businesses at the time.

Several regulations require taxation professionals to retain data for a certain time, giving cybercriminals more time to exploit any vulnerabilities. And tax season provides weak surface areas to steal funds or collect protected data and personally identifiable information.

Solution: Create an actionable framework or opt for managed security solutions

According to IBM, most organizations have been hacked more than once. The costs of data breaches are also rising, and nearly half of those costs are incurred more than a year after the breach. Therefore, tax firms need to ruggedize their IT ecosystem with strong security layers and arrangements — deploy strong security, instance response, disaster recovery, and business continuity plans.

Experts recommend an actionable framework to counteract cybersecurity threats in tax season:

• Step 1– Build Business Case: In this stage, it is important to outline the strategic business operations and map the security needs. They should define the program’s mission, value, and key stakeholders.
• Step 2 – Charter Action Plan: Next, accounting firms should prepare a risk framework after vulnerability assessment and penetration testing.
• Step 3 — Initiate Execution: After this, the accounting firms should define capabilities and competencies.
• Step 4 — Build and Mature Program: In the next stage, accounting professionals must develop critical incident response capability and an action plan for breaches.
• Step 5 – Reassess and Improve: The most common block is communicating the value to the management. Security is a continuous and ongoing effort, so accounting professionals must prepare metrics for optimization.

After implementing security measures, tax firms should benchmark their performance targets and analyze where they lack. Benchmarking helps in making more informed decisions for cyber security. It also helps in aligning resources for the maximum impact.

Also, firms can opt for a managed security solution that supports taxation firms to improve their security posture by identifying and remediating vulnerabilities in systems and networks before cybercriminals can exploit them.

This technology can help to detect and block malicious activity on networks, preventing cybercriminals from gaining access to sensitive data. It provides 24/7 monitoring of systems and networks for suspicious activity, which helps to identify and respond to attacks quickly.

4. Providing a seamless Onboarding of Clients

A well-planned strategy and the right tools can turn a stressful period into a profitable tax season, maximizing revenue while maintaining efficiency.

Tax season is a busy time for tax firms, and onboarding new clients can be a challenge. Tax firms need to collect a lot of information from new clients, including their tax returns, financial statements, and supporting documentation.

Generally, the onboarding process includes multiple steps, from the first interaction at the first touchpoint to the necessary documentation. During tax season, when time is scarce, and firms are facing resource constraints, it’s crucial to streamline the onboarding process.

Fluid onboarding gives a greater chance to improve customer retention, whereas poor onboarding creates the opposite effect. Firms that don’t prioritize omnichannel communication and streamline billing & invoicing are losing potential clients to competitors.

Solution: Tax Season Onboarding with automated bookkeeping programs and human support

During peak tax season, automated bookkeeping programs streamline client onboarding by integrating data systems, analyzing inputs, and syncing with tax or audit software. These tools replace outdated data, consolidate multiple sources, and enhance reporting and product support.

Many tax firms also use client onboarding portals for seamless document collection, allowing clients to upload tax returns, financial statements, and supporting files effortlessly.

Electronic signature tools further simplify the process, enabling firms to collect legally binding signatures on tax returns and other documents—saving time, reducing paper costs, and improving client convenience.

However, technology alone isn’t enough. Manual support plays a crucial role in bridging gaps during client interactions. A dedicated resource can manage proposals, contracts, and payments, ensuring a smooth transition from sales to operations while educating clients on in-house technologies.

Lastly, tax firms must implement streamlined procedures that leverage technology for efficient document collection, clear client guidance, and responsive communication throughout the onboarding journey.

5. Security Concerns in Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is used by businesses of all sizes in a variety of industries, including the tax industry, healthcare, retail, and manufacturing. Most accounting firms have a complex IT ecosystem where multiple technologies and applications co-exist. They form a hybrid IT where some software is on-premises, and the rest of the systems are on the cloud.

However, EDI systems are complex and might have different configurations, hardware, and language. Many data errors surface on the ground because of connectivity issues. IT teams use API-led connections to integrate each system to overcome this issue. Most importantly, EDI systems must be highly secure to protect sensitive information, but they are vulnerable to cyberattacks.

Solution: Data integration and hosting on A dedicated server for secure electronic data interchange

EDI is an advanced system that simplifies the exchange of essential documents like invoices, purchase orders, and tax-related information. It’s crucial to ensure that these documents are secure from any potential threats, such as data breaches, cyberattacks, and unauthorized access.

To safeguard this sensitive information, businesses should consider hosting their EDI systems on dedicated servers. Dedicated servers are exclusively reserved for a single organization, ensuring that all data and operations are isolated from other users.

Dedicated servers provide a highly secure and isolated environment with stringent access controls, encryption protocols, and security measures to protect financial data from unauthorized access.

As the taxation industry is subject to stringent regulatory compliance, hosting EDI systems on dedicated servers can help meet these requirements more effectively, ensuring that financial data remains in accordance with the law during tax season.

6. Banking Crisis and Tax Rule Changes

Tax rule changes can be complex and difficult to interpret. Tax practitioners need to stay up to date on the latest changes in order to advise their clients accurately. Every year, tax professionals must keep up with a barrage of tax rule changes, which can be challenging, especially for small and medium-sized tax firms that may not have the resources to dedicate to tax research and planning.

It also means that tax professionals need to navigate a maze of tax extenders, deductibility clauses, and tax credit rules. Comprehending several tax rule amendments is a painful process for tax professionals.

Solution: Implement real-time IRS Integration

The proactive integration of the Internal Revenue Service (IRS) live feeds into internal tax systems is indispensable for accounting and taxation firms. Therefore, firms should align their internal tax systems with live feeds from the IRS. Frequent news updates keep accounting firms updated with the rule changes and help them in reducing filing errors.

Some critical areas to mark are updates on audits, missing income, excessive deductions or credits, unreported income, and refundable tax credits. Keeping up with tax law changes can help you stay ahead of the rest. It makes a complex tax year more manageable.

7. Document Gathering and Organization

For tax practitioners, collecting and organizing tax-related documents is a complex and relentless task. The clients often arrive with a jumble of paperwork, some incomplete or disorganized, and expect us to make sense of it all. It’s a constant battle against the clock to ensure every document is accounted for and correctly categorized, especially during the peak of tax season.

They face the constant challenge of meticulously reviewing every document, double-checking for accuracy, and ensuring no details slip through the cracks. The stakes are high; one misstep could lead to costly errors or audits. Effective document management isn’t just about their ability to organize but also about teaching the clients.

Solution: Document management software makes the process hassle-free

To manage document gathering and organization, CPAs should initiate early communication with clients and establish clear expectations and deadlines. Customized checklists, along with the use of secure online portals, streamline the collection of the necessary documents and reduce the risk of data loss.

Opting digital tools and document management software simplifies organization and categorization while encouraging clients to scan and digitize documents, easing their transmission and retrieval.

CPAs can create a standardized digital folder structure for each client, employ automation for data extraction, and utilize secure cloud storage for accessibility. Additionally, using client portals within tax software and delegating routine tasks can significantly streamline the process, ultimately ensuring a smoother and more efficient tax season.

8. Tax Preparation and Compliance

Tax return preparation presents a unique challenge for tax practitioners. They often find themselves navigating the landscape of tax laws, a never-ending source of complexity that requires them to stay ahead of ever-evolving regulations, interpret them correctly, and ensure their clients’ returns adhere to these intricate rules. It becomes a challenge that requires unwavering diligence and continuous education.

Compliance with tax laws and regulations is the primary duty of tax professionals. They are tasked with ensuring their clients not only comply with the tax code but also optimize their returns within legal boundaries. The challenge lies in guiding clients through complex tax scenarios, ensuring they pay what’s owed while not overpaying or inviting audits.

Solution: Customized software tools can help you out

To overcome the challenges of tax preparation and compliance during tax season, CPAs can benefit from software tools and a stringent quality control process. Utilizing reputable tax software streamlines the preparation and compliance tasks, automating data entry and ensuring accurate calculations.

These tools often include error-checking features to enhance compliance. Additionally, implementing a rigorous quality control process for thorough review of tax returns helps catch and rectify any errors or omissions before submission, ultimately ensuring accurate and compliant filings.

9. Tax Deductions and Credits

Identifying eligible deductions and credits for tax practitioners is a complex and demanding task. The vast number of potential tax savings can be difficult to navigate, requiring their expertise to uncover. It is a continuous process of exploration, research, and analysis, requiring a deep understanding of the tax code to ensure that clients receive all the benefits they are entitled to.

Solution: Effective communication with clients

Tax practitioners must educate their clients about their existence to ensure they do not miss out on significant savings. With personalized strategies that fit each unique financial situation, including tactical planning, the execution of financial maneuvers, and a thorough understanding of the tax code, professionals can deliver the best possible outcome for their clients.

Tax practitioners should invest time in ongoing professional development to enhance their knowledge of deductions and credits by attending seminars or webinars.

To provide the best outcome for clients, tax professionals must analyze their financial situation, identify optimization opportunities, and execute tactical planning and financial maneuvers, including considering the timing of deductions and credits to maximize savings.

10. Dreaded IRS Investigation in Tax Audit

The fear of an IRS audit is ever-present, a challenge that weighs heavily on tax practitioners. They must be prepared for audits at all times, ensuring their clients’ records are accurate and capable of withstanding the scrutiny of IRS investigators. It becomes a challenge that demands meticulous record-keeping and proactive audit risk reduction strategies.

CPAs must be vigilant for red flags and anomalies in their clients’ returns, taking immediate steps to address potential issues and avoid audits. It’s a challenge that demands a keen eye for detail and an understanding of the IRS’s audit triggers.

Solution: Keep meticulous records

Facing the dreaded prospect of an IRS investigation during a tax audit can be anxiety-inducing. To navigate this challenging situation, CPAs can employ several strategies.

First, CPAs should maintain meticulous records and documentation of all financial transactions and tax filings to provide a clear paper trail. Second, responding to any IRS correspondence and meeting deadlines is important to demonstrate cooperation and transparency.

When dealing with the IRS, open and honest communication is key; provide all requested information and address any issues promptly and thoroughly. Tax professionals should encourage their clients to maintain a compliant culture, not limited to tax preparation but also emphasizing transparent reporting and accurate record-keeping.

11. Adapting to New Business Models

The rapid evolution of business models—such as digital products, subscription-based services, gig economy platforms, and emerging technologies like 3D printing—has introduced new complexities in income reporting and tax deductions. Traditional tax structures often struggle to accommodate these modern revenue streams, making compliance more challenging for businesses and tax preparers.

For example, gig workers earning through multiple platforms may have varying tax obligations, while businesses dealing in NFTs, cryptocurrencies, or digital subscriptions must navigate evolving regulations and classification issues. Similarly, the rise of on-demand manufacturing, such as 3D printing, adds another layer of complexity, as tax laws may not explicitly define how much income and expenses should be reported.

Solution: Choosing Suitable Tax Software

Leveraging specialized tax software for modern business models can streamline income tracking and compliance. These tools offer built-in templates, automated workflows, and real-time updates on tax regulations, ensuring accurate reporting and reducing the risk of errors. By embracing tax technology, preparers can efficiently manage the complexities of today’s diverse business landscape.

12. Communicating Effectively with Clients

Tax professionals often struggle with explaining complex tax concepts to clients who may not have a strong financial background. This can lead to repetitive conversations, misunderstandings, and a significant drain on time and energy. Some clients may overlook key details in their returns, while others may flood your inbox with questions—many of which you’ve answered multiple times.

Solution: Make Use of Client Portals Available in Tax Software

Enhance client communication by leveraging client portals in your tax software. These portals provide a centralized space where clients can securely access their financial documents, review their returns, and stay updated on their filing status—all without needing constant back-and-forth emails or calls. Clients can also submit questions directly through the portal, ensuring all communications are tracked and easily referenced.

By offering self-service access, you empower clients with the necessary information while reducing your administrative workload. The result? Fewer misunderstandings, more efficient workflows, and a better overall experience for you and your clients.

FAQs for Tax Professionals

1. What are some of the challenges in filling out a tax return?

Filling out a tax return can be complex due to evolving tax laws, missing client documents, and time constraints. Understanding deductions, ensuring compliance, and avoiding errors are some of the biggest challenges accountants face.

2. When is tax season for accountants?

Tax season for accountants typically starts in January and peaks until April 15 in the U.S. However, extensions and business filings can extend the busy period well beyond the deadline.

3. How to keep up with tax law changes?

To keep up with tax law changes, accountants should subscribe to IRS updates, attend industry webinars, use tax research software, and join professional tax forums to stay informed on new regulations.

4. How to survive tax season?

To survive tax season, accountants should streamline workflows, use automation tools, delegate tasks effectively, and prioritize self-care to avoid burnout during the busiest months.

5. What are the challenges of tax compliance?

The challenges of tax compliance include staying updated on frequent tax law changes, ensuring accurate reporting, managing client records, and navigating audits or penalties for errors.

6. What is the best tax software for CPA firms?

The best tax software for CPA firms depends on firm size and needs, but popular choices include ProSeries, Lacerte, UltraTax CS, and Drake Tax for comprehensive tax preparation and compliance support.

Final Words – Turning Tax Challenges into Opportunities

Tax season is a demanding time for tax professionals, but it is also an opportunity to make a real difference in your client’s lives.

Turning tax challenges into opportunities involves a multifaceted approach that combines careful tax planning, compliance, and strategic decision-making. By understanding the tax landscape, identifying incentives and credits, optimizing your business structure, and seeking professional advice, you can leverage the tax system to your advantage.

It’s essential to remain agile and adapt to changing tax laws and regulations, all while upholding ethical and legal standards. Embracing tax opportunities reduces financial burdens and can contribute to the growth and success of businesses and individuals, ultimately helping them achieve their financial goals.

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