New tax law sets off scramble among accountants, tax preparers
WASHINGTON (AP) _ Congress and the White House may have wrapped up their work on the tax bill, but the job is just beginning for thousands of accountants and IRS employees who must make sense of the hundreds of tweaks and changes to the tax code.
``It’s going to be a major year for tax service providers,″ said Arthur Bowman of Bowman’s Accounting Report, an Atlanta-based newsletter.
Over the past few weeks, the Washington offices of the nation’s major accounting firms kicked into high gear, with staffers pulling late-night and weekend hours to gather details of the $152 billion tax-cut package bill from congressional Internet pages and clandestine faxes from Capitol Hill sources.
They scoured the fine print to divine new tax-saving strategies for clients and develop guides for their own workers about the tax bill’s impact.
``If anything, the language in this is more arcane than anything I have every seen,″ said Doug Waltman, assistant vice president for education at H&R Block, which has 8,500 offices nationwide.
Ironically, the major accounting firms may not see a large surge of business, since their clientele might be too rich to benefit from the bulk of the tax breaks, such as the $500 per child tax credit for middle-income families.
``Since our clients are mostly wealthy, a lot of the provisions don’t affect them,″ said Tom Ochsenschlager, a tax partner at Grant Thornton in Washington. ``This particular bill has a lot less in it for our clients than previous bills.″
Instead, Bowman and others believe the law could be a boon for smaller tax preparers, such as H&R Block.
``It may draw people back to local firms who had been using Turbo Tax (computer tax program) but who are afraid″ of the new bill’s complex changes, Bowman said.
Despite this outlook, the accounting firms are using the new law as a marketing opportunity. Tax preparation services brought $5.2 billion in revenues in 1995 to the 100 largest players, according to Bowman.
The intensely competitive accounting and tax-preparation firms rushed to publish guides to the new tax law and then to seek out opportunities for new business in the legislation. Pulling together the guides on short notice ``was a monumental effort,″ said Greg Jenner, a national tax partner at Coopers & Lybrand LLP in Washington. Personal financial planning is one area of opportunity for Jenner’s firm, he said.
``Capital gains will be a real problem,″ said Jenner. At Grant Thornton, analysts are trying to make sense of the new and varied retirement savings options.
The Internal Revenue Service, which is still creating and rewriting tax forms and instructions based on the 1996 tax law’s less dramatic alterations, had started planning for the new law’s changes even before the president signed it.
``This becomes second nature,″ said Stuart DeWitt of the IRS’ legislative affairs office.
The 1997 law is the 54th major public law change to the tax code since 1986, DeWitt said. The biggest modification for next year’s forms will be the work sheet for capital gains taxes, which will nearly double in size with about three dozen new lines, said Sheldon D. Schwartz, who oversees IRS tax forms and publications.
Meanwhile, some of Washington’s high profile accountants are gearing up for cross-country trips to train colleagues and inform clients.
Next month, Ochsenschlager will begin meetings around the country with Grant Thornton offices and clients, ranging from Atlanta to Wichita, Kan., to Boston.
Recalling an exhausting 1993 tour, he said: ``Before one presentation, I had forgotten to shave, I was so tired.″