“Measure the size of the accomplishment by the obstacles you have to overcome to reach your goals.” – Booker T. Washington
Welcome back to the seventh installment of the tax season in data, for the period ending 07/15/2020. Congratulations, you did it! You’ve made it to the end of this tumultuous and unpredictable extended tax season. You’ve overcome a global pandemic, shelter-in-place orders, business shutdowns, and suddenly learning what #WFH means. You’ve outlasted the Saharan dust cloud, murder hornets, and the PPP rollout. Truly, the obstacles that have been overcome to complete this tax season have been astounding, and as you’ll read below, across all segments the tax season was finished strong.
Our Data Source
For those of you who are new to this series, let’s review the data driving these analyses. These reports are the results of millions of unique tasks processed through the XCM system annually. We leverage the resulting data points to obtain insight into the pace of filing seasons. Our customers, who receive these types of analytics during tax season, have told us that one of the most significant benefits they receive is the comparison of their firm against the national average of similar-sized firms.
Throughout the tax season, I’ve utilized XCManalytics to compile this years’ data for 1040, 1065, and 1120-C returns and benchmark them against 2018 returns, providing the tax community with insights into the pace of the 2019 tax season.
Individual Tax Returns (1040)
The graph above shows the pace of individual (1040) tax returns on 04/15 and 07/15 for the 2018 and 2019 filing seasons.
The pace change that we started to see in the 06/30 update has continued through to the end of the tax season, with the filing pace pulling for all intents and purposes even with last year. Across the board, the 2019 filing pace is within two percentage points of the 2018 filing pace, with the single largest data change coming from completed returns with an over 10% increase between 06/30 and 07/15.
Over the past two weeks, I’ve been asked what a comparison between the 2018 and 2019 filing seasons would look like, as of the federal filing deadline. Above is the results of that comparison. As you can see from the graph, though the 2019 filing season was significantly behind the 2018 season on the original filing deadline date, by the 07/15/2020 filing deadline, the gap had closed, and the 2019 filing season had surpassed the 2018 pace.
How does your firm compare to the national average? If your software provides you with the ability to perform a similar analysis, I strongly recommend assessing your pace in this manner. Take a close look at how your 07/15/2020 pace compares to your pace as of 04/15/2019.
Partnership Returns (1065)
The graph above shows the pace of partnership (1065) tax returns as of 07/15/2020, as compared to the prior tax season on the same day last year.
Throughout almost the entire extended 2019 filing season, partnership returns have maintained a similar pace as in the 2018 filing season, and the teams working on partnership returns maintained their focus on the goal. They didn’t just hold steady – they surpassed the 2018 filing pace for completed and in-progress returns.
Corporate Returns (1120 C)
The graph above shows the pace of corporate (1120 C) tax return as of 07/15/2020, as compared to the prior tax season on the same day last year.
As with individual 1040 returns, corporate (1120 C) returns have continued to close the year over year filing pace gap. In the 06/30 update, we still saw a 1% - 4.5% lag between the 2018 and 2019 filing seasons. However, as of 07/15, the pace of completed and in-progress returns for 2019 have overtaken the 2018 pace.
There is still a 1.5% gap between the current and prior year filing pace. I would recommend making contact with those clients in a “not started” status to determine what the client status is, and how the firm can assist them.
As we leave the extended filing season, assess your performance with an eye not only on extension season but also to start preparing for next year’s busy season. Ask yourself questions such as,
- What is your status right now?
- How does your firm compare to this same time last year?
- How does your firm measure up when comparing July 15 this year to April 15 last year?
- Is your firm in a good position to push through and complete all remaining work due by Oct. 15?
- Do you have a plan to recharge and reinvest in your employees, and yourself within the boundaries this pandemic has set on many of us.
If the answer to any of these questions is less than positive, I strongly recommend that you and your staff register for our Aug. 13 webinar. Withum’s Jim Bourke and XCM’s Mike Sabbatis will be discussing productivity trends and adapting for the next normal. Attendees earn one CPE while learning how to find a balance between what worked before and what needs to happen to succeed in the next normal.
Until the 09/01 update, stay safe, stay healthy, and stay productive.