Welcome to the eighth installment of the tax season in data, for the period ending 09/01/2020. Though the filing deadline has come and gone, we’re still seeing demand for national – and comparable firm size – data from both Analytics as a Service customers and our readers. So, welcome to the post-season update!
Our Data Source
Before we dive into the results, let’s review how we collect 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, we’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 current pace of individual (1040) tax returns as of 08/30/2020, as compared to the prior tax season on the same day last year.
After a tumultuous tax season, it’s good to see that the 2019 filing pace for individual tax returns has maintained parity with the 2018 filing pace. We saw as far back as the 06/30 update that individual returns have started to catch up, and the trends continued through the 07/15 and today’s update.
In reviewing the filing pace for both 2018 and 2019, I recommend firms take an in-depth look at those returns still in “not started,” evaluate whether or not they are still viable prospects, and determine what caused those returns to stall. Consider how to address these issues earlier in the process next season, and prevent this stall-out. Client communication is key – while performing your post-season analysis, be certain to evaluate the effectiveness of your collaboration tools and pinpoint any missed opportunities for client outreach.
Partnership Returns (1065)
The graph above shows the current pace of partnership (1065) tax returns as of 08/30/2020, 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.
The post-season data reconfirms consistent performance by the partnership return segment. While much of this trend can be attributed to the combination of a March deadline and COVID-19’s appearance in the US, firms may want to review the workflows and communication undertaken by their partnership return teams during the filing season. If appropriate, consider implementing in other departments some of the actions that made this segment such a success story.
Corporate Returns (1120 C)
The graph above shows the pace of corporate (1120 C) tax return as of 08/30/2020, as compared to the prior tax season on the same day last year.
Not to belabor the point, but once again, with 1120C returns, we mostly see parity – or better – between the 2018 and 2019 return post-season filing pace. However, the widening gap year over year for returns not started could be of some concern. In the 07/15 update, the gap was 1.5%, while as of 08/30, the gap is 4%.
As with individual returns, I recommend the firm reach out to clients who have stalled in “not started,” determine why the client is in that status, and how the firm can assist. Prior to 7/15 deadline we could attribute a large percentage of “not started” with returns identified earlier in the process and extended. As we are well past the initial deadline, this is no longer the case.
In order to mitigate risk or possibly avoid future unforeseen pitfalls, consider how to engage these customers earlier in the process next season.
Concluding thoughts - Is your firm on track?
When looking at the national average, the 2019 filing pace looks to have caught up with the 2018 pace. But what if your firm pace is behind the national average, your firm’s prior year average, or both? How do you get back on track and focus on a successful Q4 and beyond?
The first step is to review the season and determine potential areas of improvement for next year, especially since virtual and remote work seems to be sticking around – and so does the coronavirus. Consider the success of your communication and client outreach programs, the effectiveness of your workflow solution, and staff productivity. Your workflow product, such as XCM, should be able to provide access to productivity data and other valuable insights to help you tackle any productivity challenges.
If your workflow solution isn’t providing you with what your firm needs to make data-driven decisions, or if you struggled through the 2019 tax season without a workflow and productivity solution, start looking now. Make sure that any workflow solution you consider provides a highly visual, fully interactive dashboard that allows you to:
- Benchmark your business performance by comparing business processes and key performance metrics to best practices, and to peer group comparative data.
- Gain a multi-dimensional view of your business process metrics including a historical and future-forward view of your business.
- Establish new KPIs to continually scale up your business.
As you enter extension season and begin to plan for the 2020 tax year, consider how your productivity platform is enabling you to understand your data and stay in front of the obstacles that might slow down your production cycle.
Until the 10/01 update, stay safe, stay healthy, and stay productive.