Tax Pro Q&A: Getting Clients Ready for Tax Season

Meet Rob Berger, CPA, CGMA, principal with Anders CPAs + Advisors in St. Louis. Rob works with closely held business owners on individual and corporate tax consulting and retirement planning. He is director of the Real Estate and Construction Group, where he has helped the firm develop industry expertise, marketing plan and growth strategy.

I sat down with Rob to discuss some of the hot topics for tax year 2015, learn more about his firm and some tax advice for clients, and touch on his love for the St. Louis Cardinals. Here’s what he had to say.

Scott Cytron: What is the #1 issue individual clients will deal with for tax year 2015?

Robert Berger: It’s tough to narrow it down to just one. Taxpayers will continue to deal with the alternative minimum tax (AMT) and identity theft, but there’s only so much we can do about these things. If I have to pick one major issue, I would say ACA compliance for taxpayers needing to purchase insurance on their own. ACA reporting requirements are new and relatively complex. Failing to report things properly and file the appropriate forms can cost tax dollars and impact a taxpayer’s eligibility for future premium assistance.

SC: What is the #1 issue corporate clients will deal with for tax year 2015?

RB: With so many baby boomers nearing retirement, succession planning is one of the key challenges our business clients are facing. I anticipate this issue being front and center for at least the next five to seven years.

Because every business has different goals and expectations with respect to their succession plan, we spend a lot of time with our clients discussing different scenarios and options. There isn’t always a clear-cut correct answer, so it’s common for succession plans to evolve over time, as retirement draws near. It’s critical to start the conversation early and get input from all affected parties along the way.

SC: In general, what can clients do to make tax return prep easier for themselves, and possibly you?

RB: Start early. Most people dread the idea of gathering tax documents and/or preparing for their annual financial statement audit. It can be a stressful time, but procrastination doesn’t make the process any easier.

SC: What is the one mistake you see individual and corporate clients making year after year?

RB: I would say lack of communication is the source of many problems. We realize communication needs to go both ways, so we emphasize the importance of frequent meetings and/or phone calls with our clients. Some clients feel they are being bothersome if they call or email frequently with questions, but honestly, keeping communication lines open throughout the year makes our job easier and generally results in a better result for our clients.

SC: A lot of firms have begun sending tax organizers electronically. Does Anders do this, and if so, has this expedited your workflow? If you still send by paper, why have you stuck with that?

RB: This is an evolving process at Anders. We still send the majority of our tax organizers by paper. We offered our clients the option of receiving organizers electronically a few years back, but surprisingly, not many clients were interested. The vast majority of our clients don’t complete their tax organizer, and I think those that do prefer to have a hard copy provided rather than printing it on their own. While we will continue to explore the best way to deliver our tax organizers, our current focus is on providing secure and convenient methods for clients to send us documents electronically.

SC: I know you’re involved in the Construction Financial Management Association. Tell me two to three tax issues that are particular to construction clients.

RB: As has been the case for the last several years, uncertainty is once again the theme when it comes to 2015 year-end tax planning. While we anxiously await congressional movement on the possible extension of a variety of popular tax incentives, our best advice at this point is to have a plan and a back-up plan in place as Dec. 31 draws near.

A few key provisions impacting the construction industry include:

Bonus depreciation: A 50 percent bonus depreciation gives taxpayers the option of deducting more than half the cost of all new equipment purchased during the year, regardless of an enterprise’s net income or how much equipment was purchased throughout the year. If your business has invested significantly in capital expenditures in 2015, it’s a good idea to know your tax implications with and without bonus deprecation, in order to expedite the decision-making process in the event that an extenders package is passed later this year.

Section 179 depreciation: Similar to bonus depreciation, Section 179 depreciation allows taxpayers to take significant first year write-offs on equipment purchases. The current 179 deduction limit is $25,000 (limited to net income), but there’s speculation that this amount could be increased to as much as $500,000 by year-end. While we don’t want to let the tax tail wag the dog, any increases related to allowable depreciation could provide incentive to pull the trigger on a big purchase you’ve been contemplating for your business.

R&D tax credit: Since its inception in 1981, the research and experimentation tax credit (R&D tax credit) has expired eight times and has been extended sixteen times. Our expectation is that the credit will again be extended retroactive to January 2015. With that in mind, we’re advising our clients to work through a variety of scenarios, as described above, to determine if they could benefit from the R&D credit if it were extended.

SC: I know Anders is celebrating its 50th anniversary. Why do you think the firm has lasted so long?

RB: Yes, it’s been an exciting year, highlighted by a great anniversary party for clients and friends of the firm in early August. I believe our longevity, in large part, is due to strong, proactive leadership and an emphasis on the development of our young professionals, both technically and in the area of soft skills.

SC: Will the St. Louis Cardinals have a good team next year?

RB: Absolutely, but I’m admittedly biased. I think the success of other local teams, namely the Royals and Cubs, will push the Cardinals front office to do all that is necessary to remain competitive.