Tax pros prepare for the coronavirus

Beneath the headlines of the disease killing thousands and infecting tens of thousands worldwide sits other news: panic buying at Costco, whipsawing on Wall Street, and the specter of unprecedented disruption to everyday lives and business — all with barely five weeks to go before Tax Day.

So, how are tax professionals planning on dealing with coronavirus just as the season heats up? For now, business as usual, more or less.

“We have several hand sanitizer stations throughout the office and now are further emphasizing the importance of hand washing,” said Kenneth Bagner, member in charge of the tax practice at SobelCo in Livingston, New Jersey. “This approach is consistent with what we do every year to make tax season less stressful for our staff. If our staff follows our cautionary advice and acts to assure their own good health, we don’t expect any disruption to processing,” Bagner said, adding that his firm hasn’t taken steps to inform clients of potential changes in workflow.

“This would be a premature step that could cause more alarm and harm rather than any good,” he said.

Waiting for federal and state guidance is the watchword at Top 100 Firm CohnReznick, according to CEO David Kessler in Bethesda, Maryland, and Michelle Fleishman, chief risk officer and general counsel in the firm’s Roseland, New Jersey, office. They said the firm is cutting non-essential business travel, monitoring employees for international travel — both business and personal — and evaluating conferences and events for March and April.

The IRS is also taking a wait-and-see approach: “Our internal working group will continue to closely watch this and promptly respond to any emerging situations to protect our employees and taxpayers interacting with the agency,” the agency said in a statement. “Normal IRS operations are continuing, and we are seeing a strong, smooth filing season for the nation.”

“I suspect that the IRS is developing contingency plans, as they did with the government shutdown, with a hierarchy of essential and non-essential services,” said New York-based Enrolled Agent Phyllis Jo Kubey. “Return filing will be at the top of the essential service list.” (The IRS did not respond to an email for this story regarding their contingency plans.)

“If coronavirus keeps taxpayers away from their preparers, we envision that more extensions will be filed to allow for the returns to be completed after flu season,” said Bill Nemeth, president and education chair of the Georgia Association of Enrolled Agents.

“I’ve made sure that all my staff are set to work at home,” said Gail Rosen, a CPA in Martinsville, New Jersey. “One staff person has always preferred to come in — through snow and sleet, she’s always gotten here. I keep reminding her that this time may be different.”

Taking it seriously

“Different” might be one word to describe the potential disruption. Most firms think ahead in detail for weather or power outages, for instance. A new and largely unknown disease is a new and unknown worry. “You almost have to treat the coronavirus as a disaster or an event that could cause your company/firm to roll out their disaster recovery plan,” said Christopher Chudyk, a partner at Traphagen CPAs & Wealth Management in Oradell, New Jersey.

“All companies should have contingency plans for any natural or systemic challenge,” said Morris, a CPA and senior partner at Morris + D’Angelo CPAs, in San Jose, California. “Where and how to connect need to be prearranged. Where’s the alternate office location? Note that post-Katrina, too many New Orleans-based companies learned they all had chosen Orlando — and yet Orlando was impacted at the same time.”

“Figure out what will work for your business in case the coronavirus hits or a disaster occurs,” Chudyk said. “After developing a plan, make sure it’s written out, then discussed and reviewed with the entire company and then tested.”

No more face to face?

Tax prep also often depends on face-to-face conferences with clients with little more than the width of desk between.

“I prepare about 150 individual returns per year and have face-to-face meetings with about 10 percent of my clients,” Nemeth said. “The impact on my tax business will be minimal, since I do almost everything remotely via email, fax, secure portals and remote electronic signatures.”

Nemeth and his wife formerly operated 24 offices as a franchisee for a major tax prep company, however. “The business model was to do a one-on-one interview and tax prep in person. This business model could be dramatically impacted by the virus,” he said.

“We’ve been calling older clients who normally come in for an interview to mail in their stuff. Those who have colds, we’re asking the same thing,” said Mary Kay Foss, a CPA in Walnut Creek, California. “With less interviews, hopefully things will get done sooner. We’re also mailing out some things that we’d normally have picked up.”

“I’m lucky, because I work from my home office, I have no staff and most of my clients work with me remotely,” Kubey said. “I need not commute or interact with others regularly. I already use a secure messaging platform for communication and document exchange. I often meet with clients ‘face to face’ via videoconference.”

“I live in Atlanta and tried to buy a face mask last week at CVS,” Nemeth added. “They laughed and said they’ve been out for two weeks.”

Technology will help

For years firms have been erecting defenses against cybercrime. That technology may come in handy now.

“We’ve been trying to get more clients to use the portal and upload their documents since the outbreak,” said Chris Hardy, an EA and managing director at Georgia-based Paramount Tax and Accounting. “We’ve been stressing to every client to use this avenue along with Zoom for video conferencing if they have questions. We’re seeing more and more clients utilize this service, which has reduced phone calls for appointments and follow-up. We’re using our workflows that we set up pre-season along with weekly reminders via email and pages on our website for walking them through how to use the portal,” Hardy said.

“Our firm also allows our staff to connect their smartphones to our network so that they can send and receive client emails, view their calendars and access contact information,” Chudyk said. “We do have a policy that in case their phone is lost, our IT team will wipe their phones.”

Traphagen has also incorporated Office 365 to access Microsoft applications from the cloud, with two-factor authentication. The firm’s e-workflow in the event of a virus emergency would involve alerts to clients in case of quarantine; instructions to use the firm’s encrypted portal; staff scheduling and payroll; monitoring of each stage of work; shipment to the client for e-signature and electronic payment; and e-filing.

Kessler and Fleishman added that CohnReznick is discussing with clients the impact of the virus on their own businesses — disrupted supply chains, uncertainty in the capital markets, and so on — and will use this as an opportunity to “be better prepared next time.”