The 2021 tax season filing pace for the 1065 segment had disappointing growth, with returns not started dropping by 2.2% since the 04/01 update – a far cry from the 36.6% drop we saw on the 04/01 update. However, even with this small growth, the 2021 tax season filing pace has almost pulled even with the 2020 tax filing season (0.3% difference in returns not started) and is 4.3% away from parity with the 2019 filing pace.
I will be very interested to see how the 2021 filing pace changes – in 2019, we saw a 26% drop in returns not started between the 04/15 and 05/01 updates, though in 2020, there was only a 3% drop.
Tips for a Successful Filing Season: Communication is Critical to Success
In our 04/01 update, I discussed tips for reviewing your existing inventory and how to start organizing and completing as much pre-preparation work as possible in advance.
Once you've taken these steps, it's time to communicate with clients. Use your client collaboration software for clear visibility into the status of your clients at-a-glance, including outstanding points and missing or incomplete documents needed to complete their return.
If your firm hasn't implemented an online, secure collaboration hub, consider CCH Axcess Client Collaboration, which offers firms a new way to move client work through their workflows. A more personalized collaboration hub improves client relationships and makes busy season easier. Firms that used CCH Axcess Client Collaboration saw an average of 40% completion rates on organizers they sent out, with completion rates as high as 67%. And with a step-by-step process that ensures everyone knows what needs to be done and when, both firms and clients benefit from a frictionless experience that provides clear visibility and accountability.
The IRS filing stats show the tax pros 3.4% ahead of their year-over-year filing pace (and that doesn't take into account the 18 fewer filing days in 2021), and looking at the 1040 data, we're seeing similar cause for celebration here. With the various legislative and regulatory changes in the last year, it would make sense that more people are relying on their CPAs rather than choosing to DIY their taxes this year.
And while none of the segments have overtaken their 2019 filing pace, most have surpassed the 2020 tax filing season pace (with the 1065 segment the lone outlier). Based on the 04/01 and 04/15 period over period gains we've seen, I wouldn't be surprised if, by 05/17, the 2021 filing pace is at or near the 2019 pace.
I look forward to updating you on 06/03 with the tax filing pace as of 05/17. Until then, stay safe, healthy, and productive.