Thursday, October 12th, 2017

Tax Return Ranking – A Consistency Issue

“Discipline is the bridge between goals and accomplishment.” – Jim Rohn

If you work in a CPA firm, you probably know what I mean by the title of this post – tax return ranking. It means the level of difficulty of a particular tax return.

It is one of those procedural type issues that I probably don’t cover as much as I used to. Yet, these little things can play havoc with consistency and efficiency at your firm.

Here’s the story:

Partners are asked to assign a level of difficulty to tax returns before they are selected (or assigned) for preparation. Some firms use grades like A, B, C and some firms use a numeric ranking like 1-5, with 5 being the most difficult.

Staff and interns then select (or are assigned) returns that are appropriate to their experience level. Beginners and interns might be given the “simple” returns and more experienced tax preparers get the more complex returns.

The issue is that some partners might think a certain return is a Level 2 and another partner thinks it’s really a Level 1. They have not established guidelines as to what actually constitutes a #1 from a #3 return. It is just assumed that a #3 is more difficult than a #1. Take the guess work out of this process by better defining what each level means.

Susan Flynn, Office Manager at Gallagher, Flintoff & Klein in Lansing, Michigan has kindly agreed to share their ranking system. I though it might help other firms better define their own ranking systems.

Tax Return Rankings

0 – Business/Trusts

1 – Simple: W-2, Sch. A, No Sch. C, E or K-1s.

2 – Average: Includes a Sch. C, E or simple K-1s.

3 – Complex: One or more of the following: Sch. C, D, E, K-1s, B w/large brokerage statement, multi-state.

4 – High Touch: High-level preparer required.

Before January 1 rolls around, review your system and determine if it needs to be better defined.

 

  • "For every disciplined effort there is a multiple reward."
  • Jim Rohn

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