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Tax Bill 2017

Ahead of tax season, accountants are scrambling to understand the new law

Marielle Segarra Dec 21, 2018
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Accountants are putting in long hours in order to understand the tax bill that was signed into law Dec. 22, 2017. Joe Raedle/Getty Images
Tax Bill 2017

Ahead of tax season, accountants are scrambling to understand the new law

Marielle Segarra Dec 21, 2018
Accountants are putting in long hours in order to understand the tax bill that was signed into law Dec. 22, 2017. Joe Raedle/Getty Images
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You know those commercials where somebody’s training for a marathon or the Olympics? They drag themselves out of bed at the crack of dawn, lace up their sneakers and begin the long slog as the inspirational music builds to frenzy.

That’s basically what I witnessed on Tuesday, except the people in training were accountants. Instead of sneakers, they had cups of coffee, 6-pound tax manuals, and for inspiration, Sharon Kreider, a certified public accountant from California.

On Tuesday, Kreider stood in a hotel conference room in Manhattan in front of more than 100 accountants who paid about $1,300 to take a five-day course on accounting practices and the new tax law.

Kreider has been teaching these seminars in cities all over the country. She said the mood in the room is typically “anxious, frustrated, angry.”

Because the new tax law, passed by Congress one year ago, is more than 1,000 pages long, and it’s still not clear what a lot of it means. As a result, said Kreider, “we end up with tax preparers who should know more by now not understanding.” 

Not understanding things like whether your clients in the real estate business qualify for a new 20 percent tax deduction.

Matthew Rappaport, a tax lawyer in New York, said he’s spent between 500 and 1,000 hours trying to make sense of the law this year. He said Congress passed the law quickly, then “gave the IRS a set of statutes that were not very well drafted and said, ‘Hey, why don’t you go figure it out.’ ”

And the Internal Revenue Service isn’t there yet. So Rappaport doesn’t know if his real estate clients will qualify for that 20 percent tax break. In proposed regulations, the IRS says to qualify, you need to run a “trade or business.”

“Well what does that mean?” he said. “In the regulations, they said it refers to Section 162 [of the tax code]. Well, Section 162 has never clearly defined whether certain real estate is a trade or business or it isn’t.”

Welcome to the accounting version of hell.

And the thing is, tax season is always grueling for an accountant or tax preparer. Cesar Bocachica, a tax preparer in Virginia, said last year, he rarely got to tuck his daughter Daniela into bed or read her a bedtime story.

“By the time I got home late at night, everyone was sleeping and all I had to do was just eat and then go to sleep, wake up and do it all over again,” Bocachica said.”

This year, he’ll have the added pleasure of deciphering the new tax law and double checking the work of the real number cruncher in the room: his computer.

“We have to make sure that the tax accounting softwares are able to correctly calculate all the different changes that are happening,” he said.

Keep in mind, limbo is not a comfortable position for accountants. They’re being paid to stand between their clients and an audit by the IRS.

Carla Blanchard, a CPA in Illinois, has also been going to training seminars on the tax law. Because, well, safety in numbers, right?

“Just in case something comes up, you know, especially with a new tax law,” Blanchard said. “At least you’re being consistent with what your peers are doing. And you can kind of fight the IRS that way.”

Come tax season, the IRS may not have all that much fight left. It’s been undergoing budget and staff cuts for years. Sharon Kreider, the CPA from that five-day training session, said IRS agents are exhausted from cranking out regulations as fast as they can.

“You might have heard me say that I’ll bet there are a lot of IRS employees with a bottle of gin in one hand and whiskey in the other as they crawl out from under their desk,” Kreider said.

We ran that by the IRS. And they told us their agents are, indeed, working hard.

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