What the CPA Sees in April That You Could Have Seen in March

I want to begin by defending the CPA, because what follows can easily be misread as an attack and it is not one.

A tax preparer is engaged to report what happened. He receives the closing statement, the depreciation schedule, the K-1s, and the brokerage records, and he produces an accurate account of a year that is already finished. He is measured on accuracy, on compliance, and on getting several hundred returns out the door in ten weeks. Those are the terms of the engagement.

A tax planner is engaged to change what happens next. Different question, different timing, different measure of success.

Both are necessary. They are not the same discipline, and the reason they get confused is that the same credential often covers both.

Where the two disciplines meet

The preparer works with a completed year. By the time your client's file reaches his desk, the transaction has closed, the funds have moved, the elections that were available have been made or missed, and the structures that had to exist beforehand either exist or do not.

He can apply every provision the facts support. He cannot change the facts.

This is not a limitation anyone should apologize for. It is the nature of the work. You do not fault a cardiologist for being unable to undo twenty years of diet at the moment of the appointment.

The difficulty is that many clients believe the April conversation is the planning conversation. It is not. It is the reporting conversation, and by then the planning window closed some months earlier.

Why the March conversation does not happen on its own

Three structural reasons, none of which involve anyone doing a poor job.

The first is season. Between February and April, a preparer's capacity is fully consumed. He is not going to initiate a strategic conversation in March, and it would be unreasonable to expect it.

The second is engagement scope. Most preparation engagements are priced and scoped to produce a return. Proactive planning is a different service, and unless the client has purchased it, nobody has been paid to do it.

The third is information. The preparer sees what arrives in the annual document package. He may not know about a building under negotiation, a business under letter of intent, or a bonus that will make this year unlike every previous year, unless someone tells him.

That third one is the opening, and it is the one an advisor is best placed to close.

What you can see that he cannot

You have the client's whole picture, updated continuously, and you have it in advance.

You know when a business is being shopped. You know when a property is being listed. You know when a compensation event is coming, because you are managing the account it will land in. You typically know this six to eighteen months before the preparer will see any evidence of it.

That timing advantage is the entire asset. It is worth more than technical tax knowledge, because the technical knowledge can be brought in and the timing cannot be recovered.

What to do with it

Two things, and neither one requires you to become a tax specialist.

Tell the preparer. A short note in the fall naming what is coming, before his season begins, is worth more than a long meeting in March. Many preparers will do meaningful planning work when they have runway and are asked directly. Some will not, and that tells you something useful as well.

Get a projection built before the transaction is signed. Not a strategy. A projection. What the sale produces under conventional treatment, federal and state, with the depreciation component separated out.

That single document changes the April conversation completely, because the number is no longer a surprise. It is a figure the client saw months earlier and had the opportunity to act on. Whatever he decided, he decided it himself, with the facts in hand.

A word about how to raise this

Do not walk into a client relationship suggesting his CPA has failed him. It is usually untrue, it is always resented, and it puts the client in the position of defending someone he trusts.

The better framing is the one that happens to be accurate. Preparation and planning are two services. Your client is receiving one of them. There is a question of whether he wants the other, and it is his decision to make.

Then bring his CPA into the work rather than around it. I want the client's own accountant reviewing anything we propose, and I want it in writing before anyone signs. That is not a courtesy. It is how the work is verified, and an advisor who insists on it is protecting his client and himself at the same time.

This information is general and is not tax, legal, or investment advice. Every situation is different. Work with your own CPA and attorney before acting on any strategy.