Envisioning the future of tax practice.

• Author: Holub, Steven F.

Editor's note: Mr. Holub chairs the AICPA Tax Division's Tax Practice Management Committee. Mr. Woehlke is a member of that committee.

If you would like additional information about this article, contact Mr. Woehlke at (212) 719-8347 or JWOEHLKE@LUCA.COM.

Both the CPA profession and tax practice are in tremendous flux. Envisioning the future in this environment takes uncommon foresight. Developing that foresight for the CPA profession is what the CPA Vision Project is all about. At the same time, in developing a strategic plan for the AICPA Tax Section, the Tax Division went through its own visioning process. This column discusses the author's view of the tax profession's future and reconciles it to the CPA Vision Project and the Tax Division's envisioning and strategic planning efforts.

Visioning is a strategic process through which a company, industry or profession defines and assesses its core competencies and values, develops future scenarios and strategizes for its future vision. A future vision enables the' profession to take appropriate actions that will optimize the future. On the other hand, strategic planning involves identifying activities along specific time lines, as well as matching goals and resources, to bring about the desired future. Within this framework, visioning precedes strategic planning.

Tax Practice Influences

Many factors affect the CPA practice. AICPA members who participated in the CPA Vision Project were exposed to trends in six key global factors: (1) political, (2) economic, (3) social, (4) technology, (5) human resources and (6) regulatory. Clearly, a number of these, such as political (the worldwide spread of democracy) and economic factors (the internationalization of the economy and capital markets) will greatly affect the CPA practice over the long term. In the near future, however, information technology, domestic legislation and practice economics are likely to cause the most rapid change to tax practice, with attendant risks and opportunities.

Information technology (infotech). Technological substitution, disintermediation, and convergence are three factors that will have an obvious impact on tax practice.

Technological substitution is a new word for automation, an industrial age phenomenon that is continuing into the "information age," with enormous effect on service businesses. Former AICPA Special Committee on Assurance Services Chair Robert Elliott noted that while audit revenues have remained relatively flat in recent years, audit staff declined 20%. In tax practice, technological substitution enabled CPAs to eliminate hand-preparation and batch processing of returns, thereby omitting clerical steps. Many firms now combine the client interview with the data input step, allowing tax practitioners to perform tasks previously handled by clerical personnel. To maintain appropriate leverage, some firms permit managers and lower level staff to do client interviews, reserving important client interviews for partners.

Another technology substitution example that directly affects tax practice is IRS alternative filing methods. On March 6,1998, the BNA Daily Tax Report stated, "[IRS Commissioner] Rossotti said, `there is still too much paper involved,' pointing out that IRS is `working very aggressively' to implement a paperless filing system by the 1999 filing season. He predicted `it won't be too long' before a majority of U.S. taxpayers file their...