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AICPA Survey Finds IRS Challenges to Be Top Issue for Smaller Firms

Ruth Singleton
Published Date:
Jun 8, 2022

A survey released Tuesday by the AICPA Private Companies Practice Section has found that the top issue for smaller CPA firms is challenges when working with the IRS, the Journal of Accountancy reported. According to the CPA Firm Top Issues Survey, firms with 10 or fewer professionals deem IRS challenges to be their top issue, while it is the No. 2 issue for firms of 11-20 professionals and the No. 3 issue for firms with 21 or more professionals.  Last year was the first time that working with the IRS was a choice for respondents.  

The journal noted that IRS service issues have been the subject of congressional hearings and a recent report by the Treasury Inspector General for Tax Administration. Among the service issues over the past year have been the IRS's inability to meet timeliness standards for most taxpayers' cases, sending erroneous automated messages, failing to answer most phone calls, and failing to process a large backlog of tax returns. 

The survey included five categories of CPA firm size: solo practitioners, 2-5 professionals, 6-10 professionals, 11-20 professionals, and. 21 or more professionals. The No. 1 issue for firms of 11 or more professionals was finding qualified staff, and the No. 2 issue for firms of 21 or more professionals was retaining qualified staff. The top issue in last year's survey was finding qualified staff. 

Sole practitioners and firms with 2-5 professionals listed keeping up with the changes and complexity of tax laws as their No. 2 issue. Both those categories listed seasonality/layering of deadlines as their No. 4 issue and keeping up with technology and managing associated costs as their No. 5 issue. 

Beyond the issue of IRS challenges, the two issues that ranked in the top 10 for all size categories were keeping up with COVID relief programs and seasonality/layering of deadlines. Firms of all size categories except sole practitioners listed developing the next generation of firm leadership among the top 10. This is the second  survey in a row in which firms have shown they understand the need to prepare for succession to new leadership. 

Looking ahead to the next five years, survey respondents were concerned about changes in the regulatory environment and staffing issues. The issue of changes in the regulatory environment was listed first by sole practitioners, tied for first among firms with 11–20 professionals, and ranked second among firms with 2–5 and 6–10 professionals. Staffing issues were listed first for firms with 2–5 and 21 or more professionals and tied for first among firms with 11–20 professionals. 

All five size categories listed emerging technologies (data analytics, artificial intelligence, blockchain, etc.) as one of their top five concerns for the future, and all five listed capability to adapt to changing client needs in their top five as well. All categories except solo practitioners listed managing a hybrid workforce (remote and in-person) among their top five concerns for the future. 

The CPA Firm Top Issues Survey was completed by 752 firms between April 19 and May 23. The responding firms were given a list of issues and asked to rank them on a scale of one to five. 

The survey was released during the AICPA and Chartered Institute of Management Accountants (CIMA) ENGAGE 2022 conference.

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