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April 17, 2018 is the deadline for Americans to file their individual tax returns for 2017. With the passage of the Tax Cut and Jobs Act of 2017, there are significant changes in the federal individual income tax rates and deductions allowed. While those changes will mostly impact American taxpayers when they file tax returns in 2019, it is never too early to start understanding and planning for changes.
Working on tax returns is stressful for many individuals under normal circumstances, more so this year with major tax changes taking effect. In addition to gathering documents for 2017, taxpayers are wondering whether they need to change their withholdings, family budgets, or record keeping under the new tax law. Due to the complexity of tax laws and time involved in filing tax returns, most Americans do not like doing taxes. A 2013 national survey by the Pew Research Center found that 56% of Americans either hate or dislike doing their own taxes.[1] As a result, more people request extensions. In 2016, 7.9% of tax returns were received after April, which increased to 9.4% in 2017.[2] With changes in the tax code, that percentage is expected to rise next year.
Many Americans are seeking help to prepare their tax returns. In a 2014 statement, the Internal Revenue Service (IRS) commissioners reported that 56% of total tax returns filed for 2013 were done by paid preparers, and another 34% of taxpayers used tax preparation software, making a total of 90% of taxpayers seeking assistance.[3] One can only imagine that those percentages will be higher after major changes in the tax law.
With an increasing number of Americans using paid tax preparers, one might think there will be a spike of “help-wanted” advertisements for tax related positions during tax season, and it will be easy for people with tax preparation skills to switch jobs at that time.
Data from Chmura’s JobsEQ© Real Time Intelligence (RTI) database provides some insights into those questions. To look closely at labor market dynamics during the tax season, we first define tax-related occupations. While the occupation of tax preparers (SOC code 13-2082) is the quintessential tax professional, many other jobs are involved in filing tax returns, including accountants and auditors; bookkeeping, accounting and auditing clerks; and personal financial advisors. We also include positions such as bill and account collectors; payroll and timekeeping clerks; and billing, cost, and rate clerks. While those individuals may not directly prepare tax returns, they may be called upon to prepare various tax forms, locate receipts and invoices, and provide other help. Finally, tax examiners and collectors and revenue agents are also included as tax-related professionals, even though most of them will not help taxpayers prepare returns, they typically work for government agencies that will receive tax filing.
In the first quarter of 2018, there were 277,018 job openings for tax-related professionals. Among those, 91,748 openings were for bookkeeping, accounting and auditing clerks, 59,182 for accountants and auditors, and 21,841 for tax preparers. Compared with the open positions for the previous three quarters, there is no anticipated spike in job openings for tax-related professionals in the first quarter. In fact, the total job openings in the first quarter is almost the same as the fourth and third quarter of 2017. But there was a sharp drop in the second quarter of 2017, as there were only 206,407 total jobs openings, about 75% of jobs openings in other quarters.[4]
The seasonal pattern of tax-related job openings implies that while we typically associate the first four months of the year with the tax season, companies do not recruit a disproportionally large number of tax-related professionals in that period. The recruitment starts well before tax season. The data indicate that in the third and fourth quarter of the year, accounting and tax preparation firms increase their recruitment in anticipation of the upcoming tax season, and hiring continues through the first quarter. However, the demand of such positions drops sharply in the second quarter after the tax season is over.
This pattern makes sense for the accounting and tax industry. A well-managed business can predict increased work load for tax-related professionals and plan their staffing accordingly. Chmura’s RTI data imply that it takes 20 to 30 days for a tax-related position to be filled in 2017. Hiring for the tax season should start at least one month before the new year. But with holidays in November and December, it is not surprising that the recruitment for such positions start in October. Businesses also understand that good job candidates may not be available when tax season starts, giving them more incentive to start recruitment early and lock in talent needed.
The most job openings for tax-related occupations are with large staffing agencies for accounting and finance professionals, such as Accountemps, Robert Half, and Accounting Principles. H&R Block, and Intuit, two firms associated with tax preparation, also have one of the largest job openings in this field.
For job seekers, it appears that the second quarter is the worst time to be looking for tax-related positions. Unfortunately, the second quarter is the time when upcoming college graduates intensively look for work. Students in accounting and related fields may encounter a lack of openings in the job market. It is wise for students to start their job search in the fall semester. For the tax-related professionals who are currently working and are considering changing jobs, a good strategy is to polish their resumes in the third or fourth quarter of each year.
[1] Source: http://www.people-press.org/2013/04/11/a-third-of-americans-say-they-like-doing-their-income-taxes/
[2] Source: https://www.irs.gov/newsroom/2018-and-prior-year-filing-season-statistics/
[3] Source: https://www.cnsnews.com/news/article/susan-jones/irs-90-taxpayers-seek-help-preparing-their-returns
[4] Source: JobsEQ.