Navigating New Waters: How Recent Accounting Shifts May Impact Tax Filing

As tax laws continue to become more complicated, the demand for CPAs continues to rise. At the same time, this industry has seen a significant percentage of its workforce leave in the last five years. Since 2019, over 300,000 CPAs have left the profession, either opting for another industry or retiring. [1] Since 2016, the number of students sitting for the CPA exam has also declined by over 15,000 (down 33%). This is likely due to a variety of reasons.

According to the 2023 trends report conducted by American Institute of Certified Public Accountants (AICPA), the number of new CPA candidates by year was down to 30,251 in 2022 from 48,004 in 2016. [2] In addition, the number of students majoring in accounting has also decreased.  This is likely due to the perception that an accounting degree is harder to obtain than other business-related majors as well as the perception that the resulting profession requires longer office hours than other careers. [3]

Students who still decide to pursue an accounting degree find themselves dealing with the process and requirements needed in order to sit for the CPA exam, which continue to become more difficult. National requirements are strict (for good reason); including a bachelor’s degree in accounting or related field, additional credits beyond those required by the degree, supervised work experience requirements, etc. State requirements also vary, which can add additional credits, type of work experience, and even a written essay to be submitted and accepted to obtain the license.

There also seems to be a higher demand for tax preparation services that stems from complex tax laws being rolled out year over year. Individuals that have previously been able to self-prepare their returns are now seeking professionals to help guide them through these changes.

In order to adapt to the lack of staff and ever-growing clientele, accounting professionals are more commonly utilizing tax filing extensions in order to address the current bottleneck. What is an extension? In short, it allows for additional time to file tax returns while avoiding a late filing penalty. Any tax due must still be paid by the original filing deadline, but an extension allows additional time to prepare the returns.

At the same time, the U.S Bureau of Labor Statistics projects an industry growth of 4% from 2022-2032. The National Association of State Boards of Accountancy (NASBA) and the AICPA are also working to evolve the entrance process requirements for aspiring CPA professionals. [4] The boards are optimistic that the changes will open the door to many new applicants, however, this evolution will likely take significant time to unfold.

We can look forward to the changes ahead, while still adapting to the current environment.  If you haven’t already, reach out to your tax professional to prepare for the current filing season.  Keeping in mind although the process may look different than in previous years, they are working hard to adapt just like we are.

To speak with our tax experts, please contact our office at (503) 292-1041 or via email at info@allentrust.com.

[1] Why No One’s Going Into Accounting - WSJ (Answers how many CPA’s have retired since 2019, over 300,000)

[2] Trends 2023 report (AICPA) page 17

[3] Journal of Accountancy: How students view the accounting profession - Journal of Accountancy

[4] National Association of State Boards of Accountancy (NASBA): Evolving CPA (evolutionofcpa.org)