Kelly Phillips Erb on what comes after the extended tax season

This episode of the Sage Advice podcast features Kelly Phillips Erb. She is a tax attorney, writer, and podcaster. She authors the popular Taxgirl blog, which is consistently recognized by the ABA Journal as one of the top blogs written by lawyers. Kelly has regular columns with Forbes and Bloomberg and is the host of the newly relaunched Taxgirl Podcast. Kelly focuses on tax law, including tax planning, compliance, and controversy. 

First off, why do you do what you do?

Kelly Phillips Erb: Gosh, that is a loaded question, isn’t it? I’m a tax attorney first. I fell in love with tax law in law school. I never intended to be a tax attorney, but I loved the tax work.

I loved fixing things. That’s the most appealing part, being able to explain things to taxpayers and then help them fix problems. That translated into writing about tax. Both on the writing side and on the lawyering side, I do it because I really enjoy helping taxpayers navigate our complicated tax system.

The tax season has finally ended. What comes next now that tax season is over?

Kelly Phillips Erb: On the tax compliance side we have a lot of practitioners and tax preparers still trying to get through their extended tax season because extensions are not due until October. There’s also PPP loans. Not only are there still additional funds out there, but forgiveness is on the table right now. Folks are having to submit their paperwork and certifications for that.

Additionally, with the unemployment benefits expiring this week, the senate is looking at another stimulus package. So that is going to have ramifications for taxpayers and professionals.

Some of the things that both the house and the senate are looking at, include tax credits and new deductions. There is a lot to learn. So, tax practitioners are going to continue to be busy and taxpayers are still on edge waiting to see what’s next.

The GOP is proposing a trillion dollars in additional stimulus and Democrats are proposing another 3 trillion. My guess is we’re going to be somewhere in the middle. It wasn’t long ago we thought, oh my gosh, a federal government with a budget over 1 trillion.

Kelly Erb: I was looking at the numbers today for the deficit and it is mind boggling. But something that most people and even Congress can agree on is that we need to do something to keep the economy going. I suspect it is going end like the CARES Act where it’s going to hinge on tax policy.

The reality is that this is really the just the beginning from a tax and accounting point. I think there are still tax cases being adjudicated from the 1986 tax changes, right?

Kelly Phillips Erb: Yeah, the backlog is tremendous. There’s tax court and people are still waiting for their returns to be processed, and some still waiting on refunds. And you are right, there was a backlog even before this started. So, it just keeps going.

It will be interesting how 5, 10, or perhaps even 20 years into the future, there may still be ramifications from what happened during this 6 to 12-month period.

Kelly Phillips Erb: Absolutely, especially as it applies to the way we do business and the way we look at business. One of the interesting things in the senate proposal is about remote workers. There was a time when I did not think we would be talking about tax consequences for remote workers this quickly. But we have to now because people are being forced to work from home. So, a lot of the changes that we thought were coming slowly have accelerated. And I agree, this is something that we are going to be seeing the consequences of for quite some time.

I’m curious about your thoughts on what may be the increase of freelance workers, especially with assembly bill five in California, which was an attempt to reclassify the Lyfts and Ubers to classify people as employees. 

Kelly Phillips Erb: Interestingly, one of the senate proposals addresses that fact. Let’s take Lyft as an example. Right now, there are a lot of restrictions on the kind of assistance that they can offer them during the pandemic without accidentally becoming an employer. One of the things that is in the senate bill is to allow those companies to be able to extend some benefits to workers without magically changing them into employees.

The way we view the workplace, how we view remote work, and the gig economy is really changing things.

We’re also seeing where in Germany, Siemens is moving into what is called a ‘results-only’ work environment, where they are not even requiring employees to account for their time at home anymore, just as long as they get the job done.

Kelly Phillips Erb: We used to talk about that a little bit in the law, because you account for your time every six minutes increments and it can be really stressful. One of the things that we’ve talked about is moving towards a system of a flat fee.

So for lawyers who are working from home this means that instead of accounting for your time all the time, you just make sure you get your work done. I do think there are a lot of positives coming out of that.

I have not heard what’s going on at Siemens, which is interesting, because we have international clients. I’m interested to hear their spin on it. It makes sense because I do think especially in the States, we have kind of an emphasis on making sure you get your 40+ hours each week, and I don’t think that always promotes efficiency. It’ll be interesting to see if that system would change that.

Lastly, how can someone contact you?

Kelly Phillips Erb: Well, I’m all over the place, especially on social on @Taxgirl on Twitter. You can go to my website, which is taxgirl.com and I have a slew of ways to contact me on that site.