How Canopy is helping practitioner headaches this tax season


Tax practitioners have been saying since 2020 that tax seasons cannot get much more challenging than they are. While taxpayer relief programs were well-intentioned for the American public, most of them were hastily rolled out with little in place as to how they would be administered.

The newest headaches came in the form of advance child tax credits this year. Taxpayers and practitioners alike are complaining about the inaccuracy of letters being furnished by the Internal Revenue Service, leading to more delays in returns and a historic backlog at the IRS.

“We’re left to clean up the mess,” says Larry Furr, Chief Product Officer at Canopy, when speaking of how practitioners must now handle the variances and questions their clients are dealing with. “It’s frustrating to be a tax preparer right now.”

Furr could not be more correct.

Our practice saw a sharp increase in notices during 2021, relating to 2020 tax returns that were filed last season. Most of the communications had to do with paperwork that was sitting in one IRS department waiting to be processed while another department was sending out an automated communication.

It not only led to a rise in frustration among our clients, but also a sharp increase in the hours it takes to bring a return to completion, driving into profit margins when there is not a tool in place to help manage the increase in work.

Canopy is a top-rated accounting firm management tool, and one of the most crucial efficiency tools it offers for tax practices is its API integration with the IRS. The tool allows for the tax practitioner to pull tax transcripts, essentially automatically, for their clients.

The auto-pull does require a current power of attorney on hand, but once completed a practitioner essentially can enter their CAF into the tool and in a single click pull down the transcripts they need. What’s even better is that the software can automatically update the transcript pulls on a regular basis and notify you if something has changed from the prior copy.

The tool builds out reports for you bringing your attention to changes you need to be aware of for your clients almost as fast as they are happening. It could easily help identify issues with recovery payments and advance child tax credits before returns are filed and clients get stressed over notices or withheld refund checks.

Our practice adopted the power of attorney collection as part of our onboarding practice for all new clients to ensure we have one already on hand. It also has helped to ensure that information we receive from new clients is complete and accurate before more returns are filed.

While taxpayer relief programs were well-intentioned for the American public, most of them were hastily rolled out with little in place as to how they would be administered.

As if this tool alone does not provide huge efficiency gains, Canopy also offers a notices tool as part of their Transcripts and Notices add-on. The add-on also can be purchased as a standalone product for firms that don’t currently use Canopy as their firm management software.

The notices product will notify you as the practitioner that a notice is being sent out for one of your clients before it goes in the mail. That’s a value-add service that would separate your tax practice far above the competition. “Not every notice is the result of a filing error,” Furr says, “but clients panic.”

The ability to give a client a heads up and let them know you’re already on top of the next steps provides comfort that’s invaluable. The notices tool also offers templates and sample letters that practitioners can use for responses. You can type in the notice number and suggested response resolutions will come up.

Furr says you do not necessarily need to be a resolutions specialist. “The tool makes it easier to respond to a broader spectrum of IRS notices without necessarily having to research or prepare a written letter from scratch every time. Given the volume of notices over the last two years, that’s an enormous time saving across even a small tax practice.”

In addition to these noteworthy tools, Canopy’s client portal app is five-star rated for its mobile experience, which means it’s as user-friendly as it comes for your clients. Clients can easily use their phones to take a picture of tax documents that are then securely uploaded through the portal and can be converted to a multi-page PDF for practitioner use.

The best feature in our opinion? It prompts your clients to name their files. That means no more files with long names from scanners that give you context as to what they contain. Portals are also white-labeled with your firm name and logo to ensure your client experience is fully branded.

Our firm gave Canopy a 5-star rating overall and highly recommend it for firms of many sizes.

For more information, check out the Canopy site HERE.

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