BlockStar: Kathy Pickering, executive director of The Tax Institute at H&R Block
When Kathy Pickering first became executive director of The Tax Institute (TTI) at H&R Block, she said she was ready for the job, with one caveat: the “media stuff.” Her boss said that wouldn’t be a problem, and she would not be doing interviews with the media.
“As soon as I took the role, she said, ‘ok we’re signing you up for media training,’” remembered Pickering. “What! No, no! You said I wouldn’t have to do it.”
Now, not only does Pickering talk to dozens of online, print and broadcast reporters each tax season, she actually enjoys it.
“I love it. It makes me nervous every time, but I love it,” said Pickering. “One of the most important things that a leader has to do is communicate. So for me, learning how to be a spokesperson for the company has challenged me to develop my public speaking skills. I’ve also had to learn how to take and ask for feedback and coaching so that I can continually improve. And, talking about taxes is particularly fun – first because it’s what we do, but more importantly, translating tax issues into something that people can understand is one of the many ways we help people and inspire confidence.”
Tax reform dominates the conversation, and The Tax Institute’s work
Over the last year, tax reform has dominated many of Pickering’s conversations with reporters. Despite all the media coverage, she still expects people to be surprised when they file next year.
“Nobody else but us thinks about taxes outside of the [tax] season, so I think people in general are going to be surprised when they go to file their taxes,” said Pickering.
Pickering thinks people will be most surprised next year if they are expecting the tax preparation experience to be significantly different or simpler.
“People will still need to gather all their tax documents, go through the entire tax interview, review their financial situation and their household, identify what’s changed, and then understand the impacts of tax reform on their individual situation. This will take about the same amount time. People aren’t magically going to have a significantly easier experience than they’ve had in the past,” said Pickering.
The tax preparation experience may be even more time-consuming for some, Pickering said, because taxpayers will want to understand the pros and cons of taking the new increased standard deduction versus itemizing to determine which methodology gets them better results. In addition, some tax benefits, like the child tax credit, are now available to more people (with higher income), and other tax benefits, like the “other-dependent” credit, are new. This means more forms and documentation, and more chance of missing out if taxpayers don’t know or understand the new tax changes.
“There are a lot of really good opportunities to take advantage of tax benefits… they could be very happily surprised to take advantage of some of these credits,” said Pickering.
Another surprise Pickering expects for taxpayers is the new $10,000 limitation on their state and local tax (SALT) deduction, even though it’s been talked about extensively in the news. The $10,000 cap could prevent some taxpayers from itemizing, which could increase their taxable income and even alter their tax planning strategies, such as donating to charities.
Implementing tax reform across the federal tax return, and 42 states, and cities…is a big deal
All these changes don’t just potentially risk surprising taxpayers, but also present a gargantuan task for The Tax Institute and H&R Block to implement in time for tax season. The Tax Institute, H&R Block’s center of tax expertise, studies the changing tax laws so H&R Block can support its network of 70,000 tax professionals, DIY tax preparation products and other tax prep services.
“We study the changing tax laws and then help operationalize that to all the different functions in the company: to driving the software requirements for our tax software to working with training to help prepare our tax preparers to helping inform products and marketing,” said Pickering.
Pickering describes the work to prepare for this tax season as a duck floating on the surface, while paddling vigorously underneath. Making the changes feel seamless for taxpayers and tax professionals requires a lot of work from The Tax Institute behind the scenes – and well before tax season. This means not just tackling all the federal tax reform changes that have been made, but also how it also impacts state taxes.
“People don’t see the ripple down or domino effects to the states. Each state has to figure out what the impact of tax reform is on their filing process. That part is really a heavy lift. You take all these tax code changes times 42 [states with an income tax]. You also have different city filings that we do. There’s a lot that really doesn’t get noticed and goes into ensuring that you’ve got a complete federal and state filing,” said Pickering.
The ‘Navy SEALs’ of taxes help at the frontline during tax season
The Tax Institute’s, and Pickering’s, work won’t end when tax season begins. Instead, it is with all the systems and training they support in place the work is just beginning.
“And then also we are the experts behind the experts on the frontline. So, as the tax professionals are working with their clients, sometimes they need an authoritative source to confirm how to apply tax rules in a certain circumstance. Our credentialed tax experts in TTI can do the tax research, and provide the answers, with the legal reference and citations to help the tax professional feel confident in helping their client,” said Pickering.
It’s not just H&R Block clients who visit a tax office who receive support from TTI. TTI also supports taxpayers who are doing their taxes themselves – where the H&R Block online and software tax preparation products are concerned, “do it yourself” does not mean “do it alone.”
“We also provide the direct-to-consumer tax support function for those that use our DIY products. So, in that case, if someone is preparing their own tax return and they have a tax question they can chat with our tax experts and get our help,” said Pickering.
Yes, those people chatting with taxpayers as they file their tax returns are highly qualified tax experts from tax attorneys, CPAs, enrolled agents and those with a master’s degree in tax. A group of people who H&R Block president and CEO Jeff Jones refers to as “the Navy SEALs of taxes.”
“It’s an amazing value. They provide great assistance as people are navigating some pretty complicated tax situations like rental properties, small businesses, Uber drivers as a side gig, and even international situations where they have to report foreign income and assets,” said Pickering. “And there are many seemingly simple but confusing situations, such as: what’s the right filing status? Can I claim my child for this credit, and do I still qualify for the American opportunity credit for my college tuition? Things like that.”
Working with the IRS to reduce fraud, improve taxpayer service and advocate for taxpayers’ rights
Pickering also focuses a lot of her attention on working with the IRS to protect taxpayers from fraud and advocate for improved taxpayer service and rights.
“We basically came together – the IRS, tax industry and states – and said we’re better off together than apart, we’re being attacked by cyber attackers, we need to share information about suspicious behaviors and activities that we’re seeing, we need to set standards for the security environment and we need to do communications, education and outreach both to taxpayers and tax preparers,” said Pickering.
Pickering chairs CERCA, a committee dedicated to the relationship between the IRS and the tax industry. She’s also a member of ETAAC, a committee dedicated to the integrity of the e-file system that more than 90 percent of taxpayers use to file their returns.
“We as an industry have made great progress… There has been a 60 percent reduction in identity theft fraud in the years since we started in 2015. That’s a measurable improvement in terms of the number of taxpayers reporting that they are victims. We’re helping the government protect taxpayer dollars from going out the door as stolen identify refund fraud,” said Pickering.
The winding road to the top of The Tax Institute
Pickering’s nearly 20-year career with H&R Block did not take a straight path to becoming executive director of The Tax Institute. She started her career in IT where she gained a deep understanding of the tax development and e-filing processes. From there, she moved to the product and revenue-generating side of the business with two stints in pre- and post-filing products. After another move to working in client experience, she landed in The Tax Institute.
“My career advice for people is your career progression isn’t always a straight line up. Sometimes if you can move sideways and get exposure to different pieces of the business, that can make you more valuable, more knowledgeable, in any given role,” said Pickering.
But, there’s more to it than that. Pickering also advises that people know themselves and what they enjoy doing.
“The other side of it is you have to enjoy the work that you’re doing because we spend so much time here every day,” said Pickering.
What makes taxes, so dull to so many, something she enjoys?
“In this world I’m working with professionals solving really interesting problems, right at the intersection of the economy and social [impact]. While day-to-day is different, it’s all playing to things that I enjoy doing and find intellectually stimulating,” said Pickering. “The days go so fast, I’m never bored.”
BlockStar question: What is the best advice you’ve received?
“Find your voice and use it. For many years, I was often the only woman in the room, and sometimes it was hard to speak up and ask uncomfortable questions or share alternative options. It took time and practice to find my voice and put forward my ideas in a constructive, confident way. And, when I did that, I found that others would also start sharing their ideas. I didn’t always get it right, but when I did, it helped get us to a better result.”
– Kathy Pickering, executive director of The Tax Institute and vice president for regulatory affairs
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