Wrap Up of AICPA Spring Governing Council Meeting 2013

The 2013 AICPA Spring governing Council meeting kicked off on Sunday and just wrapped up. Take a look at the three-day meeting through the eyes of social media. (Email subscribers: View the full story on AICPA Insights.)

Tax Reform: The Crystal Ball Never Lies

People often ask me, “Ed, when do you think we’ll finally see tax reform?”

“Not before 2014,” I respond with assurance.
“How can you be so sure, Ed?” they say.
“My crystal ball never lies!

But I started getting a bit nervous about sounding so confident.  After a little digging, I found out my crystal ball had once predicted that the Titanic was unsinkable, yet it went down on April 15, 1912. How’s that for foreshadowing?! That forced me to do some soul searching and thinking.

Flash back to November 2011. I was sitting next to Pat Thompson, who chaired the AICPA Tax Executive Committee.  We were listening to Don Longano, former House Ways and Means Committee Chief Counsel and Washington tax insider, share his views on the prospects for tax legislation at the National Tax Conference.

Windows on Washington

A few weeks ago I talked about the jitters many business owners and families are feeling in regards to the current U.S. economic situation. Now, more than ever, businesses are looking to their CPAs to help them make sense of this increasingly complex world. At the AICPA, we want to do everything we can to help you succeed in this environment.

We asked you to describe the angst you are observing in your practice. We received dozens of comments via the blog post and social media channels. Overwhelmingly, members said that Congressional action—or in many cases, inaction—is the primary source of uncertainty and anxiety for clients and in their companies.

Right or wrong, it is clear that we live in a time when the Federal government is quite active. Think about it: TARP, the auto-industry bailout, Dodd-Frank, healthcare reform, American Tax Reform Act—and the list continues to grow. There will assuredly be more “cliffs” to come this year: surpassing the debt ceiling, a possible downgrade in US credit ratings, sequestration, and another continuing resolution(s) to fund the Federal government.

Tentacles of State Tax on Professional Services May Reach CPAs

Could your clients be required to pay a sales tax on your CPA tax and accounting professional services? Could states really “tax a tax service” that CPAs provide to taxpayers who need these services to comply with the increasingly complex tax law and accounting rules?

Well, three states already tax professional services and do not exempt accounting services, so CPAs in those states can speak to its impact. The states are Hawaii - 4%, New Mexico - 5% and South Dakota - 4%. Some states also have taxes that affect (but do not specifically target) the accounting profession. For example, Delaware imposes a gross receipts tax of .004% on monthly receipts over $100,000, and the state of Washington has a 1.8% business and occupation tax on service providers.

CPAs Say Reducing Nation’s Deficits Is Job No. 1

When a CPA alerts an individual or an organization to a problem, it’s usually wise to heed the financial advice. CPAs figure out the meaning of numbers every day and are accustomed to giving guidance on complex financial situations.

Once again, CPAs are informing America that the federal budget numbers tell an alarming story. In an online survey conducted by the AICPA in December, three-quarters of CPAs said immediate action is needed to quell spiraling federal budget deficits. More than half identified deficit reduction as the top economic priority for the United States, ahead of creating jobs (23 percent), tax reform (18 percent) and ensuring the long-term stability of Social Security and Medicare (5 percent).