11 posts categorized "Ann Marie Maloney" Feed

Due Diligence Reminders for Tax Extensions

4868 formOur hours get longer as we approach the downhill stretch of filing season, and it gets more tempting (if not mandatory) to file an extension for many clients. The proper preparation of an extension involves more than the entering of numbers on the extension form. And, the demands of filing season sometimes take over and quality control procedures and professional standards are overlooked in an effort to get everything filed.

This year will be especially complicated with Affordable Care Act items, a late start with extenders, many late documents from third parties and a culture that expects convenience and increasingly instant results. But the AICPA Code of Conduct, Circular 230, AICPA Statements on Standards for Tax Services (SSTSs) and the Internal Revenue Code (IRC) all still need to be considered in the preparation and filing of extensions for clients. The applicable standards include:

  • Circular 230 Sections 10.22, Diligence as to accuracy, and 10.36, Procedures to ensure compliance, mandate considerations to be followed in the preparation of federal returns, including extensions by practitioners.
  • AICPA Code of Professional Conduct Rules 1.100, Integrity and Objectivity, and 1.300, General Standards, provide rules for AICPA members to follow.
  • SSTSs No. 1, Tax Return Positions, and No. 2, Answers to Questions on Returns, provide more insight into due diligence in the preparation of returns. Also, SSTS No. 4, Use of Estimates, would be applicable for practitioners working with estimated amounts of income and deductions.
  • IRC section 6081(a) authorizes the Treasury to allow an extension of time to file for up to six months.

Let us first remember the extension we are filing is the taxpayer’s extension and not our extension. Therefore, the client must be informed that the amounts shown on the extension represents an estimate of their income and the figures are their responsibility. Where possible, assign staff to contact clients as soon as possible. Sufficient time is needed for due diligence and other considerations in order to properly and accurately file an extension.

Further, we are not allowed to file extensions just because clients expect them; we need their explicit permission. Form 8878, IRS e-file Signature Authorization for Form 4868 or Form 2350,is available for this purpose.

In order to stress this point with clients, Gerard Schreiber’s CPA firm communicates in writing with clients after filing March 15 returns and requests written authorization to file an extension of time on their behalf. The letter will also indicate:

  • Whether the taxpayer authorizes the firm to file an extension on their behalf;
  • All Forms W-2 with tax withheld should be returned with the signed letter;
  • Estimated tax payments made should be listed in the space provided;
  • This is an extension of time to file and not to pay. Any balances due will incur penalty and interest; and
  • If estimated tax payments for the next tax year are required, they should be made.

This may seem a bit too much, but we can never be too careful with this topic. The legal landscape dictates for us to be overly cautious in both return preparation and extension preparation.

We all have seen taxpayers who call and indicate that they are “going through difficult times” or “will owe no tax” and therefore do not need to make any estimated tax payment. These same clients will then show up on October 15 with a Form 1099 or Schedule K-1 for a large amount of income and owe the IRS a significant amount of tax as a result of not making estimated tax payments or a payment on April 15. Some clients are confused or incensed at being assessed interest and penalties. Some clients blame the CPA, but this argument falls flat when the CPA did his or her due diligence.

The IRS has sometimes invalidated an extension due to the use of a bad faith estimate. SeeCrocker v. Commissioner, 92 T.C. 899 (1989) and Oliver v. Commissioner, T.C. Memo. 1997-84 for more on this subject. Besides the IRS, there has been activity in local jurisdictions where CPAs were held liable for extensions filed with bad estimates.

Just some food for thought at this late date. Good luck - we’re almost there.

Gerard Schreiber Jr., CPA, Partner, Schreiber & Schreiber CPAs in Metairie, LA. Gerard specializes in tax, accounting and consulting matters for individuals and small businesses. He serves on the AICPA Tax Practice Responsibilities Committee and has authored numerous courses and articles on various tax subjects.

Valrie Chambers, CPA, PhD, is an Associate Professor of Accounting at Stetson University in Celebration, FL. She has over a decade of public accounting experience as owner/partner-in-charge of a CPA firm in Houston that specialized in advising small business owners. Dr. Chambers has been published in numerous journals and received the Texas Society of CPAs Outstanding Accounting Educator Award for mid-sized Texas universities in 2012. She has volunteered for the AICPA and the IRS’ Volunteer Income Tax Assistance in Corpus Christi

Form 4668 image via Shutterstock

Snow White Meets the IRS and Other Fractured Fairy Tales

Fairy tale imageIf you have ever watched the television show Once Upon a Time (one of my favorites) you know that it offers some compelling twists on popular children’s stories. Peter Pan author J.M. Barrie was probably rolling in his grave when his main character, a lighthearted kid who just doesn’t want to grow up, emerged as an evil teenager, but at least a relatively happy ending followed. 

Watching the show and working for the world’s largest association of CPAs got me thinking:  what would our beloved fairy tales be like if a CPA were to write them and perhaps play a role?  Here is my best tongue-in-cheek guess. Let us know if you have others you’d like to share.

Continue reading "Snow White Meets the IRS and Other Fractured Fairy Tales" »

Top 10 Tax Resources for the 2015 Tax Season

10 tax tipsA mother tries to get her son out of bed in the morning to go to school, and says, "Come on, lazy head, get up. You're going to be late.” But he remained in bed, burrowing deeper under the covers. Finally, she pulled him out, and he said, "Mommy, I can't go to school. The kids throw sticks and stones at me, and they call me names." "But you have to go anyway," she said.  "Why?" he asked. "First of all," she said, "you're 50 years old. And, second, you're the principal."

Your clients hopefully don’t throw sticks at you, but you are the CPA and like the principal, you need to show up, right?  So fight the urge to burrow - listed below are some popular tools from the AICPA to help you.

(By the way, credit for that joke goes to former NBC president Michael Gartner, who included it in an excellent speech on the 10 Rules for Life at my college commencement. Good luck prying that date out of me.)

Continue reading "Top 10 Tax Resources for the 2015 Tax Season" »

Your Professional Image - What 10 Minutes on LinkedIn can Do

LinkedinI review LinkedIn profiles almost every day. By now, I have seen at least 2,000, and I just cringe when I see things that could or will hinder someone’s professional image.  I am not in a position to advise people individually, so this blog is the next best thing.

Keep in mind that LinkedIn goes beyond looking good for recruiters.  Even if you are not interested in a new job, your online image still needs attention. If anyone Googles you - a potential client or employer, your company’s VP, a former supervisor, a reporter or even a prospective date - your LinkedIn profile could easily be the first thing that shows up. You want your best foot forward all the time.

Continue reading "Your Professional Image - What 10 Minutes on LinkedIn can Do" »

Understanding the ACA’s Mandates

I am at the AICPA Tax Strategies for the High Income Individual conference in Las Vegas. This popular conference features national experts who dig keep into new tax policies and offer strategies for navigating new laws so that CPAs can advise their high-income clients with confidence.  

Today I am live blogging the "Affordable Care Act: Understanding the Individual and Employer Mandates” session with speaker Eddie Adkins, a partner with Grant Thornton LLP. This session delves into challenges and responsibilities faced by employers and individuals to comply with the provisions of the complex health care reform law, and technical aspects of the responsibility provisions and traps for the unwary. 

Follow along with the live blog below (email subscribers can view the live blog on our website).

Continue reading "Understanding the ACA’s Mandates" »

Happy St. Patrick’s Day – The Luck of the Beer Tax Continues

LeprechaunIt should surprise no one that the amount of Guinness consumed worldwide on St. Patrick’s Day more than doubles, to approximately 13 million pints. Celebrations are held far and wide from Australia to Russia to the International Space Station, where astronauts like Catherine Coleman play Irish music in space.

As a Maloney and a Fitzpatrick, I love the idea of a global Irish celebration - makes the world feel a wee bit friendlier (even if the saint being honored is technically Scottish).

The U.S. accounts for much of the increase in St. Patrick’s Day Guinness consumption. But while the enthusiasm may be spread out across the  country, the excise tax on beer collected by each state varies considerably.

The map created by the Tax Foundation shows an interesting pattern - a low-tax band across the middle of the country, with a few Western states collecting the least, while southern states charge the most, with Tennessee coming in first at $1.17 per gallon. The Mid-Atlantic area defies categorization – my state of Virginia is in the middle but neighboring Maryland ranks much higher.

Continue reading "Happy St. Patrick’s Day – The Luck of the Beer Tax Continues" »

Top 10 Tax Resources for the 2014 Tax Season

Top-tenCaffeine, check. Office supplies, check. Patience for lost or late documents, check. What else do you need for tax season besides, of course, sympathetic family and friends?  Knowledge and technical resources help, as does convenience in finding them – so keep these resources from the AICPA bookmarked to help you prepare returns, manage your office, advise and communicate with clients, and even keep a sense of humor.

Continue reading "Top 10 Tax Resources for the 2014 Tax Season" »

Nuts and Bolts of IRS Audits

I am at the AICPA National Tax Conference today and tomorrow in National Harbor, Md. The conference features regulators, including Acting IRS Commissioner Danny Werfel, and tax practitioners. When it comes to tax laws and legislation, we live and work in a world of constant flux: updates to the American Taxpayer Relief Act, tax jurisdictions, taxes in multi-states, flow-through entities and the new 3.8% Medicare surtax regime, to name a few. It’s a recurring cycle of predicting what’s coming up, knowing how to plan and explaining critical details to your clients.

Today I am live blogging the "Nuts and Bolts of IRS Audits" session with speaker Charles Rettig, Esq. of Hochman Salkin Rettig Toscher & Perez, PC. This session provides practical advice for real-life client issues that focus on current IRS tax enforcement priorities and procedures, practitioner representation strategies and techniques and recent developments in tax controversy and procedure. (Email subscribers can read the live blog on our website.)

Continue reading "Nuts and Bolts of IRS Audits" »

The Real Obstacle to Tax Reform? Let’s Look in the Mirror

Self-reflectionIn one of the better teen movies of the '80s, "Better Off Dead," a paperboy ruthlessly stalks the main character in an intense pursuit of what he is owed, repeating, “I want my two dollars.”  

Johnny the paperboy is not alone, as the senators who proposed a blank slate approach to tax reform found out.  And of course, taxpayers want a lot more than two dollars.   I admit, I am one of those “what’s in it for me?” taxpayers but I am slowly coming around to a different philosophy. 

Continue reading "The Real Obstacle to Tax Reform? Let’s Look in the Mirror " »

Top 12 Tax Resources (for the 2013 Tax Season)

Finding time to do anything during tax season is tough. This year, with a delayed tax season, it will be an even bigger challenge. So save a little time this year by using the resources developed by the AICPA and its volunteer committees to help members successfully navigate the tax season. If you like free, you’ll love this list of resources as most of them cost nothing. 

Continue reading "Top 12 Tax Resources (for the 2013 Tax Season)" »

Some Garlic Sauce for Your LinkedIn

Vegetarian personLima beans, broccoli, and mushrooms are among Americans’ most hated foods according to a recent survey.  I’m right there with them.  But I have found that mushrooms and broccoli are not so bad when smothered in garlic sauce or maybe topped with crabmeat. 

What does any of this have to do with social media? Many people think of social media as something they know they should do, like eating broccoli or Brussels sprouts, but it’s still difficult to swallow.  Perhaps you started a profile and joined a couple of groups at some point but you haven’t been active in months. Or years.  

Just like eating vegetables is a must to stay healthy, an online presence is a must for a healthy career, especially if you are considering changing jobs or want to expand your professional or client base.  “If you’re not on it [LinkedIn], you’re not in the game,” says Mark Lee, a tax director and author of blogs and professional journal articles about social media.

So here is my version of garlic sauce to tempt those of you who are leery of getting involved or have dropped out. 

Continue reading "Some Garlic Sauce for Your LinkedIn" »

Subscribe

Subscribe in a reader

Enter your Email:
Preview