8 Tax Reform Questions Congress Needs to Raise (and Answer)

It looks like comprehensive tax reform is gaining some sense of realism. Consider these important actions so far this year:

• President Obama mentioned it in his January 2013 State of the Union address: "Now is our best chance for bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit.  We can get this done."
• The House Ways and Means Committee formed 11 working groups to address specific areas for reform.
• On March 21, the Senate Finance Committee began issuing Tax Reform Option Papers -the first one covers simplification for families and businesses.
• Tax reform is mentioned in both the House and Senate FY2014 Budget Resolutions produced by the budget committees.

In the News: You Got Tax Questions? We Got Answers!

It’s been more than a month since my (legendary?) first post of this tax season and there has been a ton of recent media coverage. In my second tax season post, I’ll share a few articles for those of you who haven’t filed yet. In addition, I promise to throw in some good information for people who have their refunds already and are just rubbernecking.

Once again this year, members of the AICPA are using their expertise to answer one daily tax question from USA TODAY readers and help the public understand how to approach some common filing issues.

Thus far, readers have asked questions regarding the requirements for claiming adult children as dependents and how to handle the tax implications of rolling over an IRA.

Readers can submit their questions to taxadvice@usatoday.com through April 15.

9 Tips for Invigorating Weary Brains, Bodies and Balance Sheets

Whew! After months of long hours, you and your colleagues are likely finishing up the first filing deadlines of the year. Nice going!

Even with April 15 clearly in sight, there’s still work to be done by many practitioners. Clients are counting on your smarts like never before to help them make sense of their financial situation in this new environment and find ways to improve it. Let’s face it, you are running on fumes, yet you are far from the finish line and a well-earned break.

The big question you may be asking now is, “How can I get an energy boost so I’ll have the stamina to deliver on the promises I have made to my clients?”   

It’s no secret that when human engines are operating at full throttle they need more than adrenaline to perform their best. Sure, we know that we should eat right, exercise and be good to our bodies and minds if we want to sustain our ability to work at a record pace. The trick is finding the proper balance to yield the needed strength when our days are jam packed with meetings and client commitments.

Here are nine best practices to reinvigorate you so you can be your best. Even better, they are not complicated, expensive or unfamiliar. 

Is Hiring a CPA Worth it? 5 Tips for Getting Your Money’s Worth

Often when people find out I’m a tax accountant, I get asked, “How much does a CPA cost?”  It’s like me asking “How much does a home cost?” We all understand that a 1,000 square-foot home in Kansas has a different cost than a 1,000 square-foot penthouse condo in New York City.  The same concept applies to CPAs.  

The answer to both questions is the same:  it depends.  For example, my uncle has a simple tax return and pays $250 in preparation fees.  On the other hand, I had a client whose return took over a week to prepare when I worked in a large firm, which cost the client around $100,000. 

A good CPA may cost you more upfront but will pay off in the long run because he or she is thorough.  Anyone can drop numbers in software.  However, a CPA will analyze the situation to look for tax savings opportunities and help you plan for next year – in short, they become your trusted advisor.  I once had a client whose former preparer had cost her an additional $4 million in taxes because he didn’t consider accelerating her fourth quarter estimated tax payment to December from January.  

The Dangers of Providing Client Comfort Letters

Every few years, the issue of providing clients with comfort letters – or verification documents – rears its head among our members. Regulators or banks often look for verification that certain items within a financial statement (e.g., revenue) or a tax return (e.g., income) is "right" and they want a CPA to verify it. AICPA members have even received requests for comfort letters from adoption agencies, health insurance providers and state taxing authorities.

According to the AICPA’s Professional Liability Insurance Program, examples of third party verification information requested by lenders and loan brokers include:

• Confirmation of a client’s self-employment status;
• Verification of income from self-employment;
• Verification of a self-employed borrower’s business ownership percentage;
• Profitability or sustainability of a self-employed client’s business; and
• The impact on a self-employed client’s business if money is withdrawn to fund the down payment on a real estate purchase.

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. 

In the News: For the Love of Money

Those wilted flowers and almost empty boxes of chocolates can only mean one thing: Valentine’s Day was last week. According to some estimates, as many as 200,000 couples across the United States choose this date to become engaged. Congrats to all the lovebirds out there!

But before these happy couples tie the knot, they’ll need to make sure they’re on the same page when it comes to their finances – otherwise, problems will likely arise. 

A timely Chicago Tribune article on this topic cited an AICPA survey showing that 27 percent of couples married or living together said money issues were likely to lead to an argument. In fact, money issues are more likely to cause an argument than topics on children, chores or work.

Tracy Stewart of the AICPA’s National Financial Literacy Commission stresses that a primary reason behind these types of arguments is a lack of communication.

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.

In the News: After the Super Bowl, Tax Season Kicks Off

The IRS has been accepting tax returns electronically and by mail since Jan. 30, but this Monday marked the official start of tax season, which is defined, for my purposes, as the day after the Super Bowl.

That means that for the next few months, as CPAs around the country are working with their clients to ensure that their returns are submitted correctly and on time, reporters and bloggers will be looking to provide their audiences with articles about all things tax. Therefore, I will be highlighting some more tax content of interest in my bi-weekly ‘in the news’ post. The circle of life, if you will.

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.

Host a “Welcome to Tax Season” Celebration

"The Bruce Dickinson" (Christopher Walken) delivering the iconic phrase "...more cowbell!" (Photo credit: Wikipedia)

As we enter one of the most anticipated times of the year, why not host a celebration to mark its arrival? You know, show the business community that you are excited about this special season.

“Are you C-R-A-Z-Y?” you might be asking. It’s tax time. Parties are just not what we do right now.

This year, maybe it’s time for a change. Do something different. Welcome the arrival of tax season with clients and friends of the firm. After all, it’s your time to shine. Embrace your place in the spotlight.  

Take a tip from movie producers and best-selling authors who hold premiere parties when they release new films and books. Believe it or not, there are a number of strategies that you can adapt from their attention grabbing events. Even though your firm isn’t likely to have such an extravagant budget, you can achieve the same results with a simple gathering. It’s all about getting your audience excited! Not to mention spreading the word about your firm with viral conversation starters such as “Guess where I’m going tonight?” or “You will never believe who threw such a great party last evening.”

Name that Angst

After a nice holiday break relaxing with friends and family, it’s now time to get back to the real world. Re-entry is always a drag, but coming back this year to the crescendo of anxiety surrounding the fiscal cliff made it that much more difficult.

I’ve spent the last two days meeting some of our AICPA course instructors and asking them about their practices and their clients, and one message came through loud and clear. Clients are concerned. And they’re turning to their CPAs for guidance.

Tax Season: Our Time to Shine

It’s almost tax season once again. Can you think of a better way to kick off 2013 than adopting a fresh approach to this ever important time of year?

Here’s a thought: What if we all agree to tell a new story this tax season? Instead of framing it as a time to work your fingers to the bone, embrace the notion that tax season is your time to shine. Don’t you owe it to yourself, your colleagues and your clients to let the world know that you love tax time? After all, it’s what you have studied for and worked toward throughout your career. Even better, it’s the time when the world looks to the CPA profession for its tax smarts and number savvy, problem solving know-how.

CPAs to Federal Government: Reduce the Debt

Most Americans greeted the news that the “fiscal cliff” had been averted with a mix of relief that a worst case scenario had been averted and frustration with the seemingly endless process. What has been lost on some casual observers is that, as a result of the deal, the U.S. deficit will actually increase an additional $4 trillion dollars in the next decade, according to the Centralized Budget Office.

Earlier this week, the AICPA released the results of a survey* asking members questions regarding the economic sustainability of the United States. The survey found that the vast majority are calling on the federal government to demonstrate more fiscal responsibility. In fact, seven in ten U.S. CPAs are concerned that both individuals and families will be severely affected if policy makers are unable to reduce the federal debt.

Crossing the Finish Line with Circular 230

Tax Ethics and Horses

OK, raise your hand if you have that Circular 230 legend at the bottom of all your emails.  Great – now keep your hand up if you know why.  Not to worry – most of us are in the same boat.  So why the question now?  Here’s the story . . .

If you do any kind of tax work, I hope you're familiar with the AICPA’s Statements on Standards for Tax Services.  And if that work involves any kind of federal filing or representation, you'll also need to be familiar with Treasury Department Circular No. 230. 

Circular 230 isn’t new - its roots go back to the Civil War. The post-Civil War Congress enacted legislation that gave citizens the authority to make claims with the Treasury Department for the value of horses and other property lost during the war.  It soon became evident that more claims had been submitted than horses lost.  On July 7, 1884, President Chester Arthur signed what became known as the Horse Act, giving Treasury the authority to regulate the admission of representatives of claimants before them and to take related disciplinary action.  Eventually, the Horse Act led to the system we have today in which licensed CPAs are automatically admitted to represent taxpayers to the IRS with full practice rights.

Immediate 2012 Tax Planning Opportunities for Individuals

Bob Keebler discusses three opportunities individuals can take advantage of while we wait for final resolution on the "fiscal cliff." Bob discusses gain harvesting to avoid the increase in the capital gains, Roth conversions to avoid the increase in income tax rate and the potential to take advantage of the loss of state income tax deductions in the future, and finally funding dynasty trusts before a new federal law could come into effect. Visit aicpa.org/PFP/YearEnd for free resources to help you get financial plans in place for your clients now.

3 Immediate 2012 Tax Planning Opportunities for Individuals

Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP. Bob is a 2007 recipient of the prestigious Distinguished Estate Planners award from the National Association of Estate Planning counsels. From 2003 to 2006, Bob was named by CPA Magazine as one of the top 100 most influential practitioners in the United States. He is the past Editor-in-Chief of CCH's magazine, Journal of Retirement Planning and a member of CCH's Financial and Estate Planning Advisory Board. His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration.  

Charitable Remainder Trust and the 3.8% Medicare Surtax

The 3.8% Medicare surtax on net investment income is set to take effect on Jan. 1, 2013. How this surtax will affect those who are current beneficiaries of charitable remainder trusts is a hot financial planning topic. Robert Keebler explores planning for this new surtax and the Treasury Department's recently issued regulations addressing section 1411 of the Internal Revenue Code, the 3.8% Medicare surtax in his latest podcast. Download a free Medicare surtax chart and visit aicpa.org/PFP/YearEnd for free resources to help you get financial plans in place for your clients now.  

Charitable Remainder Trust and the 3.8% Medicare Surtax

Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP. Bob is a 2007 recipient of the prestigious Distinguished Estate Planners award from the National Association of Estate Planning counsels. From 2003 to 2006, Bob was named by CPA Magazine as one of the top 100 most influential practitioners in the United States. He is the past Editor-in-Chief of CCH's magazine, Journal of Retirement Planning and a member of CCH's Financial and Estate Planning Advisory Board. His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration.

AICPA Advocates for CPAs with Mobile Workforce Legislation

Do you or your employees travel around the country, working in different states and jurisdictions? As I travel around the United States, I hear more and more management accountants lamenting the difficulties associated with interstate operations and the significant regulatory burden with regard to compliance with non-resident state income tax withholding laws.

Currently, there are 41 states that impose a personal income tax on wages and there are many different tax requirements regarding the withholding of income tax of non-residents among those 41 states. While some states offer de minimis thresholds or exemptions before taxes must be withheld and paid, others require only a work appearance in the state before imposing personal income taxes on the employee and withholding requirements on the employer—even for just one day.

Merchant Card Reporting Compliance Raises Its Head Again

CPAs are well aware of how Form 1099 reporting improves tax return compliance. CPAs are also aware of how the 1099 rules can lead to considerable taxpayer frustration or opposition. For example, during the 2012 filing season, we heard a lot about the difficulties taxpayers had trying to comply with the new cost basis information reporting rules for brokers reporting stock sales; and this particular issue remains a concern of ours. Another major initiative, which until recently seemed like a sleeper issue, is now ripe for taxpayer focus. Merchant card companies are required to report (on Form 1099-K) the gross receipts that a business receives from customers paying with merchant cards during the year. Merchant cards typically include both credit cards and debit cards.

In the News: AICPA Advocates for Fiscal Responsibility

As many of you may recall, in an effort to bring attention to how and why the financial sustainability of our nation is at risk, earlier this year the AICPA developed What's at Stake? A CPA’s Insights into the Federal Government’s Finances, which explicitly spells out the issues for policy makers and the public.

Following up on those calls for solutions to our nation’s financial problems, Accounting Today reported that the AICPA’s board of directors recently voted to adopt a resolution calling on lawmakers to do more to ensure the long-term fiscal health of the United States by better controlling the growing national debt. One aspect of this resolution involves the AICPA supporting two non-partisan efforts, the Campaign to Fix the Debt and the Comeback America Initiative, both of which align with the AICPA’s goals of putting America on a better path toward fiscal responsibility.

As AccountingWEB notes, the resolution will also be shared with state CPA societies as the AICPA continues to seek ways to advocate for reduced complexity for American businesses and individuals. Stay tuned.

What Happens When a Lame Duck Meets a Fiscal Cliff?

10 (Tongue in Cheek) Predictions

Last year, I wrote a blog about the congressional “super committee” created by the Budget Control Act of 2011 to deal with government’s immense debt and the deep deficit hole in which we find ourselves. The super committee of 12 members of Congress was unable to reach consensus on specific ways to wrestle with our unruly fiscal problems. That means, come this January, Washington will face $1.2 trillion in automatic spending cuts (known as sequestration).

What else is staring at us as we head towards the winter solstice? Not too much - there's the 2011 extenders including the AMT patch, 2012 extenders, the 2% payroll tax cut, the debt ceiling limit, expiration of the Bush tax cuts, and oh, the grim reaper is chasing the estate tax yet again. Did I also mention that we have a very contentious presidential election leading up to a lame duck session of Congress? Federal Reserve Chairman Ben Bernanke calls it a “fiscal cliff.” I'm exhausted just thinking about it!

2012 Presidential Election and the CPA Profession

The 2012 presidential election is just around the corner. While it’s not clear who will win the White House, there are many reasons you should be paying close attention. And we’re seeing indications that you’re doing just that. In a CPA Letter Daily poll on Oct. 16, 65% of more than 3,200 respondents said they would be watching that night’s presidential debate.

There is no shortage of issues affecting CPAs and our clients or employers. Highlighted below are some of the important financial issues facing our country:

• “Fiscal cliff.” The uncertainty surrounding potential tax increases and spending cuts, as well as related issues, has brought Washington to a stand-still. Uncertainties include extension of the Bush-era tax cuts, a fix for the Alternative Minimum Tax, tax increases attached to the Patient Protection and Affordable Care Act, and a package of mandatory federal spending cuts totaling $1.2 trillion over 10 years.

In the News: Now is the Time to Lower your 2012 Tax Bill

Fall, or autumn if you’re a season snob, is a busy time of year at the AICPA. Earlier this week, we held our Fall 2012 Governing Council Meeting – but you know that already because we’ve covered all the news earlier in the week. In addition to The World Series and beautiful foliage, fall is also the time to get proactive and take steps to lower your 2012 tax rate if you haven’t already done so.

This year, it is particularly important for taxpayers to pay close attention to the planning process with the uncertainty surrounding the potential expiration of the Bush tax cuts and many widely-used tax cuts which have not yet been renewed for the 2012 tax year . Susan B. Garland spoke to Melissa Labant,director of taxation at the AICPAabout this issue for a recent article in Kiplinger's Retirement Report focused on this issue.

The article calls attention to the fact that one of the biggest changes on the books for 2013 is a 3.8% surtax on investment income for singles with a modified Adjusted Gross Income of more than $200,000 ($250,000 for married couples). The tax applies to the smaller of net investment income or the amount by which taxable income exceeds the thresholds.

Day 2 of AICPA Governing Council Fall Meeting 2012

The second day of the fall meeting of the AICPA governing Council happened yesterday and featured a professional issues update from AICPA President and CEO Barry Melancon, CPA, CGMA. Follow the "read more" link for a look at the day through the eyes of social media. (If you're viewing this post through our email subscription, please click through to read the entire story.)

Selling a Business or Advising a Seller? Tips to Navigate the Fiscal Cliff

With about 10 weeks left in the calendar year, it would be difficult for even the most motivated business owners to complete their company’s sale by Dec. 31, unless they’re already in process.

Some owners are hustling to get that process done to avoid falling over the tax cliff set to take effect Jan. 1. But the principles of selling a business apply no matter what the calendar says, according to Scott Miller, CPA/ABV, an expert presenter for the Oct. 30 Journal of Accountancy webcast, Inside Buyout Basics and the Tax Cliff: A Timely Combination.

FATCA: Move Over FFIs, Here Come the NFFEs

Most people would agree that the Foreign Account Tax Compliance Act and foreign financial institutions are like peanut butter and jelly.  Whether or not you like the combination, they simply go together. 

Their pairing has been reinforced by the frequent publicity garnered by FFIs and the expanded withholding obligations FATCA has imposed on them.  But CPAs beware!  Lurking backstage is another set of entities affected by the rules of FATCA that you need to keep in mind.

What Can CPAs do about Tax Identity Theft?

I am constantly getting emails and calls from members who have stories about how one of their clients has become a victim of tax identity theft and the person’s refund has been put “on hold” until the government can sort things out. Some of these stories can be heart wrenching. 

It’s no surprise that these stories are on the rise. Tax identity theft has mushroomed – the IRS identified 1.2 million incidents in 2011, over double the amount from 2010 (440,581) and the numbers may actually be much higher according to a Treasury Inspector General analysis. So, unfortunately, the odds that your clients may be affected have gone up considerably.

How Do You Tackle Health Care Reform?

One provision at a time, of course!

Everyone is talking about the new Affordable Care Act.  Everyone is reading about it. Everyone is writing about it. Everyone is learning about it. But what is anyone doing about it?   

Not enough is what I am hearing from my fellow CPAs. And that is quite understandable when simply thinking about the magnitude of health care reform can leave you scratching your head. But there is a way to devour the totality of the legislation without feeling completely overwhelmed:  tweak your approach.  Just as the saying goes, “How do you eat an elephant? One bite at a time, of course!” The same holds true for tackling health care reform, you tackle it “one provision at a time.”

Prior to the Supreme Court’s decision on June 28 to uphold the mandate requiring  most U.S. citizens and legal residents to maintain minimum health coverage, many individuals and businesses put off action in case the law was overturned. Now that the results are in, many people are taken aback wondering how to go about implementing the vast array of elements that make up health care reform.

Interview: Tax Aspects of Donating a Car to Charity

While donating a car to a charity can get you a nice deduction, it can be complicated and confusing. Kars4Kids, a national car donation charity, interviewed Jerry Love, CPA, who has extensive experience consulting clients on donating cars to charities. This is a summary of the interview; the full interview can be found on AICPA.org.

Kars4Kids: How important is it for a donor to document the donation?

JL: The Internal Revenue Service has gotten very strict recently and will disallow deductions or impose fines if a vehicle donation is not documented properly.

Kars4Kids: What is the proper documentation that donors should get from the charity?

Estates and Trusts with 3.8% Medicare Surtax

The Supreme Court’s decision upholding the Affordable Care Act confirmed that trusts and estates will be subject to a new 3.8% Medicare surtax when net investment income exceeds a threshold amount. This year presents an unprecedented opportunity for you to differentiate your firm and services and show that you provide significant value to your clients by having all of their financial planning needs in mind, including retirement, estate, tax, investment and insurance planning. With so many unknowns in 2013 compounded by an election year, your clients need to take advantage of many financial planning avenues now to avoid missing crucial opportunities to protect their nest egg and increase their net worth. Listen to a recent podcast below from Bob Keebler, CPA, in which he points out issues surrounding this new surtax and how to plan for trusts and estates. Access other resources to help you educate your clients and proactively plan now in preparation for 2013.

Estates and Trusts with the 3.8% Medicare Surtax

Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP. Bob is a 2007 recipient of the prestigious Distinguished Estate Planners award from the National Association of Estate Planning counsels. From 2003 to 2006, Bob was named by CPA Magazine as one of the top 100 most influential practitioners in the United States. He is the past Editor-in-Chief of CCH's magazine, Journal of Retirement Planning and a member of CCH's Financial and Estate Planning Advisory Board. His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration.  

343,020 Reasons CPAs Should Talk Up Their Tax Expertise Now

Nearly three years ago, the IRS launched the tax return preparer oversight program and seeds were planted in the landscape of tax return preparation services.  Today, those seeds are starting to sprout. 

In June, the IRS estimated there are 717,161 PTIN holders, many of which (212,975, or 29.7%) are CPAs, outnumbering Enrolled Agents (42,895) and attorneys (31,189) combined.  While CPAs have dominated the regulated tax preparation arena, that landscape is about to change. More and more people are completing the final step to becoming a Registered Tax Return Preparer, or RTRP (they have until 12/31/13 to pass the competency exam).  Currently, there are 4,893 RTRPs.  That leaves an estimated 338,127 “provisional preparers” who may join the RTRP ranks. 

That means more competition is coming and it will influence the public perception of tax return preparers.  Unfortunately, the public doesn’t really understand the difference between a CPA and other tax return preparers.  We have all seen the advertisements by the big box tax preparation and software chains that inflate the qualifications of their employees.  They often compare them to CPAs or perhaps they feature a CPA in the ad, implying that every customer representative will have similar qualifications.

Planning Strategies in Wake of the New 3.8% Medicare Surtax

The Supreme Court’s decision upholding the Affordable Care Act confirmed that taxpayers whose income exceeds a threshold amount will be subject to a 3.8% Medicare surtax on net investment income, effectively raising their marginal income tax rate. However, whether the Bush era tax cuts will be extended and, if so, for whom, remains an open question. In light of this uncertainty, CPAs may want to start planning for possible 2013 tax increases now, particularly for clients who will benefit from transferring assets to family members, decisions that can take time to make. Download a free Medicare surtax chart from Robert Keebler, CPA, and listen to his recent podcast on how to plan for the Medicare surtax below.

Understanding the 3.8% Medicare surtax under the healthcare law

Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP. Bob is a 2007 recipient of the prestigious Distinguished Estate Planners award from the National Association of Estate Planning counsels. From 2003 to 2006, Bob was named by CPA Magazine as one of the top 100 most influential practitioners in the United States. He is the past Editor-in-Chief of CCH's magazine, Journal of Retirement Planning and a member of CCH's Financial and Estate Planning Advisory Board. His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration.  

Some Garlic Sauce for Your LinkedIn

Lima 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. 

Key Income Tax Planning Ideas for 2012

This year presents an unprecedented opportunity for CPAs to differentiate their firm and services and show that they provide significant value to their clients by having all of their clients' financial planning needs in mind, including retirement, estate, tax, investment and insurance planning. With so many unknowns in 2013 compounded by an election year, clients need to take advantage of many financial planning avenues now to avoid missing crucial opportunities to protect their nest egg and increase their net worth. Listen to Bob Keebler as he discusses how CPAs can use this uncertain time to help their clients plan for the future.

Key Income Tax Planning Ideas for 2012

Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP. Bob is a 2007 recipient of the prestigious Distinguished Estate Planners award from the National Association of Estate Planning counsels. From 2003 to 2006, Bob was named by CPA Magazine as one of the top 100 most influential practitioners in the United States. He is the past Editor-in-Chief of CCH's magazine, Journal of Retirement Planning and a member of CCH's Financial and Estate Planning Advisory Board. His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration.  

Whatever November Brings, Start Preparing Clients Now

There will be some significant potential consequences on the horizon if Congress allows certain existing tax laws to expire on January 1, 2013. With only a few months left to plan, it’s time for CPAs to be aggressive in educating clients about the decisions they may face.

Several tax changes are now set to occur at the beginning of 2013 if Congress does not act. Among them:

• Individual income tax rates will go up.
• Long-term capital gains rates will rise.
• The gift and estate tax exemption will drop from $5.12 million to $1 million. Estate assets more than the $1 million exemption will be taxed at a maximum 55% rate.
• Taxpayers whose income exceeds a set “threshold amount” will be subject to a 3.8% Medicare surtax on net investment income, effectively raising their marginal income tax rate. An affected taxpayer in the 39.6% bracket—the highest bracket in 2013—will have a 43.4% marginal rate. This will apply to individuals and trusts and estates.

In the News: Leave that Savings Alone

A Bankrate.com article titled “Four Ways to Avoid Dipping Into Your Savings Account” quoted Kelley Long, a Chicago CPA, personal finance coach, and member of the AICPA’s National CPA Financial Literacy Commission. In the article, Long provides prudent advice on how to keep the money currently in your savings account right where it is. She suggests savers don't get an ATM card or sign-up for Internet account access - because it provides the user with hassle free access to their savings. For more savings tips, please visit 360 Degrees of Financial Literacy, a free program of the nation’s CPAs to help American’s understand their personal finances through every life stage.

The New Rules for Tangible Property Cast a Wide Net

Although there are new U.S. federal income tax developments every day, it isn’t every day that something comes out that affects virtually all business taxpayers.  This is one of those times. Known commonly as the “repair regulations” (though they go way beyond repairs), new IRS rules create new tests for determining when an expenditure relating to tangible property is deductible or must be capitalized.

It doesn’t matter if you file as a partnership, corporation, sole proprietor or other form of business.  It doesn’t matter whether you are a manufacturer, an insurance company or agency, a mutual fund advisor, a hair salon, a retail store, or a charity, or whether gross receipts are $1 or are $100 billion.  These rules impact you if you, your company/employer, or your clients’ business operations acquire, produce, or improve tangible property.

Shine a Light on What Taxes You Pay

Every year, politicians, economists, tax practitioners and others talk about making changes to our federal and state tax systems. Some of the proposed changes are more fundamental – the adoption of a consumption tax, for example. Other proposals, on the other hand, call for varying degrees of modification to the existing system, such as adding or expanding tax incentives to encourage savings, modernizing the international tax rules, or making procedural changes to improve compliance.

In a presidential election year, and at a time when our country faces unprecedented levels of debt and extraordinary amounts of governmental-operating deficits, taxes will continue to be one of the most pressing issues for public discourse. Have you heard any of the candidates mention the “T” word lately? We all know, however, that talking about taxes in this environment takes a lot of political courage.

AICPA Tells Congress to Keep Oversight of Investment Advisers with SEC

As the AICPA gears up for our 125th Anniversary next week, here’s a wrap up of a few interesting accounting topics recently making the news. You can follow @AICPANews on Twitter to stay on top of all the latest official AICPA news as well as articles impacting the profession.

CFO.com wrote that the AICPA raised concerns over the Investment Adviser Oversight Act of 2012 and urged Congress to keep oversight of investment advisers with the SEC. Introduced in the House of Representatives on April 25, the bill would transfer oversight of investment advisers from the SEC to a self-regulatory organization."Many of our members work for a firm that is registered as, or affiliated with, a registered investment adviser," Barry Melancon, CPA, CGMA, AICPA president and CEO, said in a statement. The AICPA's stance is that the system proposed under the bill would cost advisers much more in fees than current SEC oversight would.

On January 19, 2011, the SEC issued a staff report that found the current SEC-registered investment-adviser examination program faces hefty capacity and funding challenges. Three options were proposed to offset these challenges.  One would be to impose "user fees" on SEC-registered investment advisers to fund oversight. A second would authorize one or more SROs to examine investment advisers, with oversight from the SEC. A third choice would be to authorize the Financial Industry Regulatory Authority, a leading broker-dealer SRO, to examine dual registrants for compliance with the Investment Advisers Act of 1940. All three options require congressional action. "We believe that the SEC's core mission to protect investors requires adequate regulation of the investment advisory profession. The SEC remains the proper regulatory body to protect the public's best interest." Melancon said, "Providing the SEC with resources to properly enforce their rules is the best solution for investors and the public."

From Tax Preparer to Financial Planner

Congratulations on making it through another tax season! As you helped your clients prepare their tax returns, did you ask yourself any of these questions?

• Who, if anyone, is looking at their overall financial picture?
• What can I do to help remove financial obstacles so they can accomplish their goals?
• Can I offer financial knowledge, analysis and a framework to make this person’s dreams a reality?

From those long hours, including rigorous reviews and meetings with clients, you’ve gained unique insight into their lives – insight into their incomes, spending habits, investments and life events. While reviewing those 1040s, you are able to envision potential tax impacts of financial decisions and begin considering tax planning opportunities for your clients. This is a great first step in helping them meet their overall financial planning needs, including making estate, retirement, tax, investment and insurance planning decisions to move them toward meeting their long term goals.

You Made It Through Another Tax Season: Now What?

Busy season is over; you made it! And while you may still have to file returns for those clients who needed extensions, you can at least stop sleeping in your office. So now what? Will you take a vacation? Catch up with those clients you had to put on hold? We asked CPA Letter Daily readers those same questions and here is what they had to say:

• 38.90% - Catch up on non-tax clients/services
• 23.01% - Sleep/relax
• 19.36% - Take a vacation
• 7.85% - Remind clients of year-round services and pursue new clients
• 6.76% - Attend a conference/catch up on CPE
• 4.11% - File amended returns

What is the Right Penalty to Combat Preparer Fraud?

The day after she gets her W-2s, my aunt arrives at my doorstep with her tax documents and an apology (I’ll explain that part later). It all started years ago when she got a notice saying she owed the Internal Revenue Service money. When my aunt signed her return, she was due a refund, so she couldn’t understand how the IRS was now saying that she could possibly owe anything at all.

In the News: Tax Tips for Procrastinators

I’m a procrastinator by nature. I can’t help it. I wait until the last possible second to do things - even important things that I know I need to do, like file my taxes. Many of you reading this may be in the same boat as me, staring at the calendar and wondering how it’s possible you still haven’t gotten around to filing yet.

I hear you, and I also hear the clock ticking as it counts down to the April 17 deadline.

As luck would have it the AICPA has helpfully compiled the Ten Top Last Minute Tax Tips  to help get us through the process as painlessly as possible. In fact, one of the most helpful last minute tax tips for me was the news that I can have my CPA e-file for me. So this year, even though I waited until the last minute I won’t have to sprint up the steps of the Post Office just to make the deadline, as I have in years past.

5 Ways to Lose Money on Your Engagements

As CPAs we are experts in determining profitability and well aware of the components that go into it.  We do a great job coaching clients in the manufacturing or construction business on the factors they need to manage in order to improve or maintain margin on a product or construction job. Yet despite our coaching, many great clients continue to experience eroding margins year to year. Their attention to what it takes to manage profitability seems to fade away. For us who are CPA firm business owners, we are no different. Owning a business, including a CPA firm, is full of distractions, time demands, fires to extinguish, dates and people to manage, new compliance demands and complexities, etc. Like our clients, we know what we should be doing, but the pressures of the busy season somehow cause us to take our eye off the ball.

Here is my list of the top five ways to erode the profitability of CPA firm engagements.

In the News: Accounting named one of the Happiest Jobs in America

We’ve got a lot of big things on the horizon at the AICPA: April Financial Literacy Month (we’ll be releasing survey results on the financial state of Americans) and in mid-May, we’ll be celebrating the 125^th Anniversary of the AICPA at our Spring Council meeting in Washington D.C.

Which is not to say that we’ve haven’t been busy lately! Just in the last week we released the results of our CGMA Global Economic Forecast and Barry Melancon, CPA, CGMA, president and CEO of the AICPA, testified before the House Capital Markets Subcommittee Accounting and Auditing Oversight Hearing. Melancon told members of the subcommittee that AICPA supports a strong, balanced and independent regulatory structure that protects investors but does not restrict the flow of capital.

During busy season and year-round, you can keep abreast of all the most important AICPA news by subscribing to the Media Relations RSS feed or following @AICPANews on Twitter. On to news of note from the last few days.

Tax Season: An Opportunity for Financial Literacy Lessons

The end of tax season is fast approaching, and CPAs everywhere are no doubt looking forward to the end of their busiest time of the year. Although I bashfully admit that my returns still have yet to be filed, I see this time of year as a prime opportunity for me to take a good look at my finances. Sure I keep the typical year-round budget, and do my best keep my finances in check, but there are always places for improvement. Since joining team AICPA, I have realized, more than ever, that year-round tax planning can truly help prepare you for life changes, while staying on track to achieve financial goals.

Doing the Right Thing…When Tax Ethics Get Murky

I often get phone calls from members who are troubled by a professional ethics issue. “Ed, I have a conflict with a client; I don’t trust him.” Or, “I just engaged with a new client and I suspect the old accountant of doing something wrong; should I turn her in?”  The scenarios change but in the end, they always ask: “What should I do?”  And I always tell them: “I can’t tell you what to do!”  Really, it comes down to a matter of ethics and who am I to tell someone how to behave?

Over the years, while teaching classes on subjects like the AICPA’s enforceable tax ethics, the Statements on Standards for Tax Services, or the Internal Revenue Services’ Circular 230, I often ask the participants to define ethics.  “Guided by a code of conduct,”  “acting with integrity,” “having a moral code,” “moral principles that govern a person’s behavior,” or “living your life with high values” are examples of what I’ve heard.  The definition that resonates best with me is “doing the right thing.” 

Proactive Planning with Your Individual Clients During Tax Season

In this audio stream, Lyle, Ted and Scott discuss why 2012 is a critical year to proactively plan with your clients.  Hear about planning techniques that need to be considered now given the many unknowns in 2013. Learn about planning opportunities that can be uncovered while you’re preparing your clients 2011 tax returns. Find out tips to communicate the value of financial planning with clients, and how you can get paid for the work you are providing and increase your bottom line by adding or expanding Personal Financial Planning services.

Proactive Planning with Your Individual Clients during Tax Season

If you prefer, you can read the entire transcript after the jump or download this and other audio webcasts from the Personal Financial Planning Section on AICPA.org.

Lyle Benson, CPA/PFS, President, L.K. Benson & Co. Based in Baltimore, Lyle runs his practice as a multi-family office, offering traditional tax services as well as a full scope of financial planning, including estate, retirement, investment, insurance and tax planning. He oversees clients’ investment portfolios and his compensation model is retainer/hourly fee.

Ted Sarenski, CPA/PFS, President, Blue Ocean Strategic Capital, LLC. Based in Syracuse, New York, Ted has gotten a taste for providing PFP services in a larger CPA firm and on his own. He provides financial planning services and manages assets. His compensation model is a mix of hourly, retainer and assets under management fees.

Scott Sprinkle, CPA/PFS, Partner, Sprinkle Financial Consultants, LLC. Based in Littleton, Colorado, Scott runs a traditional CPA practice alongside a registered investment adviser entity. He offers a full scope of tax and PFP services, and charges a mix of hourly, retainer and assets under management fees.

In the News: Optimism on U.S. Economy hits Post-Recession High

The Wall Street Journal’s CFO Report covered yesterday’s release of the AICPA’s Economic Outlook Survey results, noting that 14 percent of those surveyed plan to hire this quarter – up from 10 percent in Q4. The AICPA Economic Outlook Survey polls chief financial officers, controllers and other CPAs in executive and senior management roles about their thoughts involving the economy and their hiring plans in the next year. The Triangle Business Journal cited the rise of the CPA Outlook Index,  a composite of nine indicators, which measured a 69, a post-recession high (see the chart to the left) that matches the index score from the first quarter a year ago. The Raleigh News & Observer, noted that the CPA respondents’ views are seen as a leading economic indicator because they oversee corporate finances and help devise strategy. Carol Scott, CPA, CGMA, AICPA vice president for business, industry and government, was quoted by WRAL.com in their article on the survey. Scott said "optimists now outnumber pessimists on the U.S. economy by an almost 2-to-1 margin, which is a striking change from six months ago." The results of the survey will be discussed on a webcast 2012 Economy: Real Recovery or Roller Coaster Ride?, scheduled from 2:00 to 3:30 p.m. ET on March 22. The webcast has free CPE for the first 2,000 AICPA Members who register.

AICPA Podcast on Estate Planning Impact of the President’s Budget Proposals

A 20 minute podcast on the estate planning and financial planning impact of the estate tax provisions in the recently released President’s fiscal year 2013 budget proposal covers various provisions, including those affecting intentionally defective grantor trusts, valuation discounts and grantor retained annuity trusts.  Even though these provisions may not be enacted this year, it will help you have intelligent conversations with your clients, know what the President’s legislative agenda for this year is, and be prepared for some of the estate tax provisions that may eventually be enacted.

Estate Planning Impact of the President’s Budget Proposals

If you prefer, you can read the entire transcript after the jump or download this and other audio webcasts from the Personal Financial Planning Section on AICPA.org.

Robert S. Keebler, CPA, MST, DEP, Partner, Keebler & Associates, LLP. Bob is a 2007 recipient of the prestigious Distinguished Estate Planners award from the National Association of Estate Planning counsels. From 2003 to 2006, Bob was named by CPA Magazine as one of the top 100 most influential practitioners in the United States. He is the past Editor-in-Chief of CCH's magazine, Journal of Retirement Planning and a member of CCH's Financial and Estate Planning Advisory Board. His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration.