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The AICPA provides tax practice tools to help members elevate their practices and maintain the highest ethical standards. The AICPA also advocates sound tax policy and effective tax administration.

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Gwen Jorgensen: From Tax Accountant to Olympic Gold Medalist

Gwen jorgensenIt’s not every day a tax accountant from Wisconsin wins a gold medal at the Olympics. But on Saturday, Aug. 20, Gwen Jorgensen, formerly of the EY corporate tax group in Milwaukee, became the first U.S. woman to do just that. Crossing the finish line with a time of 1:56:16, Jorgensen won gold in the triathlon.

Jorgensen, who earned a master’s degree in accounting at the University of Wisconsin-Madison and passed the CPA exam, didn’t even take up triathlon until after college. Jorgensen was a runner and swimmer in college, and was approached by USA Triathlon looking for college athletes they thought would be successful in the sport. At the time they contacted Jorgensen, she was still in school and had an offer from EY. She turned USA Triathlon down, but they convinced her to at least try triathlon as a hobby while she worked for EY. And, thus, a grueling schedule began: waking at 4 a.m. to ride her bike to the pool, swimming, and getting to the office at 8 a.m. After work, Jorgensen trained some more. And found that she loved triathlon.

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Taxing Emotions: Death, Section 754 Elections and Serving the Client

Estate Planning 2Confronting the cold monetary and business realities of an estate is extraordinarily difficult in the midst of mourning. Even a well-planned estate’s complexity could mean the process drags on for months or even years, drawing out not only raw emotion but also tax exposure. Careful planning and a detailed explanation of your clients’ wishes are a must if you want to save their loved ones additional suffering.

My mother’s estate was moderate in terms of her personal holdings, but she also participated in substantial limited partnerships that passed to my brothers and me upon her death. While her home and personal effects were relatively simple to liquidate, the partnerships were a different matter.

There was no provision for a buyout of my mother’s interest upon her death. We found ourselves in business with people who didn’t know us, and had conflicting ideas about the future of the entity itself. Like so many partnerships, ours rarely had K-1s prepared in time to allow us to file our individual returns in advance of April 15th. We faced an indeterminate future of filing expensive extensions, estimating our individual tax liabilities and possibly increasing our exposure to an audit.

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5 Tips to Maximize Productivity - Both at Home and at Work

Shutterstock_438684127“Amateurs sit and wait for inspiration, the rest of us just get up and go to work.” ― Stephen King 

Whether it be racing to the office to conquer the business world, or managing all of our other daily commitments, we work hard every single day. And it’s not easy to stay productive with conflicting priorities. 

To keep you on track (and your sanity intact), below are five tips to inspire productivity at home and at work. 

(1) Don’t Be Afraid to Say “No.” 

Apple co-founder Steve Jobs put it the best. ”Focusing is about saying no.” From a professional standpoint, in order to truly do your job and meet your objectives, every time someone asks you to do something, you need to evaluate whether you are the best person to be doing that job, or even whether it should be done at all. Many of us are people pleasers and want to help, but saying “yes” is not necessarily the best thing for you or the organization. 

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Modernizing Fax Filings with the IRS


Shutterstock_156974060Federal and state agencies, including the court systems, are modernizing by allowing the electronic filing of petitions and other court documents. For example, Alabama, Texas, Illinois and Missouri have e-filing systems for court petitions. In 2014, two federal courts (2nd and 9th Circuit Courts of Appeals) piloted an e-filing program for all courts in which the user is authorized to file electronically. The program is expected to become national in the next few years.

The IRS is also modernizing, although not as fast as many practitioners (or the AICPA) would like. Calls to the IRS and cases can be routed to any IRS employee or office all over the country. We are seeing more appeals conferences conducted by telephone with the various service centers instead of in person and expect Skype-type conferences to become more common. For many years, the IRS has electronically processed bank account and wage levies on delinquent accounts. Now, the IRS is also able to issue electronic summonses to eBay and PayPal.

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Keeping the Cash Method Promotes Simplicity and Economic Growth

We know what we are, but know not what we may be.

   -William Shakespeare

Followers of my blogs know that I periodically write about tax reform, but it’s been a while. So, I’ve decided to dust off this quiz – here we go:

What will be the greatest driver of tax reform?

  • Bipartisan compromise?
  • Congressional leadership changes?
  • Current events?
  • Revenues?
  • Good tax policy?

CompassI know you’re thinking: “Ed, are you forgetting that it’s a presidential election year and you recently predicted that tax reform won’t happen before 2018? Does it really matter?”

Well, it does. (And there may be more than one correct answer to my quiz.) Our profession must remain vigilant on what is being discussed now to safeguard businesses (including our own) and taxpayers later on down the line.

In its current iteration, tax reform has been top of mind on Capitol Hill for about five years. Hearings, task forces, discussion drafts and bills. Lots of conversations. It’s part of the normal vetting process and quite important. It’s how we separate the wheat from the chaff and arrive at much better legislative solutions; a process that continues today even if we “know not” the result.

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The Powerful Impact of Women in Accounting and Tax

Superwoman CPAJane Doe, CPA, also known as Super Woman, woke up this morning at 5 a.m., jumped on her computer to address some urgent work emails, proceeded to pack her children’s lunch, get them out of bed (easier said than done), dressed, and off to school – and then worked all day, leading her team and conquering the business world. She runs from one business meeting to the next, finally stopping only to make dinner for her family, help her oldest child with his homework, bathe her two-year-old, and put both kids to bed. Oh, and she also helped her husband with his PowerPoint presentation, fed the pets and paid the household bills. It’s now 9 p.m., time to jump back on the computer and wrap up more business.

Does this sound familiar? We all know women like this in our accounting profession – and these women should be celebrated.

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States Moving to Conform Tax Due Dates with Federal Law

ConformityAs you recover from yet another grueling tax season, the optimist (and realist sometimes) in me says next year will be better with fewer practitioner frustrations. After many years of AICPA tax policy and advocacy efforts, Congress enacted several AICPA-supported federal due date changes and a de minimis safe harbor of $100 of income/$25 of withholdings for corrected Form 1099s that take effect for 2016 tax returns (2017 filing season).

New Federal Due Dates

As described in detail in the AICPA summary chart, these federal due date changes should provide a more logical workflow next year. Starting with 2016 returns, business entity investors’ Schedules K-1 are due before the investors’ returns are due, and foreign account information (FBAR) is due (and can be extended) when the individual returns are due. Here’s a brief recap of the new federal tax return deadlines: 

  • Partnership and S corporation information returns are due March 15, providing investor Schedule K-1 information to their partners and shareholders (including corporations) before the investors’ returns are due.
  • Tax returns for calendar-year corporations, individuals, trusts and estates, and FBAR are due on April 15.
  • The extended due date for partnerships continues to be September 15, along with corporations (until 2026). The extended due date for trusts and estates is September 30.
  • The extended due date for individuals and FBARs (and starting 2026, for extended corporations) is October 15.

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Hitting it Out of the Ballpark with the IRS’s Future State

Baseball IRSBaseball is ninety percent mental and the other half is physical.

-Yogi Berra

Spring time.  The first busy season is done – that’s when CPAs can catch their breath, relax a little, maybe even catch a baseball game. Speaking of baseball, CPAs are in a league of their own, no question about it, and our Tax Section helps get you there. Baseball also brings me back to my childhood when I was a huge Washington Senators baseball fan. But the future for the Senators was never bright; thoughts of the playoffs, let alone the World Series, were out of the question. But now with the Nationals in town, the future is much brighter.

I’m hoping that’s the case with the IRS as well.  Unlike Yogi Berra’s concept of accounting, the numbers have just got to add up for the IRS and, well, the IRS has dropped the ball in service.  We all know that, including the IRS. With two strikes against them in the realm of public opinion, the IRS has unveiled its Future State Initiative. You may know from reading my recent blog on IRS service levels that I thought the signs were starting to look good in terms of possibly starting to move the IRS service needle back in the right direction. 

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Tax Season Wrap Up

End of the roadCongratulations – you have made it through another tax season! 

Take the requisite time to mourn the loss of your time, sleep and missed social events.  Enjoy some much needed rest and relaxation with an activity of your choosing.  Then, if you have not already done so, take the advice of Kool & the Gang and celebrate!

No matter how many years pass, this song always manages to lift me up. So, whether this is your first or 50th tax season, it is an accomplishment and should be celebrated. Embrace the hard work that you have put in and give yourself a pat on the back.

Even as a perpetual optimist, I too fall victim to feeling down when I am exhausted, have hit a roadblock or have experienced a failure. In my many years in tax practice, I often came out of tax season telling myself this was my last. But guess what? By the beginning of the next tax season, I was hyped up and couldn’t wait for those first returns to come in the door.  

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7 Ways to Make Busy Season More Fun


MassageAlthough it can be a daunting and stressful time, busy season is also an extremely lucrative and productive one for tax practices, one that can be just as rewarding for them as the holidays are for retailers. What may be overlooked, however, is that it can also be a great time to build a sense of camaraderie and team spirit because a shared challenge can bring people together. That’s especially true if you add in some enjoyable activities that help maintain your team’s positive outlook and demonstrate your concern for their well-being.

To find out how CPAs are keeping the season upbeat—and even adding some fun to it—the AICPA recently engaged our social media audience and asked two questions: "How does your firm show appreciation for staff during busy season?” and “You get three wishes: What are the best ways to show staff appreciation during busy season?” We then put together the tips below based on their responses and what we’ve heard from other practitioners.

Be nice. This is the easiest and least expensive stress reliever available, so be sure to make the most of it by expressing appreciation for hard work and complimenting or publicly acknowledging outstanding efforts.

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Why “Extension” is not a Four-Letter Word for Tax Season

Tax extensionsUp until January, I worked in public accounting and remember all too well the feeling when the calendar flipped to March; it seemed like all I was hearing from my individual clients was that they still had not received their 1099s from their brokerage accounts. It seems every year the compression of when these 1099s are received and the deadline to file gets closer and closer. Not to mention the frustration of getting those amended 1099s right after the client’s tax return has been assembled. Talk about adding fuel to the fire!

There are strategies and processes you can implement to encourage your clients to bring in all of their tax return data (with the exception of the late 1099s) so that you will have everything ready to go and can quickly finish the return once the 1099 arrives. However, despite these well intended strategies, the reality is that it feels nearly impossible to move all the returns that have complicated, late arriving 1099s through the entire process before April 18th (or April 19th in the case of residents of Maine or Massachusetts).

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ACA: Step Away from that Form 1095 ‘Til You Read This

“Never do today what you can as well do tomorrow” – Aaron Burr

Proceed with cautionThis statement, sometimes written in the context of postponing an unpleasant task, was originally expressed by our country’s third vice-president to acknowledge that in certain circumstances, a premature action may be regrettable. Alexander Hamilton would agree.

The same can be said for reporting on the Affordable Care Act: CPAs may regret completing any related forms without first taking some precautions. We are in the business of helping our clients with a full range of accounting and tax needs, so offering services in this space seems to fall neatly into the area of tax compliance. This is a compliance matter, but the nature of the material required to prepare these information returns adds an additional level of complexity. CPAs who aid clients with the completion of these forms need to consider the applicability of privacy rules under the Health Insurance Portability and Accountability Act (HIPAA).

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Advice from a CPA Client - How to Break the News That They Owe

Tax billLet’s just get this out of the way up front: I’m not a CPA. I’m a pictures-and-words kind of guy. Numbers never loved me. They were my bully in school. To this day, the sight of long columns of numbers causes me all manner of gastric discomfort. So when I started my own business and realized there would be bookkeeping involved, naturally I addressed the challenge by running to my CPA.

Now, I have to pause here a moment to say my CPA is the most patient guy in the world. A sample of things he said to me over the years:

“No, Adam, you can’t deduct Warcraft.”

“What do you mean you LOST the checkbook? Don’t you use Quicken? Wait—you DON’T TRACK EXPENSES???”

“No, a 1099. Not a W2. No, that’s a K1—no, not a K9, a K1. Look, just hand me the box of papers and I’ll figure it out. Go home.”

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Update on Taxes and Terrorism: Why Clients’ Data Could Become Vulnerable

Data breachSince this article was initially published in December 2015, the FBI has attempted to compel Apple, Inc. to defeat its own encryption for the purposes of accessing the information on the iPhone of Syed Rizwan Farook, perpetrator of the mass shootings in San Bernardino in December of last year. Apple has thus far refused to obey a federal court order to provide access to the phone, based in part on a first-amendment argument that code-writing constitutes free speech. A federal court in California will hear arguments on March 22, but promises from both the Justice Department and Apple, Inc. to appeal any decision against their respective cases mean the dispute is unlikely to conclude at that time. The case is certain to have far-reaching implications for the nature of digital security both here in the United States and abroad.

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What’s a Hooraycation, and How Can I Go on One?

GalapagosGetting Away from it All After Busy Season: Trips for Any Budget

As busy season finally draws to a close, your senses dulled by long nights staring at a monitor and routing through piles of disorganized receipts, you might understandably be thinking about taking a well-earned break. Recharging your batteries, getting acquainted once again with those people who share your house and enjoying a few days of relaxation mean different things to different people, but in the end it always comes down to budget. Here are three family-friendly vacation types you can plan today, designed for modest, moderate and extreme budgets.

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Writing Off Expenses on a Martian Farm: The Trouble with Oscar-Nominated Clients


LeoIt’s Oscar season, and this year’s list of nominated films includes many characters you definitely wouldn’t want to meet in your reception area on a frantic Saturday morning. As busy season gets into full swing, here are some potential nightmare clients from current and past Oscar-nominated movies that you’ll be happy you don’t have to face in person.

Hugh Glass, “The Revenant.” The bearskin coat kind of says it all, doesn’t it? It’s certainly going to set this man apart from most of the usual clients. Glass is a fur trapper who’s left for dead and faces extraordinary hardships during a long, harrowing journey through the wilderness. At some point he wins a tough fight with a grizzly and uses its skin as a coat. Understandably, he’s not a big talker, so it will be hard to determine his long- and short-term financial goals. You also have to expect that much of his documentation for income and expenses is hard to locate.  

Mark Watney, “The Martian.” Talking about working with a client remotely! This takes virtual services to a new level. And while you may have wrestled with the complications of filing for U.S. expatriate or foreign clients before, when you deal with interplanetary tax situations you’re really breaking new ground. Another wrinkle: Where and how are you supposed to report information on income and expenses from Watney’s Martian farm?

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As Estate Basis Deadline Looms, Executors’ To-Do List Spirals

To do listUpdate: Since this blog post was published, the IRS extended the due date for Form 8971 basis reporting from Feb. 29 to March 31. For more informaiton, see Notice 2016-19.

Who thinks being an executor (or trustee) of an estate is a glorified and envied position? Have you always dreamed of being an executor and having that wonderful title – and I guess a few fees?  Have you ever served as an executor or trustee and wished to never be in that role again? 

In case you didn’t know it already, executors have many duties and responsibilities, including:

  • Setting up a bank account for incoming funds and paying any ongoing bills;
  • Maintaining property until it can be distributed or sold, and then distributing assets and disposing of other property;
  • Dealing with the probate court – filing the will and an inventory of the estate’s assets with the probate court, and representing the estate in court; and
  • Dealing with liabilities and taxes – providing notice to creditors, paying the estate’s debts and taxes, and, starting at the end of February, preparing and filing estate basis statements with the IRS and beneficiaries.

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Absurd Tax Break Requests: Darth Vader and Other "Clients" Weigh In

Darth Vader‘Tis the season that tax practitioners must break it to clients that no, you can't write off that trip to the Bahamas as a medical expense (yes, we understand it reduced your stress), claim the Golden Retriever as a dependent or tell the IRS that Botox use is a legitimate business expense because it helps you sell more homes. To put this annual ritual of wishful thinking in perspective, perhaps it would help to consider what types of tax breaks some of our most famous characters in film, TV and literature would try to claim.

Below are excerpts from focus group interviews with these characters talking about the tax breaks to which they feel that they are entitled. It seems as if they didn't all get along, and maybe it had something to do with that good versus evil thing. Or maybe it was the "but my tax break makes more sense" philosophy that can infect anyone, even the good guys.

Focus Group 1

Facilitator: Thank you all for coming here today to share insights on how the tax code could be improved and made fairer for you. Our group includes Frank Underwood, from “House of Cards,” Sheldon Cooper, star of “Big Bang Theory”, Superman, and Cruella de Vil, of “101 Dalmatians” fame. President Underwood, we'll start with you:

Frank Underwood: Thank you, it's a pleasure to be here. I think with so many people needing help, let's eliminate any provisions that benefit people like Jackie Sharp. She's the Assistant House Minority Whip and married to a surgeon – now why would they need a tax break? You really need to take a look at what she's doing. And, I think, perhaps, I should get a deduction just for being me. Maybe even named after me.

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IRS Service Levels: Don’t Give Me Excuses!

CartoonHonest disagreement is often a good sign of progress.

-Mahatma Gandhi

Abysmal service levels; I hear you, I really do. It’s been a long time since I’ve been in practice but those busy season scars are still with me. I half joke but the memories don’t go away completely.

So, another busy season and the prospects for easily – wait, reasonably – representing your clients with the IRS appear to be no better than they were last year, when I blogged several times about service issues. In May, for example, you may have read about the AICPA governing Council resolution directing the Institute to intercede on a long-term solution to the service crisis. We started those conversations but, frankly, the environment in Washington got worse. Hard to believe, but it did. In October, House Oversight and Government Reform Committee Chair Jason Chaffetz (R-UT) joined 18 members of the committee in introducing an impeachment resolution against IRS Commissioner John Koskinen. The resolution is pending before the House Judiciary Committee.

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Top 10 Tax Resources for the 2016 Tax Season

Top 10 Tax Tips 2016Have you “lost” that shiny new FitBit, depleted the family inventory of holiday goodies and now scrambled through the house trying to dig out Aunt Lucy’s famous fruitcake? Rather than investing $2,500 in a standing desk with a treadmill, it may be time to consider a new resolution!

A more practical choice may be to make a commitment that will yield positive results for the next few months. Commit to your staff, your clients, your tax practice and your professional goals during the upcoming tax season.  The AICPA wants to help you jumpstart that success by pointing out useful tools to ensure you flex your tax season muscles.

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A Lesson from 2015: Help Clients Avoid Unpleasant ACA Surprises

ACA surprisesWe made it through last year’s tax season thinking Affordable Care Act (ACA) matters were over with until the 2016 filing season, but we were wrong. Individuals who did not indicate on their Form 1040s that they had received the Advanced Premium Tax Credit were surprised to get an IRS notice at the end of 2015 requiring repayment of the credit.

The IRS identified many cases where taxpayers took the credit, but then did not indicate that they did so on their Form 1040. Tax preparers, unaware of the advance credit, calculated it again on the 1040, so taxpayers were effectively paid twice. The IRS caught these double dips, assessed the difference, and included the 20% accuracy penalty (Section 6662) in addition to repayment of the advanced premium tax credit and interest.

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It’s Just Hitting and Catching (and 1040s and W2s and 1099s and 1095s)

BaseballBaseball offseason: the time roughly between Halloween and Valentine’s Day when Major League Baseball teams take a break from hitting, catching and fielding. While there may be not peanuts, hot dogs, cracker jacks, or $12 beers being peddled at baseball stadiums across North America, it does not mean the teams are idle. In fact, in the days lead up to February 18, 2016 (when pitchers and catchers report!), teams are busy preparing for the coming season, the same way tax professionals are gearing up for the impending busy season.

This work behind the scenes is what ultimately lays the groundwork for a successful tax (or baseball) season. Without adequate preparation, both baseball and accounting organizations would find themselves struggling mightily to keep up with the demands of their professions.

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Tangible Property Wins Demonstrate AICPA’s Advocacy for Taxpayers

AdvocacyThe AICPA continually advocates on tax matters to improve tax policy and administration for tax practitioners and taxpayers alike. Though the issues and challenges we grapple with could be difficult, our goals are simple:  transparency, simplicity and certainty.  Taxpayers and practitioners have scored a major victory for certainty and simplicity as AICPA-supported provisions in legislation will soon become law.  Taxpayers will have to deal with fewer late and amended Forms 1099 that have $100 of income or less impact, fewer identity theft situations due to Forms W-2 will soon have truncated Social Security numbers, and clients will be able to rely on several permanent rather than temporary tax credits.

We also achieved more simplicity when the small business tax community received two big wins to make the “repair regs” more taxpayer friendly.

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Taxes and Terrorism: Why Data Could Become Vulnerable

Data breachThe world watched and listened in horror recently as reports of terrorism in Paris and San Bernardino, Calif., dominated the airwaves. In what is becoming a regrettably familiar scene, countries around the world joined the victims in mourning. But as the days wore on, attention increasingly turned to the covert, encrypted digital communications of the perpetrators. The government has begun questioning the wisdom of unbreakable encryption as a result. It might all seem a million miles from the concerns of tax practitioners. But is it?

In the wake of potential terrorist attacks, government officials are again addressing the complexities of obtaining intelligence data in an encrypted world. John Brennan, Director of the CIA, recently outlined these complexities in a talk at the Center for Strategic and International Studies in Washington:

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BEPS: FATCA on Steroids or Much Ado About Nothing?

ArbitrationBy now, most CPAs have heard of FATCA (Foreign Account Tax Compliance Act), which requires foreign financial entities to report information on their U.S. account holders to the IRS.  In return, the U.S. (in some cases) is sharing information on accounts held in this country by foreign nationals with the individual’s home country. The goal of this information sharing is to ensure that individuals are reporting all their income properly and paying the appropriate amount of tax.

Now the focus is shifting to tax avoidance by multi-national businesses. In early October, the Organization for Economic Co-operation and Development (OECD) released the final reports from their two-year project targeting Base Erosion and Profit Shifting (BEPS) activities. BEPS occurs when businesses take advantage of differences in countries’ tax laws, tax treaty provisions and (occasionally) special arrangements with a local tax authority to minimize their total worldwide tax liability. Some of the ways businesses do this include:

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Tax Extenders: Been There, Done That

Hamster in a wheelWhat has been will be again . . . There is nothing new under the sun."

      - Ecclesiastes

It seems like writing about expiring provisions is a regular rite of passage and frankly, it doesn't feel like the religious experience alluded to in Ecclesiastes. The last time I spoke with you about tax extenders (Nov. 28, 2014), I asked: Whats the million dollar topic on membersminds these days? The choices were the following:

  1. The IRS
  2. The congressional lame duck session
  3. Extenders
  4. Starting busy season
  5. Government appropriations
  6. The Keystone Pipeline
  7. Immigration reform
  8. Bipartisan cooperation in Washington
  9. All of the above

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Need Help? 3 Simple Steps to Find CPA Talent

Hiring“I just cannot decide which one of these tax manager candidates to hire”…

Says the rare CPA firm these days.

It is no surprise to CPAs in tax practice that finding and keeping talented staff is no easy task. Gone are the days of a waiting area filled with navy suits, briefcases, and overly qualified CPAs, each praying he or she will be the one chosen for the position. I imagine, instead, a desperate employer fumbling through Internet job sites, which serve as a digital wall too tall and wide to see around, with talented people all over the world on the other side, yet often seemingly unreachable to the employer.

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Change is Scary, but Can Inspire Progress

ChangeEarlier this year, the AICPA decided to phase out the “free/no CPE” option for attending section-sponsored webcasts. This “mixed model” was creating CPE compliance concerns so it was replaced with a selection of free events with CPE while maintaining the event archives for viewing content without CPE.

When the Taxation Team learned that the change would also apply to the Tax Power Hour (TPH), a monthly practice management webcast series, we were concerned about the impact it might have on our members. However, the team quickly came to realize this change was a blessing in disguise.

We had become complacent and had not really followed our own advice: always spend time working on your business, not just working in your business. We had stopped working on our business and were completely consumed with working in our business of serving members with new fresh resources. I’m falling on my sword with a public ‘mea culpa’ in the hopes that our members can learn from our mistakes with this valuable resource. As writer Phyllis Theroux said, “Mistakes are the usual bridge between inexperience and wisdom.

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Deflategate, Binkygate & Disclosing Open Tax Years

DeflategateNot many things capture our collective attention like investigations into controversial cases. The NFL’s investigation into underinflated footballs, or the ongoing allegations of corruption in FIFA, to whether or not David Beckham is a shoddy parent for allowing his daughter to continue to use a pacifier at age 4 are just a few examples. The accounting profession has its investigations into controversies too. A recent example is the investigation the Center for Plain English Accounting (CPEA) conducted about the applicability of the disclosure requirement of open tax years associated with FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes. The CPEA issued a report on this investigation in March.

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Due Date Changes– A Way Station on the Journey

Imagination is the only weapon in the war against reality.
― Lewis Carroll

JourneyIt started like most things we do: AICPA members needed it done. One after the other, after the other, and on and on, we heard from members who were tired of receiving complicated K-1s on October 13, 14 or even 15. “Please help us” they asked, so we turned to our Tax Executive Committee and said: “what makes sense?” And so, a multi-year, imaginative effort to craft a solution ended in a “way station” of success on July 31 when President Obama signed into law the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (H.R. 3236).

The law provides for a more logical flow of a broad array of returns. The main idea was to have flow-through returns completed before the returns in which the information is reported – Forms 1040 and 1120; give folks enough time to breathe and digest the flow-through information. And so calendar-year partnerships are due March 15 and calendar year C corporations are due April 15. Partnership returns are due a month earlier than they had been, but six-month extensions are now available. Other fixes were made, too, to Forms 990, 1041 and 5500. Also, the due date for FinCEN Form 114 (FBAR) moves from June 30 to April 15, but for the first time, taxpayers will be allowed a six-month extension.

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Making the Next Tax Season a Better One

Tax lessonsReflections on Tax Season

As we head into the second part of the 2015 filing season (with the 2016 season not far behind), some thoughts come to mind. Many practitioners felt as though recent tax law changes and related guidance was vague, late and not well supported. As a result, the 2015 filing season was more demanding than previous seasons, with uncertainty surrounding the final “repair regulations,” complex financial products and late receipt of client 1099s and brokerage statements.

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“Courteously” Connecting with IRS Service Needs

Phone cut offWords have no power to impress the mind without the exquisite horror of their reality.

                        —Edgar Allan Poe

Courtesy disconnect. You may have heard about it. The telephone hold times during this past filing season were so long that the IRS hung up on callers when the hold time reached two hours. Callers were warned they were about to be dropped — hence the courtesy disconnect. 

We heard from so many members about IRS service issues that we conducted a survey of all AICPA members to find out what exactly was going on  correctly — and to give everyone an opportunity to be heard. The survey, conducted right after busy season, included a question about courtesy disconnects. Ten percent of respondents were courteously disconnected once; 12 percent twice; and 17 percent disconnected three or more times. Give our members credit, though. Thirty-nine percent indicated they were too busy to hold on for two hours so they courteously disconnected themselves. 

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Baby on Board? 7 Tax Tips for Expectant (and Hoping to be Expectant) Clients

Connor 10 monthsIn simpler times, all you needed to welcome a new baby into your family was love and an empty drawer in which he or she could sleep. In 2015, babies are expensive and modern parents need a lot of gear: diapers, cribs, strollers and car seats—not to mention child care. The list can seem endless. And, it all adds up fast. When my husband and I were expecting our son Connor, now 10 months old, our first trip to Buy Buy Baby left us dazed and concerned about how we would afford all of it.

The good news is, there are more ways than ever to offset the considerable costs related to having a child. If your clients are expecting or planning to have a child, the seven tax tips below might help.

Infertility Treatments

For couples facing infertility (roughly 10 percent of the U.S. population), costs can start mounting long before the much-coveted positive pregnancy test. In fact, couples who require medical assistance to conceive often get hit with a one-two punch—the emotional pain of infertility and the fear of not being able to afford treatments.

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Wanted: Guidance for Bitcoin Tax Compliance

BitcoinOne of the most popular crypto-currencies available today is Bitcoin. Launched in 2009, this digital currency is similar to real currency in that it holds value which can be used to buy goods and services. More noticeable, however, are some of the key differences between Bitcoin and real currency:

Bitcoin operates independent of a central bank;

Bitcoin does not have legal tender status by any government; and

Bitcoins are treated as property by the IRS for tax purposes.

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A Key Step that ID Theft Victims May Overlook

Background checkThis year, taxpayer identity theft took a maliciously clever turn: phony tax returns were filed that looked very much like the taxpayers’ previous years’ returns. Standard pattern deviation software would not catch this type of filing. How could this happen?

It turns out that rather than just using stolen names, birthdates, street addresses and Social Security information to file tax returns with made-up numbers, criminals used the stolen information to access the taxpayers’ previous returns to make up believable numbers to file for tax refunds. The criminals were successful in about 100,000 out of approximately 200,000 attempts to acquire taxpayer information on the Get Transcript section of the IRS website, which requires other personal verification questions that only the taxpayer is supposed to know.

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Tax Reform Fatigue Got You Down?

Tax reform_stressed taxpayerFINALLY! This is the year that we get tax reform done. More than 26 years since the last tax reform, the stars are finally aligned: the Democrats and Republicans in Congress and the Administration all agree the tax code is too complex and needs to be fixed. Oh wait, that was 2012, and surprisingly (not) tax reform did not happen, but Washington will get it done in 2013. No, of course that did not happen either. Clearly tax reform would not happen in 2014 because it was a mid-term election year, but just wait until 2015, that will be the year for comprehensive tax reform, because after all, we now have one party leading both houses of Congress. OK, maybe not comprehensive reform in 2015, but you just wait until 2017…that will be the year!

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Nanny Tax 101: Managing Employer Obligations at Home

Nanny TaxesOne of the most important decisions working parents will make is deciding who will get the honor of taking care of their little one during the day. My husband and I decided to hire a nanny to watch our sweet little boy, Henry. We liked the idea of Henry getting excellent one-on-one care from an experienced caregiver, and daycare can present challenges for us in terms of picking up and dropping off our son each day – we may be parents, but our career demands still exist. Hiring a nanny worked well for our situation, but there are certainly administrative and tax responsibilities to consider when making this decision:

Nannies are household employees

Though most families want to consider their nanny an “independent contractor” to avoid costly payroll taxes and the associated administrative duties, nannies are household employees. The instructions for Form 1040, Schedule H are pretty clear on this matter.

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Who’s on Your (Fictional) Client Wish List?

Good WifeReady for some peace and sunshine in your life? In a recent blog, we speculated about TV characters who would make truly awful clients (Walter White, members of the Walking Dead, you get the picture). Now we are focusing on fictional clients who could really take the stress out of life. Which one of these would be your dream client? 

Here are our top picks:

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In the News: CPAs Provide Gift Tax Guidance and Cyber-Security Tips

Shutterstock_124401508CPAs serve as trusted advisers and provide their clients with expert guidance on a variety of topics. It’s no surprise that they are frequently cited by the media for their expertise in areas such as tax, financial planning and even cyber security best practices. I’ve summarized a few recent examples of CPAs helping people make informed decisions about their financial lives.

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Help Us Improve the “Service” in the Internal Revenue Service

Man on hold with IRSIt is no secret that IRS service during this past tax season plunged to a level that I can only describe as unacceptable.  The anecdotes from members keep coming in, and from what we hear, the predicted 53-minute average wait time to reach someone on the IRS Practitioner Priority Hotline is not so much an average as it is wishful thinking. That prediction came from IRS Commissioner John Koskinen, who said in November that the IRS will try “to do as well as we can. As well as we can is still going to be miserable.” 

Taxpayers trying to get through to a representative are not faring much better as discussed in recent news reports and shown in the chart below. In its annual report to Congress, the National Taxpayer Advocate deemed this to be the most serious problem facing taxpayers. 

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Potential State Tax Law Changes on the Horizon

In and out of focusAs we get ready to put away our snow shovels, gloves and winter coats, and take out the sandals and sunscreen (yes – we probably should be using it all year), Congress and many state legislatures are considering some important tax changes. The AICPA and state societies are closely monitoring these issues and ensuring that the profession’s voice is heard:

  • State Sales Tax on Professional (Accounting) Services

With states searching to either expand their revenue base or reduce reliance on income taxes, several states are considering proposals to expand their sales tax to cover professional services, such as those provided by CPA firms. So far this year, 11 states (California, Connecticut, Hawaii, Indiana, Maine, Maryland, Mississippi, Missouri, Ohio, South Carolina, and Virginia) are considering the issue. Recently, Pennsylvania Gov. Tom Wolf (D) proposed a sales tax expansion that would include accounting services, but professional services provided to a business would be exempt.  The AICPA continues to work with state CPA societies and our profession partners to try to stop these proposals from becoming law.

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Due Diligence Reminders for Tax Extensions

Tax 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:

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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.

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What Employers Assume about the ACA Can Hurt Them (and Staff)

Healthcare WordleThe Affordable Care Act is here to stay and continues to challenge CPAs with many unanswered questions and some mind boggling confusion. Every time I think I understand the ACA, rules change and interpretations contradict themselves. Despite the high frustration level, our own firms, our companies and our clients depend on us to guide them.

As a CPE discussion leader for the AICPA and others, I am continuously challenged by participants who complain about leaving class with more questions than answers on ACA. This situation is not about to resolve itself.

When the law was passed in 2010, the knee jerk reaction for many employers was: “We'll just cancel our health insurance plan and pay the penalties.” This is not a good answer. Take my own CPA firm as an example. We employ about 35 people and do not have to offer affordable health insurance since we have fewer than 50 full-time equivalent employees. Although Full-Time Equivalent Employee is defined three different ways in the ACA, our firm is definitely exempt from penalties.

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Rules and Resources for ACA Due Diligence

Due diligenceThe filing season is upon us and the question practitioners are asking themselves is “What due diligence steps are necessary for getting Affordable Care Act information from clients?”

The ACA provides a new challenge to practitioners in preparing 2014 returns, which will require more due diligence and effort to comply with these new rules.

The IRS, the AICPA, and others have provided many resources to practitioners on understanding the filing requirements of the ACA. In addition to these resources, practitioners should note the due diligence requirements under Circular 230, the AICPA Code of Professional Conduct, and the AICPA Statements on Standards for Tax Services that provide enforceable standards for AICPA members:

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CPA Potential Nightmare Clients: Walking Dead or Game of Thrones?

Petyr BaelishCould you use a break these days? Many of us turn to the tube when we need a mental break, but eventually our minds drift back to the office. Perhaps you have considered what it would be like to have the characters from your favorite television shows as your clients. We put our heads together and came up with the following list of television characters whom we think would be challenging clients.

Walter White, Breaking Bad. Have you ever had a client who was, say, a mild-mannered high school chemistry teacher, but you still felt there was something just a little off about him? White has built a meth-dealing empire in order to provide for his family in light of his terminal cancer diagnosis. Has he filed taxes in recent years? Are his financial statements in order? Does he have an estate plan? You might well be nervous to ask these questions, given the guy’s fairly hostile intensity. “I am the danger,” White proclaims at one point, and it would seem smart to believe him. 

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Due Diligence and ACA: A CPA Raises Some Tough Questions

ACA blog 1Editor’s Note: Last January, Janet Hagy, CPA (and AICPA Tax Section volunteer) wrote a popular blog about her concerns regarding new rules for health reimbursement arrangements and their impact on her staff. We asked Ms. Hagy to give us an update and also discuss the Affordable Healthcare Act compliance concerns she has as a practitioner for the current tax season.

What I have learned in the last year about the ACA adds extra concerns to this already complicated tax season. We have two major compliance challenges right now – coverage documentation and standalone health reimbursement arrangements (HRAs). Otherwise, penalties, higher fees and more frustration could be waiting for many of us.

The first issue is that we as CPAs have sign-off on whether our individual clients had the required health insurance for each month in 2014 for all household members. We are probably not going to receive any 2014 forms 1095-B or 1095-C from employers or insurance companies substantiating what our clients tell us about their coverage, since these forms are voluntary for 2014 and do not become mandatory until 2015. 

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How the New Congress Might Affect the CPA Profession

Capitol2Meet the new Congress. Same as the old Congress? That remains to be seen. The 114th Congress opened on January 6 with 74 new members of the House and Senate, 104 women – more than ever before, and the largest House Republican majority since 1929. Those are the numbers, but let’s look at what they mean for the CPA profession.

Our profession’s core services are greatly impacted by the legislators and regulators who set policy and standards. The November election brought many changes and several new faces to Washington. One thing that did not change, however, was a strong CPA presence. I was very pleased that nine CPAs were reelected to the House. I know that these nine individuals, as well as other CPAs, whether as elected officials or active constituents, will continue to provide crucial experience and guidance. In light of the new representatives, staff members and committee chairs in the Congress, we have been reviewing our advocacy and education efforts on initiatives affecting the profession and the public.

We expect Congress to focus on certain issues in 2015. Here is a brief summary of the more significant ones.

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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.)

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4 Tips for Turning Tax Season Lemons into Lemonade

Tax- lemonsRaise your hand if every article on the upcoming tax season has left you reconsidering your choice of profession? The messages are everywhere and are not painting a rosy picture of what tax practitioners can expect. Well, I promise not to drudge up ACA, repair regulations, foreign accounts or countless other changes - enough has been said on those. Instead, I have a few ideas that you can try the next time you spot a tax season lemon.

Whether your firm is big or small, gone completely high-tech or still doing everything manually, there are always opportunities for improving efficiency, exploring new service lines, reinforcing your value to clients and raising your fees. This lemonade recipe has four ingredients, and simply requires a notebook, a plan and a commitment to try something new.

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