Election Year Politics and Worker Classification Issues

We are in the midst of a presidential election year, and the issue of worker classification has surfaced as a labor and tax policy issue, as it normally does.  At a January 20, 2012, small business tax roundtable held by Tax Analysts, Reggie Oldak, one of the senior counsels for the National Women’s Law Center, criticized the “20 common law factors” test (used in defining who is an independent contractor or an employee) as rigged against the worker. She went on to complain that “the IRS is prevented from really devoting the energy it needs to proper [worker] classification.”  In her opinion, employers have the upper hand in employment status matters and independent contractors have no workplace protections.    

In the News: Clients Increasingly Turn to CPAs for Financial Planning

While economic uncertainty persists and conflicting economic indicators make predicting the progress of the recovery tough, stocks have been on the rise since late 2011. With the Dow crossing the 13,000 threshold earlier this week, many investors may be considering a return to the market. Before making any important financial decision, it’s essential to develop a plan that addresses the specific situation and ensures alignment with one’s goals for the future. As a number of recent news articles below demonstrate, individuals are increasingly turning to their CPA for help making investment decisions and planning their financial future, and the AICPA is ensuring that CPAs have the tools they need to best advise their clients.

Investment News reports that, as a result of increased demand from their clients, more CPAs than ever before are offering financial planning services. CPAs, who are trusted advisors to their clients, may have an advantage on other investment professionals. “We're in a natural position of trust with clients to expand into financial planning,” said Lyle Benson, CPA/PFS, of the executive committee of the AICPA's Personal Financial Planning section. The economic conditions in the U.S. have only added to the perception that CPAs are one of the best options for financial planning, and the AICPA is ensuring that members who wish to expand their financial planning services have the resources they need. “With the uncertain times, our members are seeing a lot more demand from clients for financial planning services,” said Andrea Millar, CPA/PFS, senior technical manager of the AICPA’s Personal Financial Planning section. “In recent years, we've expanded our efforts to help them add that to their practices.”

Tax Time is the Right Time for Financial Planning

If you’re like any of the CPAs I know, you’re probably fishing receipts from shoeboxes right about now, brewing coffee like it’s a second job and greeting the sun most days from your office chair.

It is, after all, that most taxing of seasons: tax season.

But in those long hours and rigorous reviews you’re also getting fresh insight into the lives of your clients – insight into their incomes, spending habits, investments and life events. That’s why tax season is a great gateway to financial planning. And why CPAs are uniquely positioned to excel as financial planners.

In the News: Tips for Choosing a Tax Preparer from the AICPA

Each year the news media seems to begin their coverage of tax season a little earlier than the year before. The Media Relations team at the AICPA works year-round to educate reporters and provide accurate and actionable information for filers. This helps ensure that during tax season the public understands the value of a CPA as a tax preparer who can help them navigate the complicated and constantly changing IRS rules. With two months until the deadline to file most 2011 returns, I present to you, dear readers, some recent articles quoting AICPA staff and volunteer leadership on tax season issues.

Eileen Connelly of the Associated Press spoke to Melissa Labant, CPA of the AICPA’s Tax team for an article on how filers can find a tax preparer who they can trust. Labant suggests that, if you're expecting to claim a lot of business-related expenses, ask colleagues from work or professional organizations if they know a CPA who focuses on your industry. And along the same lines, if you own a small business, it’s crucial to ensure that the CPA has experience with small businesses. If they’ve worked with small businesses in your industry, that’s even better.

What’s Hot These Days in AICPA Tax Advocacy?

While you are working late preparing tax returns, the AICPA is also keeping busy, evaluating proposed regulations and interpretations of current law that could affect your practice. What are some of the hot topics on our advocacy to-do list?  

Let’s start with information reporting.  Businesses that accept credit or debit cards are starting to receive the new Form 1099-K from their merchant card processing company that reports the gross amount they received during the prior year.  The form was created to ensure that businesses report their credit and debit card income, especially from online sales. (The IRS just posted more information on its website about the requirements.) 

Top 10 Tax Resources (for the 2012 Tax Season)

Finding time to do anything during tax season is tough. Emails pile up, as does almost everything else, right? So save a little time this year by using some of the resources compiled by AICPA staff. And if you like free, you’ll like this list as most of the resources listed below will not cost you a dime. 

Scrutiny of Foreign Accounts Puts Taxpayers in Tough Spot

We’ve all seen the headlines: assets hidden offshore, millions in penalties, jail time. They get your attention. But what does it boil down to? The rules regarding the reporting of financial and non-financial accounts and assets are getting increasingly complicated.  The U.S. government has taken numerous steps over the past five years to increase income tax compliance by U.S. taxpayers with overseas assets, including:

• stepping up enforcement regarding reporting of foreign bank and financial accounts and payment of all U.S. income tax on those foreign accounts;
• enacting new, additional reporting requirements for individuals (Form 8938);
• enacting new withholding requirements for foreign financial institutions and other foreign entities if they don’t enter into agreements to report annual information on U.S. citizens.

Cost Basis Reporting Rules

In this audio stream, Michael Kitces covers the new cost basis reporting rules enacted under the Emergency Economic Stabilization Act of 2008.

Note that the new tracking rules will require any financial intermediaries (i.e., generally all brokers and custodians, as well as certain other types of financial institutions) that currently issue Form 1099-B to report using an updated version, which tracks not only the gross proceeds from sales of securities, but the cost basis, acquisition date, amount of gain/loss, and character of the gain/loss (i.e., short-term or longterm). Actual reporting on cost basis will be phased in over time, with equities in 2011, mutual funds and dividend reinvestment plans in 2012, and bonds and other securities in 2013.

Michael Kitces on Cost Basis Reporting Rules

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.

Michael Kitces, Director of Research, Pinnacle Advisory Group. Michael is the publisher of the e-newsletter The Kitces Report and the blog Nerd’s Eye View through his website kitces.com, dedicated to advancing knowledge in financial planning.

In the News: Big Tax Changes to Come in 2012

The Wall Street Journal recently spoke to Melissa Labant of the AICPA’s tax team about tips for taxpayers as they wait to see if Washington addresses major tax questions in 2012; a number of major tax cuts are set to expire at year's end. Labant noted that several changes for this tax year could pose traps for those who are unaware.  Among the changes is the elimination of the charitable IRA donation, which expired at the end of 2011. IRA owners 70½ or older were previously able to donate up to $100,000 of assets per year to a tax-exempt charity. Individuals were able to use this donation as part of their required IRA payout, if they hadn't taken one. Adding to the confusion, many experts expect Congress to reinstate the law at some point in 2012. "If you want an IRA donation to be all or part of your required withdrawal, wait for Congress to act," advised Labant.

In the News: Saving Money is Top New Year’s Resolution

Hello and Happy New Year to my Insightful readers! I hope the holiday season was full of joy and left you rested, relaxed and most importantly, ready to tackle the year ahead.

The AICPA will be launching a number of exciting initiatives this year and I’m looking forward to getting the news out and continuing to share interesting articles about the profession that you may not have caught. As always, if you happen to see something that makes you stop and say ‘this is important news CPAs should really be aware of it’ – please send it my way and I’ll consider it for inclusion.

Every January many Americans resolve to make beneficial changes to their life. They may decide to start exercising, to spend more quality time with family and friends or to, finally once and for all, get organized. A recent survey conducted by the AICPA and Ad Council has found that, for young adults, saving money in 2012 is at the top of their priority list. The survey was released to coincide with the launch of a new PSA on behalf of the national Feed the Pig financial literacy campaign, which helps 25- to 34-year-olds take control of their finances and make saving a priority. 

Bob Keebler on Refining the Roth Strategy

In this audio stream, Bob Keebler covers the new thinking as it relates to Roth planning given market volatility. Key considerations include:

• Opportunistic conversions (i.e., optimizing Roth segregation strategies, which focus on the volatility of the stock market)
• Hedging against increased tax rates
• Tactical planning (i.e., net operating losses)
• The annual Roth conversion strategy

Important to note is that conversions to Roth 401(k)s cannot be recharacterized.

Bob Keebler on Refining the Roth Strategy - 12/9/2011

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.  

New Estate Planning Guidance for Decedents Who Passed in 2010

Notice 2011-66 provides guidance for executors of estates of decedents who died in 2010 regarding the time and manner of choosing to opt out of the estate tax have the carryover basis rules apply. Revenue Procedure 2011-41 provides safe harbor guidance regarding property acquired from estates of decedents who died in 2010. This audio stream provides an overview of the guidance and strategies to assist advisers and clients in making decisions.

New Estate Planning Guidance for Decedents Who Passed in 2010

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. 

Impact of the Debt Ceiling Fallout

Have your clients been asking you tough questions about the current U.S. fiscal situation in this time of uncertainty? "Should I change my asset allocation? Should I put money in gold? Should I get out of the stock market as a whole?"  This audio stream provides an overview of where the U.S. is right now from a market, economic and fiscal standpoint and also suggests various tax-motivated strategies that you might want to pursue with your clients. Note: This was recorded prior to Standard & Poor’s lowering of the U.S. credit rating.

Debt Ceiling Fallout

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.

Michael Goodman, CPA/PFS, President, Wealthstream Advisors Inc. Michael is highly active in the financial community and serves on the Personal Financial Planning Executive Committee and as the 2009 PFP Conference Chair. He earned a B.S. in Business Administration and a B.A. in Communication from State University of New York, as well as a Certificate in Finance & Management Information Systems. Michael co-founded and serves on the board of directors of Commerce Plaza Inc., a non-profit program which teaches financial skills to children at the elementary school level.

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. 

In the News: Year-end Tax Planning, Changes to Offshore Accounts

A December 10 Wall Street Journal article titled What’s Next for Offshore Accounts detailed new rules affecting 2011 tax returns. These rules will require taxpayers with assets held offshore to make extensive disclosures to the Internal Revenue Service or risk harsh penalties. The article included a table (click to expand) provided by AICPA indicating which accounts and assets should be disclosed on the new Form 8938, Statement of Specified Foreign Financial Assets, and/or on Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). 

A Resource Dream Come True for Tax Practitioners

In January 2011, I sold my tax practice to join the AICPA but sometimes, I still find myself thinking and acting as if I am still in practice.  What I loved most about my practice were the people, especially the daily interaction with clients.  I was curious about what made them successful.  I picked up tips from successful clients and implemented them in running my business. And I learned what not to do from the not-so-successful clients. 

I also wanted to learn from great thinkers.  So I read business books like “The E-Myth” by Michael Gerber, “Good to Great” by Jim Collins and “Who Moved My Cheese” by Spencer Johnson.  I was involved in my local chamber and other business or networking groups and often did presentations for them. 

An Overview of Estate Tax Portability Provisions

The IRS on Sept. 29 issued Notice 2011-82 to alert executors of 2011 estates of the need to file a Form 706 to make the election to transfer a decedent’s unused $5 million estate and gift tax exclusion to the surviving spouse. In particular, for the executor of a 2011 estate to make a portability (i.e., deceased spouse unused exclusion amount) election, the executor is required to file a timely Form 706 for the decedent's estate, even if the estate is not otherwise obligated to file a Form 706. If a timely return is not filed, any excess exclusion amount is lost forever and is unavailable at the death of the surviving spouse. To avoid falling into this trap, practitioners should discuss with their clients the benefit of filing the federal estate tax return for the first spouse, even if no tax is due. Over the next few weeks and months, it is very important to file extensions (Form 4768) or Form 706 for early 2011 deaths within the nine-month deadline (starting Oct. 3, 2011).

2011 Deaths and Form 706 and Portability

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. 

Going Beyond the Tax Organizer

While the client’s tax organizer is critical to preparing a client’s tax return, it can also be a doorway to building a long-term relationship with the client. Interpreting the client’s responses can lead to discussions on a wide variety of issues that the client may need help resolving in the future.  If you can position yourself as the quarterback of the family’s financial team, they will look to you again and again as they continually prepare for and resolve financial issues.

In the News: Financial Literacy, Social Media

I hope everyone had a happy Thanksgiving holiday and has safely emerged from their tryptophan induced coma. It’s been a busy few weeks for AICPA and the profession, with lots of interesting news coming out. I’m particularly thankful (see what I did there?) to be able to spotlight a couple of my colleagues on the Communications Team who were mentioned in the media recently.

Melora Heavey, AICPA senior manager – communications (and AICPA Insights blogger) spoke to Fox Business about some of the ways that companies are taking steps to develop a more financially literate workforce – which serves to benefit both the employees and the organization itself. “Companies are trying to manage insurance costs, and having a workforce that has a thorough knowledge of their benefits and options help them to do this,” says Heavey. How prevalent are these programs? A study by the Society of Human Resource Management found that 30% of organizations surveyed  offered one-on-one financial/investment advice, 24% offered in-group or classroom advice and 22% offered online advice. Companies interested in implementing financial education programs for their own employees can find free resources at wlife.org, the website for the Workplace Leaders in Financial Education Awards, a program co-sponsored by the AICPA and SHRM.

Critical Issues to Consider: Estate Planning Filings

The final Form 706 and instructions were issued early September by the Internal Revenue Service for decedents who died in 2010. For most people who died in 2010, the form and estate tax payment were due Sept. 19. The AICPA requested a 90-day postponement of the due date, and on Sept. 12 the IRS announced filing and penalty relief for 2010 estates. In light of recent estate tax developments, listen to Bob Keebler’s thoughts on critical issues to think through for 2010 and 2011 estate planning and filings. 

Recent Estate Tax Developments

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. 

In the News: Accountant Named a Top Career for Women

More Magazine named ‘accountant’ as one of the top ten careers for women who wish to balance a career and a personal life. “Younger people are saying, ‘Yes, I want to telecommute or take a two-year sabbatical and come back where I left off’—and providing these options is helping employers attract and retain talent,” says Mary Bennett, a member of the AICPA. Beyond the possibility of work/life balance, the article noted that the CPA credential also provides the flexibility to work in a field you're passionate about and move among a wide range of industries, since businesses in all sectors need accountants.

Stick with Clients You Can be Grateful For

Now that last year’s tax returns are done, it is time to start getting ready for next tax season. This includes making sure you get enough CPE hours, plan engagement letters, review office processes and reconsider your fees.  It also is a great time to review your client list.  I attended a 1040 update seminar several years ago where the speaker made an interesting suggestion:  Let each person on your staff recommend (with justification) one client to be fired each year.  And be sure your receptionist weighs in!

In the News: IRS Tax Preparer Fees

Patrick Temple-West at Reuters reports that the IRS is getting ready to impose the first comprehensive regulation of the industry's 730,000 practitioners who prepare tax returns. The IRS estimates the licensing fee for some tax preparers at between $250 and $275, which includes one-time fees to take a competency exam and be fingerprinted. (CPAs are exempt from the exam and fingerprint requirement and fees. For decades, CPAs and other credentialed preparers have been subject to state regulation as well as IRS rules for ethical practice and procedures, but many others were not.) The AICPA supports tax preparer regulation, but has expressed concern over the costs of requiring supervised non-signing staff at CPA firms to be fingerprinted "We have serious concerns regarding the level of burden that the user fee regulations will place on CPA firms, primarily small- and medium-size CPA firms," said Patricia Thompson, who chairs the AICPA Tax Executive Committee. The IRS, which plans to finalize the new fees in coming months, recently said it was open to ways to mitigate costs

CPA Day of Service, Estate Tax, Debit Card Fees

We asked our bloggers to tell us what they found interesting on the Internet this week. What would you add to this list?

Stacie Saunders - The Virginia State Society of CPAs shared this video on the AICPA Facebook page. It highlights how some of their members contributed to the 2011 CPA Day of Service. Great work!

Eileen Reichenberg Sherr, CPA, MST - The IRS announced in IR- 2011-97 that estates of people who died in 2011 need to file estate tax returns to benefit from the new portability rules even if they do not otherwise need to file an estate tax return. Since the estate tax return is due nine months after death, it could be due as early as Oct. 3, but a six month extension can be filed to give the estate more time to consider this option.

Gregory J. Wright, MBA - In a move that surprised many, Bank of America stated it was going to roll out a debit card fee plan that would charge customers $5 per month if they wished to pay for purchases using their debit card. After criticism from the public, Bank of America went on the defensive, stating “…we lost lots of revenues and these fees only partially make them up.” Bank of America lost $2.2 billion in 2010 and recently posted an $8.8 billion loss for Q2 2011.

We’d be remiss this week if we did not mention the passing of Steve Jobs as the biggest news item of the week. His innovation and leadership changed the face of technology as we know it. We leave you with this quote, which we feel summarizes his legacy well. This is from his commencement speech at Stanford University, June 2005.

"[Y]ou can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something -- your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life."

 

The Unknown Tax Break

A few years ago, President Obama decided to boost the economy by proposing the “Making Work Pay Credit” – a tax incentive intended to put money into people’s pockets.  The credit was “delivered” by changing withholding rates so taxpayers would get a little more cash in each paycheck.  However, it ended up frustrating some people because the withholding tables employers were provided did not always match the amount of the credit.

For example, a two-income family may have taken home an additional $1,200 but only qualified for the maximum credit of $800, resulting in a family possibly owing $400 more at tax time.  Similar problems existed for single people with multiple jobs because withholding was reduced by each employer, even though they could only get one $400 credit.  Dependents with jobs also had issues because their withholding was reduced even though they were not even eligible for the credit.

Persistence Results in Protecting Taxpayers

It was a five-year battle, but working together the AICPA and state CPA societies were gratified  when President Obama on Sept. 16 signed into law a bill that includes a provision to prevent the issuance of new patents on tax strategies. We asked so many of you to send letters, and state CPA societies and members responded each time. Details on the harm tax patents could cause are discussed in this AICPA Insights blog post.

Tax strategy patents now become one of only a handful of patent types that the Patent & Trademark Office is prohibited from issuing, which includes medical procedures, nuclear technology and, now, tax strategies. 

I would like to thank each of the AICPA staff, members, states, committees and others who participated in this advocacy effort, which marks a huge victory for both the public and the CPA profession.

It is important to note that existing tax strategy patents remain in effect so tax practitioners still need to remain vigilant. Patent applications pending as of Sept. 16 were discontinued and no new applications are allowed.

This victory shows the positive results that stem from collaborative and persistent efforts when it comes to getting legislation enacted.  Congratulations to those who played a part in this process. On behalf of taxpayers and the profession, I thank you.

Barry C. Melancon, CPA, President and CEO, American Institute of CPAs.

 

In the News: Dividends, PCGAAP, Deductible Loss

Multiple news outlets, including Tax-News.com and Accounting Today covered the news that more than 2,600 letters have been written to the Financial Accounting Foundation demanding differential financial reporting standards for private companies and a separate independent board to oversee those standards. “Ninety nine percent of the letters from the privately held company constituency demanded that the FAF create differential standards for privately-held companies,” said Barry Melancon, CPA, AICPA president and CEO.

Paul Stahlin, CPA, AICPA chairman, said “now is the time for the FAF to take the bold step of creating a separate board to set relevant standards that privately-held companies sorely need. We call upon more CPAs and business leaders within the privately-held company constituency to push the FAF to make these changes.” The AICPA developed a letter writing tool to help members write letters to the FAF in support of a private company board.

In the News: Economic Outlook, Outstanding Govt CPA

Earlier this week, the AICPA released the results of the 3^rd Quarter Economic Outlook Survey, which showed a decline in optimism among CPA’s who serve as chief financial officers and other high-ranking financial decision-makers. WRAL Tech Wire reported that AICPA found that 61 percent of the respondents think it's "somewhat" or "very" likely that the U.S. is heading into the second trough of a double-dip recession. The News & Observer noted in their coverage that "turbulence in the political and economic environment eroded the sense earlier this year that a recovery was taking hold," according to Carol Scott, AICPA vice president of business, industry and government. Accounting Today pointed out in their article on the results that only 9 percent of CPAs in executive positions expressed optimism about the U.S. economy in the third quarter, down 24 percentage points from the 33 percent who said they were optimistic in the second quarter.

Death and Taxes: Not Quite as Certain as You Think

In 1789, Benjamin Franklin now famously observed in a letter to French physicist and writer Jean Baptiste Leroy, “Everything appears to promise that it will last; but in this world nothing can be said to be certain, except death and taxes.”  However, 222 years later, Americans have much uncertainty with taxes, particularly those related to death. 

One such tax mystery that is still unraveling is the estate tax.  It started over 10 years ago with the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), which lowered tax rates and increased exemptions on estates starting in 2002 through 2009, until the tax was finally repealed in 2010.  Then, unless a later Congress took further action, the higher pre-EGTRRA rates would return starting in January 2011.

In the News: Hurricane Irene, Cloud Computing

As Topical Storm Irene left a trail of devastation in its wake, initial estimates of damages were in the billions. For individuals struggling to put the pieces of their life together, the aftermath can be extremely difficult to navigate. Michael Eisenberg, CPA/PFS, told MarketWatch that gathering the facts and carefully evaluating contractors was the prudent approach. “As much as somebody wants to jump in and do something now, you need to step back a little bit, take a breath, get your wits about you before you start making decisions,” said Eisenberg. Mitchell Freedman, CPA/PFS, advised readers that in the article if their house is unlivable, they need to find out whether their insurance policy covers the expense of a hotel or rental apartment.

In related news, the AICPA wrote a letter to the IRS asking them to extend the Sept. 15 filing deadline for business tax returns for tax payers and preparers in areas impacted by Hurricane Irene. Mike Cohn of Accounting Today reports that the AICPA asked the IRS to use its administrative authority to grant at least a two-week extension of the deadline for those in the areas affected by the hurricane. Patricia Thompson, CPA, chair of the AICPA’s Tax Executive Committee, also asked that any relief apply to situations in which the taxpayer, tax return preparer or the records are located in areas ravaged by the hurricane. The Tax Adviser reports that the IRS announced September 1 that taxpayers in certain areas affected by Hurricane Irene have until October 31 to file certain returns and make payments normally due before then. The areas eligible for relief include parts of North Carolina, New Jersey, New York, and Puerto Rico; the IRS expects to provide similar relief to other places affected by the hurricane, such as Vermont

As many business are considering transitioning to cloud computing, a CFO.com article tackles the not-so-simple question of what it means to ‘move to the cloud.’ As CPA firms who have adopted the cloud model likely know, there are a number of different options for companies looking to make the switch. In the article, Timothy Chou provides real life examples and breaks down six distinct different ways to make the move.

Going Concern recently covered the AICPA’s announcement of the second annual accounting case competition. The article notes that the contest asks college students to flex their fraud and forensic skills in advising a fictional client on a major overseas expansion. “The competition is an opportunity for students to get a hands-on, real-life understanding of one of the fastest-growing interest areas in accounting: fraud and forensics,” said Jeannie Patton, AICPA vice president for students, academics and membership. The top three teams will strut their stuff in Washington D.C. and the one that does the best job keeping the project on track — and on the right side of the law — gets $10,000.

If you come across a recent article of note about the profession, please let me know in the comments section or send me an email.

James Schiavone, AICPA Staff.

In the News: Women to Watch, Financial Literacy, CPE

A recent AccountingWEB article spotlights the Women to Watch Program, an effort of the AICPA’s Women’s Initiatives Executive Committee, which will be honoring women who have made significant contributions to the accounting profession and to the development of women. Candidates are nominated by their peers and firm. Award winners will be honored at events sponsored by their CPA societies. "The women who are selected for the Women to Watch awards have made some outstanding or unique contribution to the profession. They have been successful in integrating their personal and professional lives. They are more visible because of the awards. They become role models. They prove it can be done," added Yasmine El-Ramly of the AICPA.

We Heard You Loud and Clear on the Due Dates Issue

Every voice is important to us.  So when the AICPA heard from so many of you a few years ago about the problems associated with the late receipt of Schedules K-1, we mobilized to come up with a solution.

After considerable dialogue, the AICPA submitted a proposal to Congress in October 2010 suggesting that the due dates for Forms 1065, 1120, 1120S, 1041 (along with some others) be shuffled around a bit--with the understanding that change can be difficult.  We know how important and ingrained return due dates are to tax professionals. Because members’ practices are so diverse and varied, and most members tend to have general practices, our volunteer leadership wanted to make changes that benefited the tax filing system as a whole.  We all understand how challenging the filing season can be.

“Who’s on First” with the Best Deficit Reduction Idea

Well, it seems as if deficit-reduction watching has nudged baseball out as America’s favorite pastime!!  With a full count on the debt ceiling, Congress came together on August 2 to strike out the looming debt ceiling cap and hit a $1 trillion in spending cuts.  At the same time, lawmakers also agreed to come to grips with the monumental deficit.  The agreement created the “Dirty Dozen,” a bipartisan Joint Congressional Committee that is charged with moving forward additional deficit-reduction ideas of at least $1.5 trillion by November 23, 2011. Automatic, across-the-board spending cuts will ensue if Congress fails to come up with a specific plan by the end of December.

So what’s still in the field of play of ideas? 

In the News: Financial Literacy, Mortgage Interest

Jimmy Williamson, CPA, and member of the AICPA’s financial literacy commission spoke to the Contra Costa Times for an article about the Consumer Financial Protection Bureau. The CFPB, designed as a one-stop place for consumers to file complaints about financial products, is currently only handling credit card complaints. “Like any new federal agency it takes time for it to get its wheels rolling," said Williamson. “It's designed to help consumers make better financial decisions, if they are borrowing money for a home, if they are getting a credit card, those kinds of things. It's designed to improve transparency.”

In the News: Debt-Ceiling, College Tuition, EDGE

This week’s post comes from Palm Beach, Florida, where I’ve been attending  the AICPA & CPA/SEA Interchange 2011 conference the past few days. It’s been a great experience learning about the issues impacting the profession, including informative forward-looking presentations from Barry Melancon, CPA, president and CEO of the AICPA and Paul Stahlin, CPA, AICPA chairman. It was wonderful to have the opportunity to meet so many of my colleagues from the state CPA societies around the country and learn about the projects they’ve been working on.

Now, on to the news.

It’s Time Congress Says No to Withholding Rule

If there are any lessons to be learned from the 1099 reporting controversy, it’s that hitting the proverbial fly with the hammer is not the best way to go after tax cheats.  The fly still lives but everything around the fly gets whacked.

What is shaping up to be Lesson #2 is a rule that will force many federal, state and local agencies to withhold 3 percent of payments to contractors for goods and services that cost over $10,000.  It covers governments with total yearly contract expenditures over $100 million, which means most states and large cities.  The rule was enacted in 2006 but its implementation has been delayed – but barring congressional intervention, it will take effect Jan. 1, 2013.  Three bills have been introduced in Congress so far to abolish it - H.R. 674 and S. 89, which would simply repeal the rule, and S. 164, which would offset the cost of the repeal with unobligated funds. 

Why is the 3 percent withholding a bad idea and why is the AICPA opposing it?

In the News: PCGAAP, Protecting Elderly Clients

Paul Stahlin, CPA, AICPA chairman, wrote an editorial titled ‘One-Size GAAP’ Does Not Fit All for The CPA Journal, a New York State Society of CPAs publication, on the need for differences in accounting standards for privately-held companies. Stahlin highlights the recommendations of the Blue Ribbon Panel on Private Company Financial Reporting, including the creation of a separate board with standards-setting authority under the Financial Accounting Foundation’s oversight and changes and modifications to existing U.S. GAAP, where appropriate, for private companies.

 

Did the IRS Get the Reg. Tax Preparer Program Right?

For years, AICPA members have approached me at conferences and asked, “Ed, why doesn’t the AICPA support efforts to regulate paid income tax preparers?”  Or, “Why can’t the IRS discipline 'unenrolled' preparers under Circular 230 (the rules governing practice before the IRS)?”  

They believed that the playing field deserved a little bit of leveling for certain “players.”  They weren’t alone.  The Government Accountability Office and Treasury Inspector General for Tax Administration both issued compliance studies (cited in the IRS Commissioner’s report) that implicated the “unenrolled” preparer community as the source of compliance problems.

Well, we support those efforts now!

In the News: IRS Tax Preparer Exam, Same-Sex Filings

Accounting Today reports that the AICPA wrote to the IRS offering to help develop the IRS exam for registered tax return preparers by leveraging the AICPA’ s experience with the Uniform CPA Exam. AICPA Tax Executive Committee Chair Patricia Thompson wrote “we believe the examination should address problems faced by tax return preparers that might arise in the preparation of basic Form 1040 returns, including coverage of basic self-employment income.” Thompson noted that the IRS exam should have questions related to ethical responsibilities of tax return preparers and be updated annually to reflect the most current tax laws and regulations.

Why Tax Innovation Could Be Harmful to Your Practice

What do CPAs, estate planners, attorneys, and multimillion dollar corporations (or their chief executives) have in common? They are all affected by patents being issued on tax strategies or products that were already in use in the industry.

“The current statutory scheme leads the [Patent and Trademark] Office to issue many dubious patents because it does not have the resources to properly examine the patents.”  So testified David Simon, associate general counsel for the processor giant Intel at a congressional hearing.

Why should tax practitioners care? The concept of tax strategy patents (TSPs) may seem abstract or unimportant to many tax advisors.  And, frankly, I don’t blame them. Would anyone find out whether a client of a CPA in Reno lowered his tax liability through some complicated plan involving a charitable trust?