Wednesday, March 31, 2010

Tax Conformity Included in State Budget

It's been a long road for tax conformity this year, and it's not quite over.

The 2010–2012 state budget was amended to include several changes to tax conformity.

If the budget is passed, these changes will amend and reenact § 58.1-301 of the Code of Virginia. The proposal advances the fixed date of conformity with the Internal Revenue Code (IRC) from December 31, 2008 to January 22, 2010, with the following exceptions (new exceptions italicized):
  • Special depreciation allowances under §§ 168(k), 168(l), 168 (m), 1400L and 1400N of the IRC
  • Carry-back of net operating losses (NOLs) for five years under § 172(b)(1)(H) of the IRC
  • Original issue discount on applicable high yield discount obligations under § 163 (e)(5)(F) of the IRC
  • Cancellation of debt income deferral under § 108(i) of the IRC
    • Allows for cancellation of debt income deferral for debt refinancings in TY 2009 only, but spreads deferral of three years
  • Amount of the deduction allowed for domestic production activities under § 199 of the IRC for tax years beginning on or after January 1, 2010 through a phase-out of the deduction as follows:
    • Two-thirds of the federal deduction for tax year 2010
    • One-third of the federal deduction for tax years 2011 and 2012
    • One-sixth of the federal deduction for tax year 2013
    • No deduction in 2014 and beyond
  • Earned Income Tax Credit (§ 32(b)(3)) for tax years beginning on or after January 1, 2010 — i.e. allowed for 2009
  • Deduction for qualified motor vehicle sales taxes under § 164(a)(6) for tax years beginning on or after January 1, 2010 — i.e. allowed for 2009
Thus far, 20 states have already deconformed with § 199, so Virginia would not be alone if this provision is passed. Additionally, conforming through January 22, 2010, allows taxpayers to take advantage of tax deductions on their 2009 returns for contributions to Haiti made in the early part of 2010.

Gov. Bob McDonnell has not yet signed the budget, which means conformity is not finalized. Stay tuned to for updates. Also, check out the Virginia Department of Taxation's recent bulletin on tax conformity.

Friday, March 26, 2010

Virginia General Assembly 2010: Top Issues Recap

Now that the 2010 Virginia General Assembly session has come to a close, read through a recap of several important accounting-related issues.

Check out a recent Session Watch alert, which was sent to Virginia CPAs this week, or visit the VSCPA's Session Watch page to see the outcome of each bill.

As always, don't hesitate to contact me at (804) 612-9428 or if you have any questions regarding these issues.

Wednesday, March 17, 2010

"Listening" Still Underrated?

In a recent Leaders' Edge column in Disclosures magazine, I discussed the underrated art and skill of listening and provided some tips in improving your skills.

Are you a good listener? Most of us are not. In a short video, Tom Peters recently trashed "bosses" and "managers" (and most of us) for not being more intentional about bringing listening to the forefront of our "strategy" as organizations.

Let's face it though. Listening is hard work....
  • Sometimes we'll hear things we don't want to hear!
  • We were NOT taught how to listen better in school.
  • Being a better listener is not always immediately rewarded.
  • The subject itself can seem boring or make us feel defensive - "I listen well enough!"
  • We have to be fully present to listen, which is hard in our fast paced demanding world.
  • There may be stereo-types working against us ... We accountants are "counters" not listeners. We are "requesters" not listeners, and we relay "knowledge", not our listening.
Let's make it real simple here: Think about the people in your life that you get along with best. Think about the people that make you feel good about yourself. They probably have many different strengths and personalities but the chances are they LISTEN TO YOU! They provide you a gift, and that gift leads to new possibilities and results in your life.

People have told me, in a class setting no less, that when they were talking with another person and they felt like they were not listened to well ... they did not want to listen well "back" to that other person. This is in a communication class where we are practicing listening! So can you imagine how this affects us in the "real world." Listening (or lack thereof) is highly contagious.

st try tomorrow, or better yet in the very next conversation you have .... give that other person more of your "gift" and see what happens.

Tuesday, March 16, 2010

I Am …

… a farmer’s daughter. I am a Virginian, born and raised. I am a University of Richmond Spider. I am an association executive. I am a traveler at heart.

More importantly, who are you?

The VSCPA wants to know more about the individual members who make up this organization. That’s you!

Enter the "I Am the VSCPA" Video Contest by April 28, 2010, for a chance to win one of two $500 gift cards. Create a quick video describing who you are and post it as a video response to the
announcement video on our YouTube channel.

Throw together a quick video using your computer camera. Upload a video from your camera phone. There’s no need to get fancy. Just tell us who you are.

Check out for rules and contest details.

I am … excited to get to know more about VSCPA members.

Tuesday, March 9, 2010

VSCPA Tax Help Programs in Full Swing

Enhance the image of CPAs and the profession. Increase public understanding of the range of CPA services. Promote the integrity of the CPA designation. These are the goals of the VSCPA Public Relations Team. Basically, it’s our job to make sure the public knows what a great resource CPAs are.

Year round, hundreds of members volunteer for the VSCPA’s pro bono programs, which help increase the awareness of the diverse services that CPAs provide. Tax season is a great time to promote CPAs as the premier financial and tax experts because….you are!!

I’m really excited this year because the VSCPA tax programs are very popular among CPA volunteers and the public! Here are some of the activities that are keeping volunteers busy this tax season:

”Ask a CPA” E-mail Program
Through the “Ask a CPA” E-mail Program, VSCPA members provide free online tax advice to anyone filing federal or state tax returns in the Commonwealth of Virginia. Taxpayers can get answers to their questions by submitting an e-mail at CPA volunteers provide answers to tax questions within three business days and have answered 31 tax questions so far this year.

NBC12 Tax Call-In
Also this year, VSCPA members are participating in the NBC12 Tax Call-In Program in Richmond. This is one of the first on-air programs staffed exclusively by VSCPA members. The NBC12 Tax Call-In allows viewers to receive free tax advice from CPA volunteers during the evening news broadcast. This live call-in is held every Wednesday night for six weeks. So far this season, VSCPA volunteers have answered more than 600 questions via phone and live blog.

Roanoke tax events
In February and March each year, a live tax interview is broadcast over the airwaves of the WVTF Public Radio Station in Roanoke. VSCPA members field calls from WVTF listeners and provide answers to tax questions on the air. The next show is scheduled in late March.

Tax Time is an annual program that combines a tax call-in with a lively panel discussion. This event is held in February on Blue Ridge Public Television (WBRA) in Roanoke. Check out these videos of your colleagues participating in this year’s program!

Media interviews
CPAs are really in demand this time of year, especially with the news media. With so many tax changes for the 2009 tax year, reporters need your expertise. VSCPA members have participated in 13 media interviews on tax-related topics so far this year.

As you can see, VSCPA tax experts are busy right now!! They’re helping clients and volunteering time to assist the public. These programs are only made possible by our members who generously volunteer their time. Thank YOU!

We would love to have you! The VSCPA welcomes new volunteers for tax programs and financial literacy programs year round. If you’re interested in volunteering, please fill out this online form.

Tuesday, March 2, 2010

Who Is the VSCPA?

You are the VSCPA. At the heart of the VSCPA are individual members who drive the organization. But who are those VSCPA members? You. Your colleagues. Your peers.

We want to know more.

Enter the "I Am the VSCPA" Video Contest by April 28, 2010, for a chance to win one of two $500 gift cards. Simply create a quick video describing who you are and post it as a video response to the announcement video on our YouTube channel. Check out for rules and contest details.

We look forward to learning more about you!

Guest Post: What Would Happen if Conformity Didn’t Pass?

The Virginia General Assembly has not yet passed tax conformity in Virginia, which could cause major problems for Virginia taxpayers and tax preparers. Years ago, when the legislature decided to enact fixed-date conformity, it was understood that the General Assembly would then have to pass a conformity bill annually. And in the past, the bill has sailed through without issue. This year, however, the bill is in danger — which poses major threats for taxpayers.

Here are some of the most prominent issues that would result from NOT passing conformity:

  1. Please refer to the impact statement, paragraph 11, attached to SB 545, which states “Because federal adjusted gross income (individuals) and federal taxable income (business) are the starting point for Virginia tax returns, if the bill is not enacted, Virginia taxpayers would be required to make complex ‘Fixed-Date Conformity’ adjustments to remove the changes made by this Act when they prepare their Virginia tax returns.”
    a. Not only would this cause increased cost and complexity for taxpayers, the Virginia Department of Taxation (TAX) would encounter significant programming issues in processing tax returns. Electronic filing, which has been a cost reduction goal of TAX for many years, would suffer a setback, as many of the returns would not be able to be e-filed, as the start point of the calculation would not be match federal filing. Not only would there be increased programming costs, but probably additional forms for taxpayers to complete to reconcile federal and Virginia taxable income.
    b. Businesses and individual taxpayers would be faced with the added cost of having two sets of tax records, one for the Internal Revenue Service (IRS) and another for TAX.
  2. Changes made to the Federal Earned Income Tax Credit would not carry forward to the Virginia calculation. Those taxpayers who need the relief most would have a tax INCREASE on their Virginia returns, whereas their federal taxes will have been lowered.
  3. Failure to adopt conformity would not necessarily achieve the desired budget savings that may be anticipated. Although it is difficult to measure the impact, additional costs might include program and administration costs for TAX; additional taxpayer costs, which would be deducted by businesses; and decreased compliance due to added complexity, which could cost the Commonwealth money and not increase tax collections.
  4. Business taxpayers looking to expand or increase productivity could be disadvantaged because of lower depreciation deductions. This is a mere timing difference. It may also influence job creation in the Commonwealth. Currently, Virginia is in a competition with Maryland and Washington, D.C., to attract major corporations, and decoupling completely from the Internal Revenue Code could be the influencing factor NOT to locate in the Commonwealth.
  5. Most jurisdictions have advanced conformity, with exceptions similar to those contained in the original bill. Failing to accomplish conformity would be a giant step backward for Virginia.
  6. Federal legislation in 2009 increased the fringe benefit for taking mass transit to work or parking at or near the employer. This would not be adopted by Virginia if conformity were not advanced. Thus, taxpayers would have to recalculate the W-2 income received from an employer.
  7. For taxpayers who are S corporations and contemplating selling their businesses, the period for calculating the “built-in-gain” would be different for federal and Virginia. Virginia S corporation owners would pay higher taxes than those in jurisdictions where conformity was advanced.
  8. The expanded definition of expenses available to be paid by Section 529 plans would not conform from federal to Virginia. Congress expanded the definition of expense able to be reimbursed from 529 and that would not be the same definition in Virginia.

These are just a few of the issues that might ensue if we don’t pass conformity in Virginia.

Monday, March 1, 2010

March CEO Update Podcast Available

The March CEO Update Podcast is now available. VSCPA President & CEO Stephanie R. Peters, CAE, and VSCPA Government Affairs Director Emily Walker have a discussion about the status of conformity in Virginia, and Peters touches on other legislative issues as well as recent tax updates.

Download the latest podcast here. Check out past podcasts here.