CPA Cafe: 2012

Friday, December 28, 2012

Tuesday, December 25, 2012

Auditing 'It's a Wonderful Life'

Business news site Quartz provides a little holiday levity with an audit of the Bailey Bros. Building & Loan Association from the Christmas classic "It's a Wonderful Life." Let's just say the company's internal controls didn't inspire much confidence from the auditors from PotterHouseErnstCooper LLP. (That would be, what, the Big One?)

It wasn't just an $8,000 discrepancy on the books that led to the auditors' concerns. Vice President William "Uncle Billy" Bailey drew this scathing description:

Let us be blunt. “Uncle Billy,” as Mr. Bailey is known, exhibits clear symptoms of early stage dementia. And while we are sympathetic, his involvement in key operational activities amounts to a threat to survival of this institution.

Here's hoping the VSCPA's members working in audit don't have to deliver this kind of bad news to their clients.

Friday, December 21, 2012

Tuesday, December 18, 2012

Clarity on IRS Lockbox Changes?

A VSCPA member recently asked where to send fourth-quarter estimated tax payments in light of the closure of some U.S. Internal Revenue Service (IRS) lockbox operations. We reached out to the IRS and got this answer:

"Other practitioners have raised this issue, too. I did find an Issue Management Resolution System issue very similar to this (IMRS - 07-0000496). Apparently, the same type of thing happened to taxpayers in 2007. Then, payments sent to the old site were date stamped and forwarded to the new site. I am assuming (IRS emphasis - ed.) the same thing will happen for the 2012 4th quarter estimated tax payments. It appears the IRS would prefer them to send the payment to the new address but, if they send it to the old address, it should still be processed."

Does anyone have any insight on this issue?

Friday, December 14, 2012

Tuesday, December 11, 2012

Digital CPA Conference Wrap-Up

By Jen Syer
VSCPA Technology Director

"It's like being covered in pixie dust!" That's how Jennifer Wilson of ConvergenceCoaching, LLC, summed up the 3-day experience that was the Digitial CPA Conference in Washington, D.C., from Dec. 5-7, hosted by the American Institute of CPAs (AICPA) and CPA2Biz.

I had the great fortune to attend the event, along with VSCPA Chair John Montoro, CPA and according to the registration list, 500 other CPAs and accounting-related professionals, ~20 of whom were VSCPA members!

As one would expect, the main theme surrounded cloud, albeit largely from the CAS perspective vs. day-to-day office operations. Speakers articulated their points surrounding SaaS, CAS standardization and fixed-fee schedules, encouraging CPAs to more effectively serve their niche market.

Jim Collins and Steve Jobs quotes were tossed around like footballs, with good reason... When CPAs focus on their strengths, understand their brand and leverage technology to reduce cycle time, the road to a million-dollar practice can become a reality (hard work is — of course — still requisite)!

Most attendees I spoke with seemed to follow the normal change management distribution curve. Regardless of where your firm sits on said curve, resources are available which can introduce or foster your ongoing relationship with the cloud... I'll discuss these in an upcoming post, in the hopes of spreading the "pixie dust" effect!

In the meantime, I hope you enjoy the following whitepaper, written by Dr. Geoffrey Moore, shared by CPA2Biz. Accounting Services: Harness the Power of the Cloud.

Friday, December 7, 2012

Monday, December 3, 2012

Guest Blogger: IRS Future on Display at the AICPA Tax Conference

By Julia Rogers, CPA
Rogers & Associates

The American Institute of CPAs (AICPA) Tax Conference, held last month in Washington, D.C., boasted several speakers from the U.S. Internal Revenue Service (IRS) who discussed the future of the organization. Here’s what they talked about:

IRS Taxpayer Advocate Nina Olson talked about her office’s decline in case inventory, which she attributed to declines in new homebuyer credit cases and acceptance of new cases.

IRS Commissioner Faris Fink discussed small business/self-employed (SBSE) taxation. He says the next big focus will be on partnerships, with particular attention paid to basis and other advanced issues. That project is in the planning stage now and will be in effect in 2014.

Fink also discussed the National Research Project (NRP) audits, which are shifting into new areas of focus after the completion of the 2008–2010 employment tax research cycle. Corporate NRP audits have been reduced from a three-year cycle to a one-year cycle.

According to Fink, offers in compromise are skyrocketing, with a 121 percent increase over the past four years. The IRS is attempting to reduce inventory by providing less stringent criteria for simple wage cases.

Peggy Bogadi, the IRS’s director of submission processing, talked about filing, refunds and the challenges of legislation that will come from the lame-duck Congressional session. More than 80 tax forms and schedules will have a change from 2011.

Bogadi also discussed:

The alternative minimum tax (AMT), which is set to cover many more taxpayers. Forms are currently programmed assuming a patch will be passed.
IRS Form 1040, which will now only be accepted via modernized e-file (MeF). Legacy data continues to be phased out as IRS Form 940 and 1041 filings will move to MeF for 2012, while the IRS continues to work on Form 1040X.
Identity theft, which is causing major problems for the 2012 filing season as 600,000 taxpayers will need personal information numbers (PIN) to file their tax return and process refunds.

She said that guidance will be issued soon on the Individual Taxpayer Identification Number (ITIN) application process.

Outgoing IRS Commissioner Doug Shulman discussed his tenure at the agency, citing the following as his key accomplishments:

Foreign investment issues
Better relationships with taxpayers and advisors
Technology upgrades
The Registered Tax Return Preparer (RTRP) and Preparer Tax Identification Number (PTIN) programs
The agency’s data analysis of preparers and possibly fraudulent refund claims
The Real-Time Tax System, which remains in process
Customer satisfaction, which is up to 73 percent, a 41 percent change since 1998

Carol Campbell, director of the IRS’s Return Preparer Office (RPO), talked about the agency’s PTIN program, which oversees 730,000 PTIN holders nationwide. She said a searchable PTIN database will be available next year once all testing is complete.

Campbell noted that compliance checks for continuing professional education (CPE) requirements are not yet in place, meaning that CPE compliance remains on the honor system. She said that less than 5,000 preparer visits will take place this tax season, two-thirds of which will take place over the phone. Preparers found to have issues will be required to take additional CPE.

Friday, November 30, 2012

Thursday, November 29, 2012

Lockbox Changes for Federal Tax Payments

The U.S. Internal Revenue Service (IRS) and the U.S. Treasury Department's Financial Management Service (FMS) are making changes to the tax lockbox network, and Virginia taxpayers and preparers will be affected.

Virginia tax payments had previously gone to St. Louis, which is one of two lockbox operations (along with Atlanta) closing effective Dec. 31, 2012. Individual taxpayers in Virginia, Alabama, Georgia, Kentucky, Missouri, New Jersey, North Carolina, South Carolina and Tennessee will now send their payments to Louisville, Ky.

Read the VSCPA's article for more information and the appropriate addresses for each form.

Wednesday, November 21, 2012

Health Care Exchanges in Virginia: State or Federal?

As the deadline to elect to set up a state-run health insurance exchange draws, closer, Virginia Gov. Bob McDonnell is holding firm with the plan to default to the federal exchange option.

The exchanges, which allow citizens to shop for private health insurance policies, are part of the Patient Protection and Affordable Care Act (PPACA) of 2010. States must decide by Dec. 14 whether to set up their own exchange or allow the federal government to run the exchange.

Virginia Senate Democrats called for McDonnell to schedule a special General Assembly session to discuss the exchanges. A McDonnell spokesman said that such a session would be expensive and that no decisions need to be made before the start of the regular session in January.

What do you think? Is it worth it for Virginia to set up its own exchange?

Friday, November 16, 2012

Volunteer With the VSCPA!

The VSCPA is seeking volunteers for the 2013–2014 membership year. Will you take advantage of this member benefit?

VSCPA members cite volunteer opportunities as one of the most satisfying aspects of their membership. VSCPA volunteer work provides networking opportunities, leadership development and a chance to represent your firm and your profession. In addition, all VSCPA volunteers are invited to the annual Leaders’ Summit, a free, two-day leadership training event which qualifies for CPE credit.

“I have grown tremendously personally and professionally through my involvement with the VSCPA,” VSCPA member Monique Valentine, CPA, said. “…The VSCPA has helped me grow in my current position … and has introduced me to so many great CPAs that I would never have had the opportunity to work with without my involvement at the VSCPA.”

Use your valuable professional skills to help your community or build your skills in an area where you don’t have as much experience. Your time commitment is up to you.

“I feel like volunteering is the best way to say ‘Thank you,’ to everyone that has helped give me opportunities to be successful in life and to try and provide those same opportunities to others,” VSCPA member Andrew Martin, CPA, said.

Visit the VSCPA Volunteer Opportunities page for more information. The deadline to sign up is Feb. 1, 2013.

Wednesday, November 14, 2012

Tax Refund Debit Cards in Virginia

The Virginia Department of Taxation (TAX) is now offering two options for receiving individual state income tax refunds for 2012 returns: direct deposit and debit card. Notably absent is the option to receive a paper check.

The switch to debit cards was part of Virginia's budget legislation passed in the 2012 General Assembly session. One big reason for the move was to save money by reducing check printing and mailing costs, and the program is expected to reduce annual costs by $200,000.

The VSCPA has pointed out several groups for which the debit-card option is impractical, including deceased taxpayers, elderly taxpayers, minor taxpayers and out-of-state taxpayers.

What do you think? Will the cost savings with the new program outweigh the inconvenience for the groups mentioned above?

Friday, November 9, 2012

Thursday, November 8, 2012

Accounting PACs and the Election

Here's an interesting post from Accounting Today regarding how the profession's most prominent political action committees (PAC) spent their money in 2012 and how their preferred candidates turned out.

The biggest accounting PACs backed Gov. Mitt Romney by a 4:1 ratio, but did better at the Senate level with less partisan, more spread-out contributions. Among the winning candidates backed by accounting PACs were Sens. Kirsten Gillibrand (D-N.Y.), Dianne Feinstein (D-Calif.), Debbie Stabenow (D-Mich.), Ben Cardin (D-Md.) Sherrod Brown (D-Ohio) and Jon Tester (D-Mont.) (Tester's race was still in doubt when Accounting Today's article went live, but he has since been declared the winner.)

The article also noted that accounting PACs gave early contributions to Sens. Richard Lugar (R-Ind.), who lost in the primaries, and Olympia Snowe (R-Maine), who later retired.

Tuesday, November 6, 2012

TAX Issues e-Alert on Corporate e-Filing Waiver Requests

The Virginia Department of Taxation (TAX) has issued an e-alert providing instructions on how tax preparers should submit a waiver request for the corporate electronic filing requirement. Use it as is or reformat for your purposes. Questions should be directed to Nancy Wilson.

e-Alert to Tax Preparers – 11/6/12
Subject: Virginia’s Corporate Electronic Filing Requirement – Submission of Waiver Requests by Tax Preparers
The Virginia Department of Taxation would like to clarify how Tax Preparers should submit the Corporate Income Tax Electronic Filing Waiver Request on behalf of their clients.

Complete a single Corporate Income Tax Electronic Filing Waiver Request Form.

Attach a list of the Corporations for which you prepare tax returns and/or submit payments and include the following information for each corporation.

Corporation Name

Corporation FEIN

Indicate whether you have a Power of Attorney for each client

Fax the Waiver Request and list to 804-367-3015

The Department will issue a single waiver to the tax preparer covering all their clients.

Listed below are some valid reasons that a Tax Professional would request a waiver.

The Tax Preparer’s software does not support electronic filing

The cost to purchase software supporting e-File would be a cost burden on the firm.

The fact that the IRS does not support a specific federal form or schedule through their e-File program is not a valid reason for a waiver on its own merit. Since Virginia’s e-File program supports PDF attachments, the federal return or form can be attached as a PDF and filed as an “unlinked” return to Virginia. Please check with your software company as to whether they support both linked and unlinked returns.

If you do not have a scanner or other means to produce a PDF, then request a waiver.

If your software does not support unlinked filing of returns to the state, then request a waiver.

Valentine Gives Back in Every Way

Editor’s Note: This is part of a series of profiles highlighting the diverse interests and careers of VSCPA members. Know a member (including yourself) who would make for an interesting profile? Email VSCPA Communications Specialist Chip Knighton.

The VSCPA is filled with high achievers, but Monique Valentine, CPA (right) has been remarkably active even among that group. She chaired the VSCPA Board of Directors in 2007–2008 and has held leadership positions with the VSCPA Educational Foundation and the VSCPA PAC. As it turns out, that love of service bled into her non-VSCPA work.

After starting in public accounting, Valentine transitioned into the nonprofit sector in 2000 and has worked for the Associated General Contractors of America (AGC), where she is now chief financial officer (CFO), and has been for 11 years.

“My first job in my nonprofit career was with a [501(c)(3)] organization that raised money for international relief and development organizations, and knowing that the money we raised went to help people in under-developed countries was very rewarding,” Valentine said. “We worked hard to keep overhead expenses to a minimum so that the majority of the money we raised was used to fulfill our mission. It gave me a great sense of purpose knowing that the work I did was benefitting many other individuals.”

Valentine made partner in a Springfield CPA firm the same year she got married and began a lengthy commute from Front Royal around the same time. It didn’t take long before she realized that spending four hours a day in the car wasn’t conducive to a successful marriage.

“The thought of an increased commute and the long hours I was working helped me to decide that I either needed to divorce my job or my husband,” she said. “I chose to divorce my job.”

While work-life balance played a role in her move to the nonprofit world, the sense of working for a greater good let her know she made the right decision.

“I love working for an organization where I believe and support the mission and know that my work benefits more than just the owners of the business,” she said.

It’s that same sense of working for something bigger than herself that has driven much of Valentine’s volunteer work with the VSCPA and other organizations. In addition to the long list of roles she’s held with the Society, she’s given her time to the George Mason University Accounting Advisory Council, the American Institute of CPAs (AICPA), the American Society of Association Executives (ASAE) and Manassas Presbyterian Church. She started as a VSCPA volunteer with the Young CPAs Committee before taking on a greater role with the Society’s Northern chapter.

“The firm I worked for was a strong advocate for giving back to the profession and encouraged all staff to get involved with the local chapter and the VSCPA,” she said. “…I have grown tremendously personally and professionally through my involvement with the VSCPA. I never thought that I would have a leadership role at the VSCPA, but by getting involved early on and taking on a little more each year, I eventually felt that I had the knowledge and ability to serve in a leadership capacity.

“The VSCPA has helped me to grow in my current position as the CFO for a large trade association and has introduced me to so many great CPAs that I would never have had the opportunity to work with without my involvement at the VSCPA.”

Becoming a volunteer has helped Valentine in her day job, too.

“By volunteering with the VSCPA and other organizations, I have had to become more efficient at managing my time, which is a skill we can all continually improve upon,” she said. “My volunteer work has also helped me to improve my communication skills, and has given me the ability to work in teams with fellow professionals with diverse and varying backgrounds. But most of all, I think my volunteer work has helped to build my confidence and to not be afraid to try new things by taking on new opportunities and challenges. The roles I have had with the VSCPA have helped me to improve all of these skills, which has led to my becoming a more efficient, productive CFO.”

Going into the nonprofit world after “divorcing her job” helped Valentine refocus on her family life. She has two children, Sara (15) and Ben (13) and enjoys taking them to the beach, on camping trips and to Washington Nationals games.

“My kids keep me sane and are my reality check in life,” she said.

Even that sanity check hasn’t stopped her from scratching the volunteer itch. In addition to her work with her church, she serves as the treasurer for Ben’s middle school.

“I am always volunteering my time because I love it,” she said. “The word ‘no’ is not part of my vocabulary.”

Friday, November 2, 2012

Monday, October 29, 2012

Tuesday, October 23, 2012

Guest Blogger: Benefit Corporations in Virginia: What's the Fuss (or Is There Any)?

By Carter Scott

Attorney, DurretteCrump, PLC

On July 1, 2011 Virginia became one of only four states (there are now seven) to authorize the creation of a “Benefit Corporation”, so named because it authorizes the officers and directors to create a public benefit to society as a whole, in addition to generating profit for its stockholders.

The new law applies only to Virginia corporations, so other forms of business, such as limited liability companies and partnerships, must first convert to corporate form in order to make the election. A similar law applicable to limited liability companies was introduced, but not adopted, in the 2012 legislative session.

The most likely methods of doing so are (i) by a newly formed corporation in its original Articles of Incorporation; or (ii) by an existing corporation filing Articles of Amendment. Both methods require the unanimous approval of stockholders.

Traditionally, the sole objective of a for-profit corporation has been to maximize stockholder return, and indeed the company’s directors and officers are subject to legal action for failing to do so. As a Benefit Corporation, the company’s management has added protection from stockholder lawsuits.

On the other hand, suit may be brought by or in the name of the Benefit Corporation to enforce compliance with the public benefit designated in the Articles, but directors are protected against personal liability and officers are given broad discretion in satisfying the goal.

The company must prepare an annual report to its stockholders and publish the report on its website, if any, to describe its compliance with the public benefit selected, all of which must be measured by an independent third party standard.

As long as certain business support, whether financial or intellectual, is dedicated annually to the designated public benefit, the decision is up to the company. The support may be for charity, the environment, religious or educational institutions, or a myriad of other causes, many of which are set out in the statutes.

While it is obviously too early to tell how this new “social enterprise” model will be received by Virginia business organizations (there are currently less than 20 on file at the State Corporation Commission), published reports by Maryland companies that have adopted that state’s version of the law since its adoption in 2010, suggest that it has created a competitive advantage with potential customers and employees who desire to do business with socially responsible business entities.

Finally, there are around 475 business entities around the country that have been certified as socially conscious by a Pennsylvania non-profit organization, known as B Lab (not connected to the legal form of “Benefit Corporation”), which further supports a trend of public acceptance, and indeed demand, for more public spirited commercial enterprises. Recent articles in the business press generally use the terms interchangeably.

Friday, October 19, 2012

Monday, October 15, 2012

What Makes a Great Boss?

That's the question Matthew Yglesias asks in a new Slate article. The impetus for the question is a working paper from Stanford University and University of Utah researchers called "The Value of Bosses" detailing research into supervisors at an unnamed company.

The researchers reached several conclusions, the most interesting of which is that much of the value of a good supervisor persists even after a worker switches bosses — that is, that a supervisor's greatest value comes from teaching effective work methods.

The paper also argues that pairing the best workers with the best supervisors, rather than having the best bosses mentor weaker workers, leads to increased productivity. Yglesias' article is a good entry point into a study that could have major implications for workplaces that implement its findings.

What makes a great boss to you? What did your best supervisors bring to the table?

Friday, October 12, 2012

Thursday, October 11, 2012

Financial Fitness for the Very Rich: ‘Broke’

Forgive this blogger for the lateness of this review, but CPAs with an interest in financial literacy, financial planning and/or sports should set their DVRs for a rerun of the second-season premiere of the “30 for 30” film series, “Broke.” Directed by Billy Corben (who also directed the University of Miami football documentary “The U” in the first season of “30 for 30”), the film focuses on the alarming numbers of professional athletes who go broke after their playing careers are done.

A 2009 Sports Illustrated article, “How (and Why) Athletes Go Broke,” goes into detail on, well, how and why athletes go broke. One of the athlete workshops mentioned in that article is shown in the movie, and workshop leader Ed Butowsky plays a prominent role.

For those sports fans out there looking for some nostalgia, among the players interviewed are:

Former NFL players Andre Rison, Bernie Kosar, Dante Wesley, Keith McCants and Leon Searcy
Former NBA players Jamal Mashburn (who, it should be noted, has been remarkably successful as an entrepreneur post-retirement) and Antoine Walker
Former MLB players Curt Schilling (whose video-game company, 38 Studios, recently filed for bankruptcy), Cliff Floyd and Homer Bush (another post-retirement success story)

Another strong presence is former NFL player and coach Herm Edwards, who runs league workshops on financial literacy. The criticisms presented in the AV Club review of the movie are valid — Corben might have done better to narrow his focus onto fewer subjects — but overall, it’s a fascinating look at how even multimillionaires can lose it all.

"Broke" next airs on Saturday, Oct. 13, at 6:30 p.m. on ESPN Classic.

Monday, October 8, 2012

Friday, September 28, 2012

Thursday, September 27, 2012

Make Your Voice Heard on VBOA Fee Proposal

In a week and a half, the Virginia Board of Accountancy (VBOA) will begin accepting comments during the final comment period for its updated fee proposal. On Oct. 8, the proposal will be published in the Virginia Register of Regulations, and the comment period will run from then until Nov. 7. Click here to learn how you can comment.

The fee package is on schedule to take effect Jan. 1, 2013. Click here for more details on the changes or click here to read an interview with VBOA Executive Director Wade Jewell about the reasoning behind some of the changes.

Monday, September 24, 2012

Thanks for Giving Back on CPA Day of Service!

The fourth annual CPA Day of Service was a smashing success, and it's all thanks to volunteers like you! CPAs across Virginia took a day to give back to their communities at the end of Virginia CPA Week. It's just another way CPAs help the communities where they live and work.

Here are some pictures from CPA Day of Service! We took some of them ourselves, and some have been emailed to us by members and firms who answered the call and volunteered. If you volunteered on CPA Day of Service and don't see yourself represented here, email your pictures to Tracey Zink or Chip Knighton at the VSCPA!

First up, we have volunteers from Kositzka, Wicks & Company, who cleaned up outside areas at the Carpenter's Shelter in Alexandria:

Volunteers from Watkins Meegan prepared bagged meals at the Embry Food Shelter in Reston:

The Richmond office of BDO, including Kevin Murphy, volunteered with the Comfort Zone Camp:

Volunteers from Valderas & Fishel cleaned up trails for the James River Park System in Richmond:

Volunteers from Harris, Hardy, Johnstone & Co. prepared meals at the Central Virginia Food Bank:

The Richmond chapter of the American Society of Women Accountants (ASWA) did a variety of tasks, including cleaning and ironing donated clothes, at the Sophie House in Glen Allen:

Members of the VSCPA's Thomas Jefferson chapter put together packets for child care providers in Charlottesville:

And finally, VSCPA staff got in on the act, too, holding a book drive for the Children's Museum of Richmond. Here, staff members (clockwise from top left) Rocio Gibbs, Jane Hayes, Jenny Hansen, Laura Cobb, Talley King and Tracey Zink pose with the haul:

Thanks to everyone who took the time to volunteer for CPA Day of Service. We hope to see you again next September!

Monday, September 17, 2012

Happy Virginia CPA Week From the VSCPA!

Virginia CPA Week is here! Gov. Bob McDonnell has issued a proclamation (PDF) recognizing Sept. 16–22, 2012, as Virginia Certified Public Accountants Week.

All week long, the VSCPA will be posting videos of your VSCPA colleagues discussing how they got their start in the accounting profession and what they like the most about their jobs. First up is Kristin White, CPA, of Wells, Coleman & Co.:

To help raise awareness of how CPAs protect Virginia taxpayers, the VSCPA is holding free, CPA-led money management workshops for the public, as well as a sold-out Nonprofit Finance Seminar for non-finance nonprofit executives on Wednesday. And on Friday, CPAs across the state will come together to serve their communities on CPA Day of Service.

Visit VSCPA.com all week long to learn about how your fellow CPAs got started in the profession and what keeps them coming back to serve Virginia taxpayers.

Friday, September 14, 2012

Friday, September 7, 2012

Thursday, September 6, 2012

On September 25 the spotlight will be on Ernie Almonte!

The Virginia Society of CPAs (VSCPA) invites you to take part in an exclusive meet and greet with special guest Ernie Almonte, CPA, MST, CFF, CITP, CGFM on Tuesday, September 25 at the Richmond CPA Center.

This is a FREE special event for VSCPA members and industry friends to meet Almonte - former chair of the American Institute of CPAs, renowned international speaker and, most recently, Rhode Island's gubernatorial candidate. We are so excited to host Almonte at the Richmond CPA Center and for him to meet our members. This is one meet and greet you won't want to miss!

EVENT DETAILS

Date: Tuesday, September 25, 2012
Time: 5:30 - 6:30 p.m.
Location: The Richmond CPA Center, 4309 Cox Road, Glen Allen VA, 23060
Cost: Courtesy of the VSCPA, there is NO COST for you and your guests to attend.

Click here to RSVP now.

Please plan to join us on September 25 with Almonte as he speaks to leadership in the CPA profession and the role of CPAs running for public office and answers your questions one-on-one.

Please RSVP no later than Tuesday, September 21 to attend.

We look forward to seeing you at this exclusive spotlight session!

Wednesday, September 5, 2012

IRS Form 14157: Anonymity Issues?

U.S. Internal Revenue Service (IRS) Form 14157 (PDF), Complaint: Tax Return Preparer, allows taxpayers to report a tax return preparer or tax prep firm for illegal behavior. The form can be submitted anonymously, which critics say increases the potential for abuse. (The form does include an area where taxpayers can include contact information to allow the IRS to follow up with them, but the field is not required.)

Tax preparer Trish McIntire, an Enrolled Agent (EA), raises the following questions:

How can a preparer respond to an anonymous complaint?
Will the IRS initiate an investigation whenever a Form 14157 is filed, or will it take more than one complaint?
When will a preparer be notified that a complaint has been filed against him or her?
If enough Forms 14157 are filed, will the IRS assume there is a real problem?

It's worth noting that Form 14157 has its uses for tax preparers as well — it's the form preparers can use to report that someone else is using their Preparer Tax Identification Number (PTIN) to prepare returns. We should also point out that the VSCPA allows anonymous complaints against CPAs, as do the Virginia Board of Accountancy (VBOA) and the American Institute of CPAs (AICPA). Read the VSCPA's article on the form to learn more about which forms are made public.

What do you think? Does the usefulness of Form 14157 trump the potential for abuse? What other potential problems could the form create?

Friday, August 31, 2012

New IRS Website: Is It an Improvement?

The U.S. Internal Revenue Service (IRS) unveiled its new website Thursday after offering a sneak preview last week. The IRS says technological upgrades will help the agency deliver services at a faster pace.

The IRS redesigned the website after analyzing usage of the previous site, including the most visited pages and most used tools. The main nagivation was modified to reflect demand for critical information about filing, payments, refunds, credits and forms.

The new site also boasts expanded language options, offering content in Spanish, Chinese, Korean, Vietnamese and Russian.

The IRS plans to add new search capabilities to better tag and target content for more meaningful search results. The agency will also feature related forms and publications in a separate section in search results.

Another change to the website is the new promotional banner, which will put important information, updates and tools front and center.

What do you think? Is the new website a step up? Will search improvements help you and your clients find information more quickly?

Monday, August 27, 2012

Wednesday, August 22, 2012

Are Delinquent Taxes Enough to Deny a Business License?

Delinquent business taxes have created a stir in Norfolk, where the city's treasurer has demanded that the commissioner of revenue stop issuing licenses to businesses that are behind on municipal taxes.

According to The (Norfolk) Virginian-Pilot, Treasurer Thomas Moss, Jr., said that businesses with delinquent business taxes are operating illegally and accused Commissioner of Revenue Sharon McDonald of not enforcing city and state codes. Moss added that his office would apply business license payments from such businesses to any delinquent taxes owed, rather than to the license renewal.

McDonald declined comment and called the issue "another Virginian-Pilot manufactured 'he said/she said' story designed to create the appearance of conflict when, in fact, none exists."

Norfolk's City Council passed an ordinance in September that said the commissioner of revenue should not issue business licenses until it receives verification from the treasurer's office that the applicant is current on all taxes. The other cities in South Hampton Roads (Chesapeake, Portsmouth, Suffolk and Virginia Beach) all have similar ordinances, as does the Virginia state code.

What do you think? Is this an appropriate use of government power?

Friday, August 17, 2012

Monday, August 13, 2012

A Startup Dating Back to 1878?

“Man, U” have got to be kidding me!

When you think of startup companies, English soccer juggernaut Manchester United (Man U) probably isn’t the first organization that comes to mind. But the club is weighing the possibility of taking advantage of a U.S. law aimed at helping small companies gain access to capital.

Man U went public on the New York Stock Exchange on Aug. 10 and said in its IPO filing that it may take advantage of relaxed reporting and auditing requirements for so-called “emerging growth companies” enacted as part of the Jumpstart Our Business Startups Act (JOBS Act), which President Barack Obama signed into law in April. The bill provides exemptions for companies with less than $1 billion in annual revenue, a requirement Man U met during its last fiscal year.

Should Man U decide to take advantage of the relaxed requirements, the club would have to provide just two years of audited financial statements and two years of related disclosures and would be exempt from the auditor attestation requirement in its assessment of internal control over financial reporting. The club said in its filing that it would opt out of another provision of the JOBS Act that would have granted it an extension to comply with new or revised accounting standards.

Forbes ranks Man U as the world’s most valuable sports franchise at $2.23 billion, and the club’s website bills it as “the world’s most popular football team.” The club was founded in 1878 and has won a record 19 English league titles.

The VSCPA commented on the JOBS Act when it was under debate in Congress, expressing concern with exemptions included in the bill for certain companies and the effect those exemptions could have on public company financial reporting and the independent standard setting process for accounting standards.

(Also in the interest of full disclosure: your humble blogger is an Arsenal supporter. Expect much more vitriol on this topic if Robin van Persie winds up at Man U.)

Friday, August 10, 2012

Thursday, August 9, 2012

VSCPA Members Appointed to Virginia Board of Accountancy

Virginia Gov. Bob McDonnell recently appointed two VSCPA members to the Virginia Board of Accountancy (VBOA) — Stephanie Saunders, CPA, a small practitioner from Virginia Beach, and Marc Moyers, CPA, a KPMG partner from Richmond. These appointments are another win for the VBOA, Virginia CPAs and the citizens of the Commonwealth. Stephanie and Marc bring a wealth of experience and service to the profession and the public it serves, and they will bring a fair and open-minded approach to regulating the CPA profession in Virginia.

For many years, the VSCPA has enjoyed a positive, cooperative relationship with the VBOA. While we always recognize the differences in our purposes and roles, we also recognize the need to understand each other, to sit down and discuss issues facing the profession, and to find common initiatives to promote together.

One way we collaborate is through the CPA Inauguration, an event we hold twice a year to recognize and celebrate new CPAs entering the profession. Both organizations understand the importance of reaching out to new CPAs to help them understand the profession they are entering and the rewards and responsibilities the profession will bring.

The VSCPA and the VBOA also work together to communicate important professional information to students and CPAs across the state. We have jointly presented on professional and licensure topics to accounting classes, and we frequently present sessions for CPAs on recent changes and information regarding their license.

Finally, the VSCPA serves as a vehicle for CPAs’ voices to be heard as the VBOA discusses and debates new rules and regulations — members and staff attend all VBOA meetings, and the VBOA is always open to hearing the VSCPA’s thoughts, ideas and viewpoints.

We look forward to continuing a great working relationship with the newest VBOA members, and, as always, we will continue to keep members informed of all activities related to the VBOA and CPA licensure requirements in Virginia.

Friday, August 3, 2012

Thursday, August 2, 2012

Go for the Gold — and Pay the Tax Man

With the London Olympics in full swing, many Americans are glued to their televisions, cheering on the gold medal-winning likes of Michael Phelps, Missy Franklin and Virginia Beach's own Gabby Douglas. But do they realize the tax implications of those athletes' Olympic glory?

Americans for Tax Reform (ATR) appears to be the original source for a story that's gone viral in Olympic- and tax-related media. The advocacy group calculated the tax bills for the honorariums medalists receive ($25,000 for gold, $15,000 for silver and $10,000 for bronze). The ATR tabulated the tax hits on those prizes as $8,986 for gold, $5,385 for silver and $3,500 for bronze.

Weekly Standard blogger Jonathan V. Last ran the numbers for Franklin, a high school student from California who won swimming gold in the 4x200-meter freestyle relay and the 100-meter backstroke and bronze in the 4x100-meter freestyle relay. (She's got three events left on her schedule). Last calculated that Franklin already owes nearly $14,000 in taxes for her medals, and she could hit the $30,000 mark with more golds.

There's a way for Franklin to get around the tax bill, and she might have to do it to keep competing as an amateur. If she follows through on her plan to compete in college, she'll have to decline the prize money in order to maintain her eligibility.

The ATR also noted that there's a more modest tax on the medals themselves based on commodity prices. The tax hit is $236 for a gold medal, $135 for silver and $2 for bronze. (Those numbers are included in the figures provided by the ATR.)

Sen. Marco Rubio (R-Fla.) proposed a bill on Wednesday that would exempt athletes from the federal tax.

Friday, July 27, 2012

Thursday, July 26, 2012

Guest Blogger: 10 Ways Cash Flow Forecasts Go Wrong

By Mary Ellen Biery
Research Specialist, Sageworks, Inc.

Experts say cash flow forecasts can be tripped up by several common items that business owners and financial managers might overlook. Generally, these can be blamed on two factors: omission or over-optimism. We’ll discuss over-optimism later, but let’s start with common items left out of cash flow forecasts that can throw off your accuracy.

Omissions abound

1. Year-to-year operational changes. A good forecast starts with what happened last year, but then you must consider what’s changed, according to Glenn L. Friedman, a CPA and managing partner of New York accounting firm Metis Group CPAs LLC. Maybe it’s pricing or promotional activity. “Maybe you’re doing an ad campaign you didn’t do last year, and you will believe it will generate X amount of revenue,” he says. Or maybe you’re planning an earlier ad campaign this year, so you will need to adjust the expected timing of revenue associated with that. In the case of service-oriented businesses, consider whether you plan to do some work earlier or later this year, Friedman adds. This is also the time to take a look at your client list and adjust your cash forecast based on the loss of a big client or the addition of several new ones.

2. Non-expense payments. Friedman says people often think about cash flow using their profit and loss statement. “They forget that there are cash requirements in balance sheet items as well,” he says. Repayment of debt is one example.

3. Infrequent items. Other common omissions include estimated tax payments for employees, monthly loan payments, periodic contributions to retirement plans or savings, and occasional expenses tied to unexpected surprises, such as equipment repairs or automobile maintenance.

4. Seasonality. Most businesses have busy and slow seasons, so taking that into account as you estimate cash outlays for inventory or staffing can help avoid a cash crunch. How holidays fall on the calendar can affect a retailer’s year. If you sell ice-removal products and last year was an unusually icy winter, you may need to plan for a more normal business pattern this year.

5. Commodities. Fluctuations in commodity pricing or currencies can be difficult to price ahead of time, but it’s important to take these trends into consideration when estimating your cash flow.

6. Capital expenses. Otis says forecasts can be spoiled if you omit property, plant or equipment investments for repairs or replacements or when something has become technologically obsolete.

7. Payroll. Michael Cole, audit principal at Southern California CPA firm Holthouse Carlin & Van Trigt LLP, says payroll can often cause big mistakes in cash flow forecasts. “If companies pay people on a monthly payroll or weekly payroll, then every seven years, they’re going to have an extra pay period,” he says. If they forget to plan for that, they could come up short for payroll, he adds. Similarly, cash outflows associated with annual or holiday bonuses or with quarterly estimated tax payments for your employees can be substantial enough to cause problems.

Finally, don’t forget that staff turnover creates something called “productivity churn,” which has an impact on cash flow. Michael Voie, a CPA and partner with Stallcup & Voie LLP in San Francisco, suggests that if you lose an employee, determine how that person affected your business relative to his or her replacement. And it’s not just salary and benefit costs. “Are they a production person, and were they putting in 250 units a day and this [new] person is putting in 100? What if sales come in less?” he says. You need to think through the variance that will occur because of those changes.

Optimism confounds forecasts

The second general culprit of errors in cash flow forecasts – over-optimism – is pervasive but understandable, experts say. “Business people by nature are optimistic people, and that hurts them when they’re making cash flow projections,” says Lauren Prosser, manager of advisory services at Sageworks.

Here are several ways that too much optimism can confound your cash flow forecasts:

8. Sales and payments. By far, the most common issue cited by financial experts is when you’re too optimistic about when sales will occur and too optimistic about how soon customers will pay. “Don’t forget that a customer may say, ‘The check is in the mail,’ but you can’t spend those funds until the check has been deposited in your bank and cleared successfully,” says, David Douglass, a partner with Atlanta-based professional services firm Tatum.

9. “Averages.” In quickly changing times, averages used in your cash flow projections might [become] inaccurate, Douglass says. “For example, if your customers generally pay in 30 days after being invoiced and then suddenly delay payment for an additional 15 days, the extra 15 days often means you will have to cover another payroll,” he says. “There’s hardly anything worse than not having enough cash to cover payroll.

10. Gaps tied to growth. Growing businesses often run into cash troubles when they incur new costs associated with growing (e.g., new staff, logistics) but they inaccurately estimate when the cash benefits of those investments will start coming in, says. Otis echoes that concern. "In the end, what we find very often is people aren’t getting nearly as much cash flow from their growth as they expect there to be, because they need the money to pour back into the business.”

Mary Ellen Biery is a research specialist at Sageworks, a financial information company and maker of the ProfitCents suite of financial analysis applications. She is a veteran financial reporter whose works have appeared in The Wall Street Journal and on Dow Jones Newswires, CNN.com, MarketWatch.com, CNBC.com, and other sites. She received her undergraduate degree from Wake Forest University, where she graduated cum laude, and her master’s degree from the University of North Carolina at Chapel Hill.