Friday, November 30, 2007

Remembering Past Blogs of Distinction--This Time, the Taxmen (and Taxwomen) Cometh

In the final retrospective before the 2007 "Twelve Blogs" begin (actually a baker's dozen since a 2006 accounting awardee has gone dormant), tax is the topic of interest. From the 2005 class, Villanova law professor James Maule continues Mauled Again. In a 11/28 post, James looks at the new National Research Program compliance audit and asserts that tax simplification by Congress would mitigate both image and collection problems for the IRS. Joe Kristan at Roth CPA Updates continues apace as well. A recent Roth entry (11/27) found that IRS intent for a 90-day to be issued on the 22nd does not defeat an actual stated date of the 24th. In Tax Prof, Paul Caron looked at an initative of his to encourage active student learning. Finally, Taxable Talk's Russ Fox posted (11/28) about a 35-count charge of tax fraud against a Pennsylvania attorney.

2006 awardees displayed similar admirable activity and acumen. Joel Schoenmeyer writes about Larry King and life insurance (11/29) in Death and Taxes. Kay Bell
(11/28) had a sobering story about credit cards and younger kids and the importance on setting limits on the commercial and material facets of Christmas in Don't Mess with Taxes (watch for the Carnival of Taxes next Monday). Gina answers early November questions about SEP-IRAs, Five Year Capital Gains Rates and Unimproved Land in Gina's Tax Articles (previously Gina's Tax Page). Finally, if you can get past his great cartoons, the Tax Guru (aka Kerry Kerstetter) warns noncorporate entities
(11/29) to beware state tax authorities and the IRS regarding payroll taxes and the contentious independent contractor/employee issue.

Congratulations to each of these bloggers for their past and present contributions. May your blogs continue more than 1040 days into the future!

Thursday, November 29, 2007

Remembering Past Blogs of Distinction--Personal Finance This Time

Time to check on the 2005 and 2006 awardees of the "Twelve Blogs of Christmas." Blueprint for Financial Prosperity had a humorous recent post (11/28) on the cost of the original "12 Days of Christmas." Consumerism Commentary just posted (11/29) a recollection by well-known humorist Ben Stein of the "Three Biggest Retirement Mistakes." Financial Rounds has a challenging, but potentially valuable post about an inverse relationship between revenue accruals and stock prices (11/24). Free Money Finance had a thought-provoking post titled "Five Reasons to Turn Down a Job Offer." Dawn at Frugal for Life just changed her URL (web address)--the new address has a humorous post, "New Words for the Frugal," about new made-up words related to spending. Mighty Bargain Hunter recently posted on "Invest in Yourself by Learning Things of Value." My Money Forest looks for new income streams in "Ebooks Generate Cash (11/18)." Finally, pfblog addresses an unexpected earnings opportunity (pursue at your own risk) with (11/6) "How to get 8% Annual Return at No Risk."

Congratulations to all the above on past and present contributions; it is good to see that all these blogs remain active and healthy.

U. S. Treasury Raises Concern about Three International Tax Issues

In a recent report, the U. S. Treasury notified Congress that it was looking into three issues of concern involving international activity and related parties: "earnings-stripping" (paying deductible interest to related parties living in low or no-tax countries (sometimes referred to as "tax havens"); transfer-pricing (shifting income to related parties in tax havens) and misuse of tax treaties (one example: excessive reductions in taxes withheld). The key in all these appears to be related parties--could a stricter version of Section 318 be on the horizon or will the IRS simply target greater enforcement efforts. Once again, the "tax gap" beckons--this time, in the international arena.

Tuesday, November 27, 2007

Remembering Past Blogs of Distinction--Accounting, Auditing, etc.

As was done last year, I start the "Twelve Blogs of Christmas" by remembering past awardees. 2005 awardees which are still active include the Analyst's Accounting Observer and Found in the Footnotes. While some content for each blog is no longer freely available, even the abridged versions of each blog is well worth the while. A recent AAO entry (11/12) addressed the possibilities and pitfalls of using IFRS to GAAP reconciliation while Footnoted (11/27) addressed lawsuits by consumers which complained that gasoline was being heated, which reduced the effective amount delivered. Brian Tankersley's "CPA Firm Technology Blog" had a entry about hosted document management as its most recent post (10/30, a little more regular posting, please). The original fourth 2005 awardee was Vanilla Accounting; unfortunately, that blog has gone dormant. In its place is BSG Trendlines, Rick Telberg had a semi-recent Halloween post about the history of accounting.

2006 awardees included Big 4 Guy, an anonymous blog about auditing, financial accounting and the impact of Sarbanes-Oxley. A semi-recent post (9/11) dealt with the CISM exam--presumably an exam for accounting system professionals. Tracy Coenen's Fraud Files recently (11/26) did a good job of distinguishing who should or should not blog. Finally, Neil McIntyre (11/19) wrote a useful post on the importance of materiality in accounting and auditing.

Congratulations to the past and present contributions of these seven bloggers; though it is a little unsettling that two have at least partially restricted content and three have done little posting so far in November. Next, 2005 and 2006 awardees in personal finance will be reviewed.

Tax Software Producers Face Lawsuit

Major tax software makers such as H & R Block (TaxCut) and Intuit (Turbo Tax) face a potential class-action suit for excessive e-filing fees. Philadelphia attorney Thomas Marrone and client Stacie Byers argue that the proprietary software is too expensive for working-class and middle-income taxpayers. Tim Hugo, who represents the Free File Alliance, a consortium of software manufacturers, argues that the software agreement to provide free filing for taxpayers earning less than $52,000 per year saves the government nearly half a billion dollars per year and argues that the government should respond if it is believed that taxpayers need broader access to free e-filing. A separate issue: do low-income taxpayers have sufficient access to computers to use the free software which the consortium presumably has available?

Plenty to fault both sides on here since each seems to be overly fixated on entitlement mentality. Nevertheless, the key question becomes--how committed is the IRS and Congress to semi-universal e-filing? If the IRS truly wants the majority of individual taxpayers to use e-filing, Congress probably does have to expand eligibility for e-filing, perhaps to AGI of $75,000-80,000 per year. Otherwise, taxpayers generally should use mail filing and be a little more patient with receiving their refund. Better yet, if possible: reset exemptions claimed to where the taxpayer only receives a small refund; there are much better savings plans than letting the IRS borrow withheld taxes for NO interest.

Thursday, November 22, 2007

Thanksgiving Adjustments

Congratulations to new additions Get Rich Slowly, No Credit Needed and Wisdom from Wenchypoo's Mental Wastebasket. Unfortunately, I also had to drop several blogs due to infrequent posting or links which had changed or deteriorated (I hope no one has recently tried to go to "Intaxicated"--apparently there is a virus at that site now).

GASB: Government Endowment Real Estate to be Valued at Market

GASB Statement 52 will require governments with fiscal years starting June 2008 or later to report endowment real estate, such as buildings, farm land, etc. at fair market value. Gains and losses must be determined and reported and reported as investment income and the government must disclose how it arrived at fair value. The rationale given for the change from historical cost is consistency with pension plan accounting.

To me, this feels like one of those accounting standards which may produce a better balance sheet at the cost of a less-informative operating statement and one where timeliness outranks objectivity. While I can see GASB's rationale, this seems like "fixing something that wasn't broke."

Tuesday, November 20, 2007

2007 Nominees for the "Twelve Blogs of Christmas"

For the third year, Tick Marks will announce the "Twelve Blogs of Christmas" during December. Previous awardees are not eligible since the "Twelve Blogs" becomes in effect of "Hall of Fame" of active blogs in accounting, personal finance and tax (note: Tick Marks is not and will not be considered). Since "Benefits Blog" has effective gone inactive, there will be five accounting blogs in December (one as a substitute for the 2006 year).

Nominees in accounting: AccMan, Accounting Onion, Accounting for a Detoured Economist, The Directors and Officers Diary, FEI SOX Blog, From Greg's Head, Tech Gap, White Collar Fraud

Nominees in personal finance: All Financial Matters, Five Cent Nickel, Get Rich Slowly, My Money Blog, No Credit Needed, Wisdom from Wenchypoo's Mental Wastebasket

Nominees in tax: CPA Sense, Taxalicious, Tax Mama, Tax Info Blog (Tax Playa), Wandering Tax Pro, Wills, Trusts and Estates Prof Blog.

Congratulations to all nominees. If you believe that other blogs should be considered, please comment (through 10 pm CST November 30). (NOTE: A list of previous awardees is linked through the title above.)

Changing Times (and Executives) at HR Block

HR Block CEO and Chairman Mark Ernst has resigned in the wake of sizable losses from subprime mortgage operations. The ouster of Ernst was catalyzed by former SEC Chairman Richard Breeden, who successfully led a movement to replace HR Block directors earlier. Alan Bennett will be the interim chair as Breeden attempts to reemphasize tax activities and dispose of financial services subsidiaries.'

The moves at HR Block make sense from a business perspective and also an ethical perspective; the combination of financial services and tax preparation, particularly when tax anticipation loans become part of marketing tax services, seems to reek of conflict of interest. Congratulations to Breeden on returning the emphasis at HR Block to tax.

Wednesday, November 14, 2007

HoR Gives Tax Salute to Military on Veterans' Week

  • Kay Bell's summary and link to House Commentary

  • The House of Represenatatives passed without a "no" vote H. R. 3997, titled the Heroes Earnings Assistance and Relief Tax (HEART) Act. Among provisions included in the HEART act are: inclusion of combat pay as earned income for social security and other purposes, use of qualified revenue bonds to reduce interest rates on mortgages for veterans as well as making certain tax and pension benefits permanent. In addition, Peace Corps and Americorps volunteers, volunteer firefighters and EMTs qualified for tax benefits from the HEART Act.

    Congratulations to Charles Rangel (D-NY)and other House members for their votes. In general, the HEART Act does not fit with tax simplification; on the other hand, the Act was a fitting tribute to those that serve their country in time of need.

    Tuesday, November 13, 2007

    Little Time for News

    Between end of semester responsibilities, family visits, the "Twelve Blogs of Christmas" and an ailing 13-year-old dog; I anticipate only posting 1-2 times per week (except for "Twelve Blogs") through mid-January. Hope all my readers have a great end to 2007.

    New AICPA Audit Guidance Available

    2007 Audit and Accounting Guides are being shipped this week by the American Institute of CPAs. The primary focus of this year's guide is risk assessment as spelled out by the Auditing Standards Board. Specific industries getting attention this year include: agribusiness, construction, health care and not-for-profits. Additional guidance on personal financial statements, derivatives and hedging should be forthcoming by year-end.

    The AICPA Guides are worth perusing, especially if you are in a new CPA firm or auditing a business in a new industry.

    Saturday, November 10, 2007

    FIN 48: A Reprieve for Nonpublicly Traded Businesses

    Many smaller, nonpublicly-traded businesses have recently recieved a one-year deferral on Accounting for Uncertainty in Income Taxes (FIN 48), allowing companies with third and early fourth quarter year-ends an extra year to figure out the new provisions. One reason given for the deferral: many pass-through entities were unaware that the new standard applied to them.

    Two things to be aware of: companies with 2007 calendar year-ends do NOT get additional deferral and those who started implementing FIN 48 must continue.

    Thursday, November 08, 2007

    Taxes for Televangelists?

    Ranking Senate Finance Committee member Charles Grassley (R-IA)has written to six "media-based" ministries (Paula White Ministries, Benny Hinn Ministries, Joyce Meyer Ministries, Kenneth Copeland Ministries, Bishop Eddie Long Ministries and World Changers Church International (Creflo and Taffi Dollar)) regarding executive compensation and "perks" and certain expenditures. Grassley said that the inquiries resulted from news reports and public complaints, saying that taxpayers as well as donors have the right to make sure that expenses fell within "ordinary and necessary" guidelines. Specific items questioned included "love offering" compensation, extravagant office facilities, long-term loans and lavish gifts.

    A tricky issue this is: on the one hand, the tax-exempt status of these ministries provides opportunities for abuse and some televangelists are not popular with even fundamentalist and evangelical Christians. On the other hand, without exercise of considerable care, such investigations can become persecution of legitimate ministries.

    Monday, November 05, 2007

    The Return of "Twelve Blogs of Christmas" Coming Soon!

    For the third year, Tick Marks plans to include the "Twelve Blogs of Christmas," an informal "Hall of Fame" for accounting, personal finance and tax blogs. In the near future, nominees will be announced. Between Thanksgiving and Christmas, Tick Marks will remember past "Twelve Blogs" awardees and briefly review recent posts in these blogs, then one-by-one list this year's blogs, starting with accounting blogs and ending with tax blogs.

    Looks Like "Another Year, Another AMT Patch"

    The House Ways and Means Committee passed legislation to avoid an AMT intrusion on middle-income taxpayers and extend several small popular tax credits by a 22-13 vote today. H. R. 3996 would keep from adding AMT to 23 million new taxpayers and would extend such items as the work opportunity credit for victims of Hurricane Katrina, deduction of state and local sales taxes and tax-free charitable donations from IRAs. Also, the bill excludes from gross income mortgage debt forgiveness and extends eligibility for the child tax credit. Clint Stretch of Deloitte warns that the Senate may fail to provide funds for the patch. Finally, interim commissioner Linda Stiff warned that failure to quickly pass the patch would mean that later legislation would not get into the 2007 IRS forms, causing administrative headaches--including delays in tax refunds--similar to last year.

    Regardless of political influence, let us all hope that Congress can avoid the temptation to modify further and pass this legislation. The inconvenience to middle-income taxpayers and tax preparers of failing to do so might come back to haunt Congress later.

    Friday, November 02, 2007

    AICPA: We Like Uniformity in State Tax Withholding

    The American Institute of CPAs has thrown support behind a House bill which would create a nationwide standard for state tax withholding of nonresidents of a given state. Businesses and multistate (or larger) CPA firms would be helped greatly by a single standard for withholding. Among the complexities presently faced in state income tax preparation/compliance are: differing exemptions, reciprocity agreements with neighboring states and presumably, definitions of what constitutes income which vary at least to a small degree.

    Except at select tax conferences and large Master of Taxation programs, educational opportunities on state income tax are markedly less than for federal tax law. While I continue to be a fan of the tenth amendment to the U.S. Constitution, greater uniformity in state tax law would improve the prospects of getting more educational classes in state tax law, thus hopefully enabling a larger number of tax professionals to be able to be handle tax law for more than one, two or three states.

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