AICPA awards two Oustanding CPA in Government Awards

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The American Association of CPAs has awarded Kurt Kawafuchi (Hawaii) and Robert Scott (Texas) its 2008 CPAs in Government awards. Mr. Kawafuchi has streamlined the tax process and simultaneously improved taxpayer assistance, sped up refunds and improved collections on unpaid taxes. Scott researched the Texas Municipal Retirement System and found that previous actuarial assumptions were unrealistic. As a result, employer contributions have been increased and the system is considered much more viable.

Congratulations to both winners; may many other CPAs in government find other ways to protect taxpayer dollars while providing better services to the citizens.

Disappearing Act

I anticipate one (MAYBE two) posts by Thursday morning, then posting will be light and irregular until about August 8. Among other things, my wife and I plan to travel to the Midwest to see siblings (and hopefully a certain Iowa-based tax blogger) during this period. Stay cool while I'm gone!!

"Back to School" Sales Tax Holidays Return in August

At least thirteen states plus the District of Columbia will waive sales taxes on selected goods (usually school supplies or related items) this August, with most choosing a specific weekend and all but Connecticut and Texas emphasizing the first weekend in August. Other states presently planning the holiday include Alabama, Georgia, Iowa, Louisiana, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee and Virginia. Vermont already had their holiday in mid-July, Maryland will defer to next year and past "holidayers" Florida and Massachusetts do not have a holiday scheduled at this time.

Sales tax holidays are clearly driven by social and/or political considerations rather than coherent tax policy. That said, the politican who cancels a "Back to School" tax holiday takes a big risk in an election year.

KPMG Foundation Awards 41 Scholarships to Doctoral Students of Color

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The KPMG Foundation, charitable arm of KPMG CPAs, has awarded 41 scholarships of $10,000 each to minority doctoral students. The KPMG Foundation program has been ongoing for over a decade. 10 new students and 31 continuing students received the awards. Two new students each will go to Florida Atlantic and Harvard with the other new students going to Arkansas, Penn State, Rutgers, South Florida, Tennessee and Texas Tech.

Congratulations to each of the award winners, including the ongoing students. Also, applause to KPMG for providing the wherewithal to increase racial diversity in accounting faculty throughout the country.

Another Tax Season, Another Set of Tax Scams

The Internal Revenue Service recently announced that a variety of new scams involving everything from computer abuse to identity theft had surfaced during May and June. These include a tax refund scam (key: the IRS does NOT send unsolicited e-mail), economic stimulus scam (a 2007 Form 1040 or short-form equivalent triggers eligibility for the stimulus, not an e-mail "IRS form"), a substitute 1040 fax scam (again, the IRS does NOT send unsolicited faxes), company report (a phony "IRS company report" becomes the launching point for malware) and Tax Court scams (a taxpayer involved in a suit is asked to download files which end up being malware). A recurring theme--be wary of unsolicited e-mails purporting to come from U.S. Government sources--very rarely if ever are such documents legitimate.

Sigh--one wonders why people work so hard to come up with scams when they could be earning money legitimately. The flip side--if the government did not overspend by as much as they do and if some IRS officals in the past had not abused their authority (in fairness here, the IRS seems to be doing somewhat better since the "Taxpayers' Bills of Rights"), these scams would have less chance of success.

House Financial Services Committee Permits IFRS Use--At Least, for Foreign Companies

The support of Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke for convergence between IFRS (International GAAP) and SFAS (US GAAP) was critical during a House Financial Services Committee meeting regarding SEC funding. Committee Chair Michael Capuano (D-MA) was initially skeptical of convergence and was considering an amendment forbidding the Securities and Exchange Commission from allowing an international body from establishing accounting standards for companies in U.S. financial markets. After hearing the support from Bernanke and Paulson, Capuano dropped the amendment and the original motion to strengthen SEC enforcement procedures passed by voice vote by the Financial Services Committee.

All eyes await the initial IFRS-based financials to see whether such statements will meet the needs of stakeholders (perhaps even improving the reporting process). One side note--at a time when financial reporting appears to be heading in a principles-based direction (IFRS is supposed to be more principles-based than present U.S. GAAP), it seems strange that some state boards of accounting are going in the opposite direction for continuing ethics education and pushing rules-based approaches such as state-specific requirements for the new ethics CPE requirements.

Fair Value Roundtable Tomorrow

The Securities and Exchange Commission plans a two-session roundtable on fair value accounting and its impact on businesses and users of financial statements. The first session will emphasize fair value from the perspective of large publicly-traded financial institutions and their stakeholders while the second session will look at these issues from the perspective of smaller public companies and their stakeholders. An all-star panel of top business executives, financial practitioners such as CPA firms, professional organization leaders, government officals and academics will be on the panels with representives of FASB, IASB and PCOAB attending as observers.

Two different strains could make the work of these roundtables challenging: on the one hand, accountants probably are already feeling overwhelmed by additional responsibilities created by XBRL and IFRS convergence; on the other hand, the recent run-up in petroleum and food prices probably places historical cost in its weakest position for theoretical soundness in the last quarter-century. It may be time to dust off inflation accounting treatises from 30 years ago, at least in regard to note disclosure.

Carnival of Taxes 38

Kay Bell's now-monthly Carnival of Taxes (Lingering Tax Fireworks)came out today; my "Noncorporate Business Extension Period Sliced by IRS" from last week was included. Other interesting posts included: "How to Hire a Good Tax Professional" by Free Money Finance, "Four Ways You're Unknowingly Cheating on Your Taxes" by Blueprint for Financial Prosperity, "A Very Interesting Question" by the Wandering Tax Pro, "What about the Alternative Minimum Tax (AMT) by Baglady and "Moving to Canada" by Tax and Financial Planning Blog (a possible addition to the bloglist in the near future).

O'Reilly Factor Gloat Alert: GE may be in a VAT of Trouble in Brazil

(David Johnston of Tax Notes via TaxProf via Instapundit) The diligence of new Brazilian manager Valter Moriera for General Electric has uncovered potential (and emphasis on potential, note one of the comments defending GE) value added tax fraud by recording sales in rural areas of Brazil (which have low or no VATs) instead of urban areas (with VATs approaching 20%). Apparently, the issue had been known since 1999, but no action was taken until Moriera brought the topic up in 2005.

Too early to tell how this will pan out; the most likely consequence to GE is in Brazil, not the U.S. Will be interesting to see the comparative Fox vs. NBC (a holding of GE) news coverage; Fox has been harsh on NBC/GE in recent months.

Fireworks and 40,000

Hope you are having a wonderful Fourth of July. Thanks to our military forces for all their sacrifices and hope that we can remember the purpose of independence is more freedom than security.

Even bigger thank yous to my readers with the 40,000 hit mark likely to come next week. I appreciate your viewership and hope that I can produce posts worth reading.

[Paul] Hogan's Heroes - Richard Hatch and Wesley Snipes?

"Crocodile Dundee" star Paul Hogan has challenged the Australian tax authorizes to "come and get me" upon reports that he is being investigated for potential tax evasion. Hogan criticized the Internal Revenue Service for attempting to get his bank records, something which he claims that the Aussie tax man cannot legally obtain. He stated that he might be arrested on arriving in Australia to film a movie in September, but joking promised to carry a gun.

Glad he got the gun joke out of the way before arriving at the airport (Homeland Security does NOT take well to such jokes) but seriously, is Mr. Hogan in early stages of dementia? Challenging a tax authority may look macho, but it is about as dangerous as playing Russian roulette with four bullets.

Noncorporate Business Extension Period Sliced by IRS

The Internal Revenue Service announced that the automatic extension for noncorporate, nonindividual tax returns such as Partnership (1065), Trust and Estate (1041) and Partnership Withholding Tax (8814) would be shortened to five months. In most cases, this means that the return would be due on September 15 of each year. The change applies to returns due after the end of the 2008 calendar year with a fiscal year ending September 30, 2008 or later. IRS Commissioner Doug Shulman emphasized the needs of recipients of partnership, trust and estate income to receive their K-1s in time for the October 15 extension deadline for most indivdiuals.

I guess I have mixed emotions about this decision. Shulman's advantages to trust, etc. income recipients are legitimate; at the same time, this could become problematic for preparers who have balky partnership or estate clients. Furthermore, the change to September 15 seems to be of limited administrative advantage to the IRS, since third quarter estimated payments traditionally come due on that date. Finally, trust, estate and partnerships are placed at a disadvantage compared to corporate or individual taxpayers, having only a five-month extension opportunity versus six months. While the IRS can make a case for this ruling, small tax practitioners and bank trust departments cannot be faulted if they are unhappy with the change.