Wednesday, November 30, 2011

PCOAB Increases Membership in Standing Advisory Group

The Standing Advisory Group for the Public Companies Accounting Oversight Board has been increased in size to 42 members and terms extended to three years. Prominent men and women from accounting firms, medium and large businesses, major universities and even a labor union are among the 42 who give counsel to the five-member board. As the saying goes: "With great power goes great responsibility." The PCOAB has done well to seek the advice of these prominent men and women in making their decisions about accounting policy.

Monday, November 28, 2011

TPIN Competency Tests Are Just Around the Corner

  • IRS Fact Sheet 2011-12

  • The Internal Revenue Service has announced the second phase of tax preparer regulation; this phase being testing. Next week, scheduling of Tax Preparer Competency Examinations will be announced and the fee for the exam will be $116 per sitting; previously, it had been announced that Prometric (which also oversees electronic CPA exam administration) would administer the exams. Fact Sheet 2011-12 (see link above) overviews the testing procedure. The IRS estimates that about 350,000 tax preparers will need to take the 2.5 hour, 120 multiple choice question exam emphasizing Form 1040 (all registered tax preparers except EAs, CPAs and attorneys) and that they must complete the exam successfully by December 31, 2013. Yet to be determined (to the best of my knowledge) are the following issues: CPE requirements, background check requirements (fingerprinting is out for now) and frequency of exam (pass once for all time or take every "x" (e.g. five) years). In a related development, the IRS announced no change in the requirements for Enrolled Agents.

    The requirements above suggest that the Registered Tax Preparer designation will be effectively Enrolled Agent Light; nevertheless, for many taxpayers, this will be plenty of tax heft at generally a significant discount from an attorney, a CPA; probably even an EA. The question as whether federal registration of tax preparers is needful; however, continues to be valid.

    Saturday, November 19, 2011

    "Patriotic Millionaires:" A Buffett Line of Wealthy Tax-Raisers

  • Patriotic Millionaires Web site

  • A group called the Patriotic Millionaires visited Washington recently to lobby for an increase in the tax rates for high-income Americans. The group announced opposition to Senator Pat Toomey's (R-PA) proposal to reduce the maximum tax rate from 35 to 28 in exchange for limiting or eliminating many present tax deductions.
    The group consists of about 100 people or couples, few if any famous and mostly from California or the New York City metro area (though a surprising number come from Utah). They claim either to be making or have made $1 million or more per year.

    That Warren Buffett, Peter Lewis of Progressive Insurance or the Patriotic Millionaires could be lobbying for higher tax rates should not surprise; Karl Marx's benefactor and co-author, Josef Engels, was very wealthy. Power comes in many forms: monetary wealth and political influence being two examples and some may be willing to give up wealth for political influence. I will leave the debate as to whether tax rates on the wealthy are too high, too low or just right to others, at least for now; what clearly (at least to me) is the case is that the federal government is too big to succeed and the tax code is too complex to collect taxes as efficiently as possible.

    Friday, November 18, 2011

    Financial Planning Expert Larry Carroll Comes to Austin Peay

    Larry Carroll, cited by Barron's as a Top 100 Independent Financial Adviser on multiple occasions, returned to his alma mater to address a standing-room only crowd of students and faculty at Austin Peay's Gentry Auditorium in the Kimbrough Building this morning. Mr. Carroll specializes in retirement planning and emphasizes control of risk. Mr. Carroll pointed out that he was a first-generation college student and survived a rocky start at his first school before thriving at Austin Peay. Three life lessons that he shared in the early part of his talk: [1] position and reputation are less important than whether you can do the job; [2] Austin Peay (and similar universities would provide comparable preparation, I's sure) gave him all the background he needed to succeed at a prestigious graduate program (UT-Knoxville) and [3] job security is based more on your skills (and work ethic?) than the size of the business that you work for.

    Friday, November 11, 2011

    CCH, Technology and Its View of the Future

    CEO Mark Sabbatis of major reference publisher Commerce Clearing House delivered a talk to CCH personnel recently on being a "future-ready" firm. While much of the presentation was geared at CCH-specific issues and opportunities, Sabbatis did have some useful ideas for businesses in general. Among these insights: the importance of following best practices, resilency and flexibility in business operation, a holistic approach toward employees, continuous improvement in processes as well as results and a disciplined approach toward integrating new technology. The conference also found that a majority of attendees needed to improve their tax document processes and they also sought to improve their ability to leverage technology.

    Although CPA firms are far more tech-savvy compared to when I worked as a CPA 30 years ago or so, competitive pressures require that the successful practice NOT rest on their technological laurels. The emphasis on improving processes as well as results was also impressively insightful.

    Congress Makes End of Year Tax Decisions: Smart Money Predicts the Results

    It's the standard (regrettably) end-of-year panic by Congress to reconsider tax breaks which are set to expire. Keep in mind in considering the likely outcome of these breaks that the Supercommittee on the deficit looms and the Democrats want "revenue enhancements" to be included in the final package.

    The editors of Smart Money ranked the likelihood of extension for several popular tax breaks. They gave highest likelihood to (yet ANOTHER annual) alternate minimum tax patch; a strong likelihood to the tuition and K-12 teacher supplies deductions and the state/local income or sales tax deduction option; a more likely than not rating to extending the reduced Social Security withholding rate and IRA charitable deduction provisions and a low likelihood of maintaining the energy-efficient home improvement credit.

    For the most part, I tend to agree with Smart Money--although based on the deficit issue mentioned above I am less confident than the authors that the income/sales decision option, the charitable IRA deduction and the reduced Social Security rate of 4.2% for employees will be continued (one possible compromise on the Social Security--the 4.2% rate would only be used for the first $50,000 of wages or salary per job). One takeaway--if you have home repairs such as weatherstripping or better insulated windows to install; arrange to have this done before Christmas. The more salient concern here--why can't Congress (both Harry Reid and John Boehner) get this done earlier in the year so taxpayers have some time to make decisions.

    A Couple of Early Thanks

    First of all, thanks to my friends in Clarksville and elsewhere who serve in the military as well as all military men and women who serve throughout the world. Stay safe and celebrate YOUR day.

    Additionally, thanks to Kay Bell and Don't Mess with Taxes for including the "Millionaires Tax" post in this week's Carnival of Taxes. Thanks also to Robert Flach for mentioning the post in his Buzz in The Wandering Tax Pro.

    Friday, November 04, 2011

    "Millionaires Tax" Now Gone--Next Issue:Hiring Exiting GIs for Civilan Jobs

    Senate Democrats have decided to drop a proposed "millionaires tax" to pay in part for President Obama's recent jobs and have moved on to pursuing funds to pay for a tax credit for businesses hiring soldiers re-entering the civilan job market. Democratic Senators Debbie Stabenow (MI) and Patty Murray (WA) both urged the Senate to remember the sacrifices of military men and women and ease their return to civilan jobs. The proposal would continue a withholding provision for federal and state contractors to enable the creation of a $2400 credit for businesses hiring unemployed veterans. The credit could go up to as much as $5600 if the veteran was out of work for more than six months and as high as $9600 for disabled vets.

    A shrewd political move by the Democrats to be seen as military friendly and this credit surely is less controversial than a surtax. Would the jobs credit improve hiring of ex-GIs?; it is hard to say but with overall unemployment rates of nearly 9% I can understand why Democrats would want to see.

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