RTRP Courses and CPE Tracking from Checkpoint Learning: A Video Update

Judy Young, Ken Koskay and Winford Paschall talk about the Registered Tax Return Preparer (RTRP) requirements and testing process, and new offerings from Checkpoint Learning. New CPE courses in multiple formats (webinar, online, self-study with online grading, live seminar) are available to prep for the IRS exam and to meet annual CPE requirements, and Checkpoint Learning's CPE compliance tracking for RTRPs provides e-alerts, automatic CPE certificate submission to the IRS, and more.

Find out more at http://cl.thomsonreuters.com/CPESolutions/TaxPreparers

Checkpoint Learning 2012 Courses: A Video Update

Robin Thompson and Ken Koskay, vice president for Learning Solutions in the Tax & Accounting business of Thomson Reuters, talk about the 70+ new Checkpoint Learning courses and webinars launching in 2012.

Find out more at http://cl.thomsonreuters.com/CPESolutions/NewCourses

Rules for Political Participation by Churches and Other Nonprofits

With the national and local elections process in full swing, political contributions and participation in the political process are regular topics on the evening news. The dramatic increase in the amount of money being donated to and spent by the national campaigns is staggering.

During the last major election, I wanted to be part of that process, so I donated ten dollars to one of the major parties. They took my ten dollars, added fifteen dollars to it from some other donor, and then spent the combined twenty-five dollars trying to get me to donate ten more dollars. That is the worst business model I have ever seen, but I guess it works on some folks.

My contribution was not tax deductible; however, it was legal. Donations to a political organization by churches and other nonprofit organizations (NPOs), on the other hand, are strictly prohibited by Internal Revenue Code Section 501 (c) 3.

The Code also prohibits churches and other NPOs from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Any church or other nonprofit organization violating this prohibition risks losing its tax-exempt status. The Internal Revenue Service does, however, provide resources to help these organizations understand the rules.

Actions Churches and Other NPOs May NOT Take

1. Endorse political candidates.
 2. Contribute to political candidates or political action committees.

3. Participate in fund-raising projects for political candidates.

4. Distribute a candidate’s political statements.

As part of its examination program, the IRS monitors whether organizations are complying with the prohibition. When the agency finds or is made aware of instances of noncompliance it may issue a warning letter or it may revoke the entity’s tax exempt status.

While the IRS has issued hundreds of warning letters intended to stop advocacy for political candidates, it has only revoked a church’s tax exempt status twice since the tax law was amended in 1954.

Certain activities or expenditures may not be prohibited depending on the facts and circumstances.

Actions Churches and Other NPOs May Take
1. Conduct non-partisan voter registration/education drives.

2. Host forums where all candidates are invited and treated impartially.

3. Rent a church or other NPO membership list (at market value) to a candidate.

4. Make voter’s guides available to members so long as the guides do not reflect a partiality which could be misinterpreted as an endorsement of a particular party or candidate.

Trivia
1. The first recorded tax exemption for churches occurred circa 312, when Constantine, Emperor of Rome granted the Christian church exemption from all taxation following his conversion to Christianity.

2. In 2010 the State of Oklahoma awarded tax-exempt status to a Satanist group called The Church of the IV Majesties.

When it comes to politics, churches and other nonprofit organizations have to walk a very fine line. While the prohibition for organizations does not apply to members, a member must be careful to inform an audience that he or she is speaking as a citizen and not on behalf of the organization.

Frequently Asked Questions About RTRP

Now that tax season is behind us and that last extension has been dropped in the mail it’s time to think about whether you or some of your staff need to take the new Registered Tax Return Preparers (RTRP) test. The test has been available since last November but the IRS and others recommended that you wait to take the test until after tax season. Following are some of the most frequently asked questions about the Registered Tax Return Preparer test.

1. What does the new IRS return preparer oversight program require?
The oversight program requires all paid tax return preparers to register with the IRS each year and have a Preparer Tax Identification Number (PTIN). Certain tax return preparers who prepare Form 1040 series returns must also pass a one-time competency test, a tax compliance check, and a suitability check.

2. Who must take the RTRP competency test?
All paid tax return preparers who prepare Form 1040 series returns, and are not CPAs, Attorneys, or Enrolled Agents, are required to take the test.

3. Can I take the test even if I’m not required to?
Yes. However, you must have a PTIN if you wish to take the test.

4. Is the test available in Spanish?
No. The test is currently available in English only and generally will be administered in a computer based-format.

5. How many questions are on the test and what is the minimum passing grade?
There are 120 questions in a combination of multiple choice and true or false formats. You will have two and a half hours to complete the test. A perfect score is 500 but you must score 350 (70%) or higher to pass the test.

6. Where do I go to take the test and is there a fee?
The test is administered by Prometric and can be taken at any one of its more than 260 sites throughout the U.S. The test fee is $116 and must be paid each time you take the test.

7. By what date must I pass the test?
Preparers must pass the competency test and a tax compliance chech by December 31, 2013.

8. Do I have to pass the test more than once?
No. Passing the test is a onetime requirement to become a RTRP.

9. Must RTRPs comply with any annual requirements?
Yes. Starting in 2012 you must complete 15 hours of continuing education each calendar year. The 15 hours must include two hours of ethics. three hours of federal tax law updates, and 10 hours of other federal tax law courses. These courses must be taken from an IRS-approved vendor.

10. Where can I find more general test information?
For more information on the testing requirements go to:
http://www.irs.gov/taxpros/article/0,,id=239683,00.html

RTRPs representation rights are limited to representation before certain IRS officers and employees and only in connection with returns they signed.

If you’re looking for an IRS-approved CE vendor with RTRP prep courses to help you pass the test and all the continuing education courses needed to stay current with the latest changes in federal tax law and fulfill the ethics requirement, then visit Checkpoint Learning.

How to Succeed in Business… Just Ask!



 Ask whom, you might wonder? The answer: your customers. Often businesses try to tell customers what they want rather than asking them what they need, and then fulfilling that need. Companies that do not listen to what their customers are saying can suffer grave consequences, as evidenced by the recent bankruptcy of the Eastman Kodak Company. How could a venerable company like Kodak that has been around for over 132 years, come to such an end? The answer: not listening to its customers. Kodak’s film business was its cash cow, so when customers began moving away from film and on to digital photography Kodak was concerned that if they moved with them it would cannibalize its film business. This concern made the company reluctant to embrace the new technology, even though Kodak invented it back in 1975. Other camera companies, like Cannon, listened to their customers, saw the opportunity and quickly began to address the needs related to digital photography. By the time Kodak realized that its future was not going to be selling film, it was too late. Their competitors had left them behind. In contrast to Kodak, the Encyclopedia Britannica, Inc. listened to what its customers were saying and made the move to digital publishing. They recently announced that they will no longer offer the 32 volume encyclopedia in a printed format. The company said it had been exploring digital publishing since the 1970s and published the first online encyclopedia in 1994. Wikipedia, the free online encyclopedia, didn’t come along until January 2001. Customers don’t always know what they want and they may think they want something they don’t need. So don’t ask them what they want; ask them what they need or ask them to identify their biggest challenge. You just might be able to provide them with a solution. What do you think?

Yellow Book CPE Requirements: A Video Update

Winford Paschall, CPA, sat down with Robin Thompson to answer some questions on the CPE requirements under Generally Accepted Government Auditing Standards (GAGAS, also known as Yellow Book) for professionals who perform audits or attestation engagements, including the 80/24/20 continuing education equation.

Visit our website to browse CPE courses and solutions that will help you meet Yellow Book CPE requirements: cl.thomsonreuters.com/CPESolutions/YellowBook

Road to Somewhere: Tax Changes in the Senate-Passed MAP-21 Transportation Bill

When I filled my gas tank the other day, regular was still below $4 per gallon. The difference between the price I paid and $4 seems to have diminished faster than I would have preferred. Anyone who has watched the price of gasoline increase over the past year can understand why the business standard mileage rate increased from 51 cents per mile for travel during the first half of 2011 to 55.5 cents per mile for travel in the second half of 2011. As of January 1, 2012, the standard mileage rate is 55.5 cents per mile. If the price of gas continues to increase, the standard mileage rate will probably increase again.

The federal excise tax on gasoline is currently 18.4 cents per gallon, and there are 15 days left before current transportation funding and the authority to collect the federal gas tax that supports that funding expires. Congress is now paying close attention to the March 31 deadline.

The Senate voted on March 14 to pass an 18-month transportation bill, known as S. 1813, the "Moving Ahead for Progress in the 21st Century Act" or MAP-21. (MAP-21 sounds more like a food additive, a genome, or a distant star than the name of a bill.) Although the legislation primarily overhauls a number of federal highway-related programs, the bill does contain some important tax changes.

Here are some of the tax changes contained in the Senate-passed transportation bill. This is not a complete list.

Parity for employer-provided mass transit and parking benefits. For 2011, there was parity for exclusion from income for employer-provided mass transit and parking benefits. The exclusion was $230 per month for each of these breaks. However under current law, for 2012, the exclusion is $240 for qualified parking (due to an inflation adjustment) but only $125 for employer-provided transit and van-pooling benefits. Under the bill, effective for months after December 31, 2011, the 2012 exclusion amount for employer-provided transit and van-pooling benefits would be increased from $125 to $240.

Funding break for employers maintaining pension plans. As a result of the current, low interest rate climate, pension plan contributions have been very high, and there is concern in Congress that this will lead to more company layoffs or pension plan freezes. Under the bill, plan liabilities would continue to be determined based upon corporate bond segment rates, which are based on the average interest rates over the preceding two years. However, for plan years beginning in calendar year 2012, for purposes of the minimum funding rules, the segment rates would be adjusted up or down, as necessary, to an amount equal to either 90% or 110% of the 25-year historic average of interest rates, whichever is closest. In today's low-rate environment, the immediate effect of this change would be to raise interest rates for funding purposes and thereby lower the minimum required pension contribution. For plan years beginning in calendar year 2013, the interest rate "corridor" would expand in 5% increments each year until it reaches 30% above and 30% below the 25-year historic average of interest rates.

AMT relief for private activity bonds. Tax-exempt interest on private activity bonds issued after the enactment date and before January 1, 2013, would not be an item of tax preference for purposes of the alternative minimum tax (AMT). Additionally, tax-exempt interest on private activity bonds issued after the enactment date and before January 1, 2013, would not be included in the corporate adjusted current earnings (ACE) adjustment.

Longer write-offs for leased highway property. States may contract with a private entity to lease an existing highway or build a new one, and then operate the highway for a number of years. Although these transactions generally are structured as a lease (plus grant of a franchise permitting the private entity to collect tolls), the private entity is treated as the owner because it has the burdens and benefits of ownership. Under provisions of the bill, for leases entered into after the enactment date, the highway property would have to be depreciated over 45 years (instead of 15), and the cost of granting the franchise to collect tolls would have to be amortized over a period that is not less than the term of the applicable lease (instead of 15 years under Code Sec. 197).

Revocation or denial of passport of individuals owing more than $50,000 in back taxes. Effective on January 1, 2013, the bill would authorize the government to deny the application for a new passport or renewal of an existing passport when the individual has more than $50,000 (indexed for inflation) of "seriously delinquent tax debt." A seriously delinquent tax debt does not include a debt that is being paid in a timely manner under an agreement with the IRS or if the collection of the debt is on hold because of a collection due process hearing. The government also could revoke a passport upon reentry into the U.S. for such individuals.

In addition, the provisions of this bill allow the IRS to impose a levy of up to 100% (up from the current law's 15%) against Medicare service providers with tax delinquencies.

The bill now goes to the House of Representatives. It remains to be seen if all of the tax provisions in the Senate bill will be present in the final legislation. While the transportation bill works its way through the House, do not be surprised if the price of regular gas soon exceeds $4 per gallon. Once that threshold is exceeded, Congress may have some political incentives to add other provisions to this bill.