There is a saying in Texas that, “when the Legislature is in session no one is safe.” I think that statement may also apply to the 111th. U.S. Congress. With the flurry of tax legislation passed this year (some of it very late in the year) and the Democrats and Republicans engaged in guerilla warfare it looks like both the IRS and tax practitioners are going to be facing a very challenging tax season. For example, two bills in particular created some unfortunate consequences:
1. Affordable Health Care for America Act
2. Tax Relief, Unemployment Insurance Reauthorization and Jobs Creation Act of 2010 –better known as the 2010 Tax Relief Act.
Hidden deep in the 2,409-page Affordable Health Care for America Act was an onerous provision that will require businesses to significantly expand the number of 1099 tax forms they must file each year. Almost everyone agrees that this is bad legislation but congress has been unable to agree on a bill to repeal the provision.
The 2010 Tax Relief Act was passed so late in the year that the IRS is now saying that some final 2010 tax forms may not be available until as late as February.
Add to the two items mentioned above the IRS’s Unenrolled Tax Preparers initiative and the new Preparer Tax Identification Number (PTIN) registration regulations and I am sure that you will agree that 2011 is going to be interesting. I think what both tax practitioners and the IRS are facing in 2011 can be summed up in a quote from actress Mae West; “Hang on boys, it’s going to be a bumpy ride.”
HAPPY NEW YEAR
Thursday, December 30, 2010
Wednesday, December 8, 2010
12 Common Nonprofit Financial Statement Disclosure Omissions
The holiday season is upon us and with it thoughts often turn to the local charity or nonprofit organization. When I think about nonprofit organizations I am reminded of the financial statement disclosure omissions I see in their financial statements. Following is list of the 12 common disclosure omissions in nonprofit organization financial statements:
1. Organization’s capitalization policy.
The failure to disclose the organization’s capitalization policy— basically, the minimum dollar amount for capitalizing and depreciating an asset—is a common financial statement omission. In addition, the financial statements should include the organization’s policy on implying time restrictions on gifts of long-lived assets.
2. Subsequent events review.
Sometimes nonprofit organizations fail to disclose the date through which subsequent events have been evaluated and whether that date is the date the financial statements were issued or were available to be issued. It doesn’t matter if there weren’t any subsequent events disclosed in the financial statements; the financials still need to disclose the information about the review.
3. Uncertain tax positions.
ASU 2009-06 provides guidance on uncertainty in income taxes for tax-exempt organizations. FASB ASC 740-10 requires certain disclosures of those positions that are often overlooked:
a. Policy for classifying interest and penalties recognized in the financial statements that are associated with its tax positions.
b. Total amount of interest and penalties recognized in the statement of activities and the statement of financial position.
c. Information about positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date,
d. The tax years that remain subject to examination by major tax jurisdictions.
4. Long-term promises to give.
If a nonprofit organization has long-term promises to give that are measured at present value, then the resulting discount should be disclosed either on the face of the statement of financial position or in the notes to the financial statements. A related disclosure that is often missed is the amounts of promises receivable in less than one year, in one to five years, and in more than five years.
5. Interest paid.
FASB ASC 230-10-50-2 requires the financial statements to disclose interest paid (net of amounts capitalized). This disclosure is often omitted.
6. Summarized financial information.
Summarized prior period financial information does not always include all the detail required by GAAP. FASB ASC 958-205-45-8 and FASB ASC 958-205-50-4 require the financial statement titles to indicate that the prior year information is summarized and to see the financial statement notes that describe the nature of the summarized financial information.
7. Contributed services not properly disclosed.
FASB ASC 958-605-50-1 requires the disclosure of the following items that are sometimes omitted:
a. The activities or programs for which contributed services were used.
b. The nature and extend of those services.
c. The amount recognized as revenue during the period.
d. If practical, the fair value of contributed services received but not recognized in the financial statements.
8. Fund raising expenses.
Any nonprofit organization that has fund raising expenses is required to disclose the following items that are often over looked:
a. Total cost of all fund-raising activities.
b. The method used to compute the ratio of fund-raising expenses to funds raised, if such ratios is disclosed in the organization’s financial statements.
9. Concentrations of risk.
FASB ASC 275-10-50 includes the disclosure requirements related to risks and uncertainties. One that is often overlooked is the requirement to consider whether to disclose concentrations in the market or geographic area in which the nonprofit organization operates.
10. Endowment funds.
All nonprofit organizations that have endowment funds are subject to the disclosure requirements of FASB ASC 958-205-50-1B. The disclosures include organization policies related to endowments, a reconciliation of beginning and ending balances, and information about deficiencies in individual endowments. These are often missed.
11. Trade receivables.
For nonprofit organizations that have trade receivables, FASB ASC 310-10-50-2 through 50-8 includes disclosures related to these receivables. (They do not apply to promises to give.) These disclosures are sometimes overlooked when preparing year-end statements.
12. Restrictions on net assets.
Nonprofit organizations must disclose the total of temporarily and permanently restricted net assets either on the face of the statement of financial position or in the notes to the financial statements. Where the disclosures can sometimes fall short is FASB ASC 958-210-50-3’s requirement to also disclose information about the amount and types of the different restrictions.
In order to prepare nonprofit financial statements in accordance with GAAP and not inadvertently leave out a required disclosure, consider using a disclosure checklist such as the one included in PPC’s Guide to Preparing Nonprofit Financial Statements.
1. Organization’s capitalization policy.
The failure to disclose the organization’s capitalization policy— basically, the minimum dollar amount for capitalizing and depreciating an asset—is a common financial statement omission. In addition, the financial statements should include the organization’s policy on implying time restrictions on gifts of long-lived assets.
2. Subsequent events review.
Sometimes nonprofit organizations fail to disclose the date through which subsequent events have been evaluated and whether that date is the date the financial statements were issued or were available to be issued. It doesn’t matter if there weren’t any subsequent events disclosed in the financial statements; the financials still need to disclose the information about the review.
3. Uncertain tax positions.
ASU 2009-06 provides guidance on uncertainty in income taxes for tax-exempt organizations. FASB ASC 740-10 requires certain disclosures of those positions that are often overlooked:
a. Policy for classifying interest and penalties recognized in the financial statements that are associated with its tax positions.
b. Total amount of interest and penalties recognized in the statement of activities and the statement of financial position.
c. Information about positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date,
d. The tax years that remain subject to examination by major tax jurisdictions.
4. Long-term promises to give.
If a nonprofit organization has long-term promises to give that are measured at present value, then the resulting discount should be disclosed either on the face of the statement of financial position or in the notes to the financial statements. A related disclosure that is often missed is the amounts of promises receivable in less than one year, in one to five years, and in more than five years.
5. Interest paid.
FASB ASC 230-10-50-2 requires the financial statements to disclose interest paid (net of amounts capitalized). This disclosure is often omitted.
6. Summarized financial information.
Summarized prior period financial information does not always include all the detail required by GAAP. FASB ASC 958-205-45-8 and FASB ASC 958-205-50-4 require the financial statement titles to indicate that the prior year information is summarized and to see the financial statement notes that describe the nature of the summarized financial information.
7. Contributed services not properly disclosed.
FASB ASC 958-605-50-1 requires the disclosure of the following items that are sometimes omitted:
a. The activities or programs for which contributed services were used.
b. The nature and extend of those services.
c. The amount recognized as revenue during the period.
d. If practical, the fair value of contributed services received but not recognized in the financial statements.
8. Fund raising expenses.
Any nonprofit organization that has fund raising expenses is required to disclose the following items that are often over looked:
a. Total cost of all fund-raising activities.
b. The method used to compute the ratio of fund-raising expenses to funds raised, if such ratios is disclosed in the organization’s financial statements.
9. Concentrations of risk.
FASB ASC 275-10-50 includes the disclosure requirements related to risks and uncertainties. One that is often overlooked is the requirement to consider whether to disclose concentrations in the market or geographic area in which the nonprofit organization operates.
10. Endowment funds.
All nonprofit organizations that have endowment funds are subject to the disclosure requirements of FASB ASC 958-205-50-1B. The disclosures include organization policies related to endowments, a reconciliation of beginning and ending balances, and information about deficiencies in individual endowments. These are often missed.
11. Trade receivables.
For nonprofit organizations that have trade receivables, FASB ASC 310-10-50-2 through 50-8 includes disclosures related to these receivables. (They do not apply to promises to give.) These disclosures are sometimes overlooked when preparing year-end statements.
12. Restrictions on net assets.
Nonprofit organizations must disclose the total of temporarily and permanently restricted net assets either on the face of the statement of financial position or in the notes to the financial statements. Where the disclosures can sometimes fall short is FASB ASC 958-210-50-3’s requirement to also disclose information about the amount and types of the different restrictions.
In order to prepare nonprofit financial statements in accordance with GAAP and not inadvertently leave out a required disclosure, consider using a disclosure checklist such as the one included in PPC’s Guide to Preparing Nonprofit Financial Statements.
Thursday, November 11, 2010
Blue Light Special
Blue Light Special
When you think of: Faster than a speeding bullet, do you think of Clark Kent, aka Superman? Well, if so, you are not keeping up with tax law. The Internal Revenue Code is now faster than a speeding bullet. I am not referring to the fact that tax law changes more quickly than fashion styles. I am referring to the fact that some new tax laws are only effective for less than 100 days.
Seriously!
Code Section 1202, which has been around since 1993, provides for an exclusion of a portion of the gain from the sale of C corporation stock, meeting specific requirements, held for more than 5 years. The exclusion rate, prior to the most recent legislative change, was either 50% or 75%. Under the Small Business Jobs Act of 2010, the exclusion is 100%. Now, that is a full exclusion. In other words, the gain on the sale of the stock is completely and totally tax free. This is a wonderful benefit and all practitioners should be sure to fully review the statute in full.
However!
But, the statute is effective only for stock acquired after September 27, 2010 and before January 1, 2011. That means September 28-30, all of October, all of November, and all of December 2010 but not a day later. That is less than 100 days! The time is short.
I find it remarkable that Congress can pass a law which virtually expires before the general public knows about it. I attribute this law to the new world of social media. It used to be we obtained our news by reading a printed newspaper, a fine magazine, or a book. Now the news comes to us via Facebook, MySpace, and Twitter. And Congress knows it.
Is the day too far off when tax law will change this way? You'll look at your iphone and read the following tweet: For the next 15 hours, if you buy a new ipad, you can take 120% depreciation. But, remember, this offer is only good for the next 15 hours. 16 hours, and you are toast. Act now!
Internal Revenue Code meet the Kmart Blue Light Special!
When you think of: Faster than a speeding bullet, do you think of Clark Kent, aka Superman? Well, if so, you are not keeping up with tax law. The Internal Revenue Code is now faster than a speeding bullet. I am not referring to the fact that tax law changes more quickly than fashion styles. I am referring to the fact that some new tax laws are only effective for less than 100 days.
Seriously!
Code Section 1202, which has been around since 1993, provides for an exclusion of a portion of the gain from the sale of C corporation stock, meeting specific requirements, held for more than 5 years. The exclusion rate, prior to the most recent legislative change, was either 50% or 75%. Under the Small Business Jobs Act of 2010, the exclusion is 100%. Now, that is a full exclusion. In other words, the gain on the sale of the stock is completely and totally tax free. This is a wonderful benefit and all practitioners should be sure to fully review the statute in full.
However!
But, the statute is effective only for stock acquired after September 27, 2010 and before January 1, 2011. That means September 28-30, all of October, all of November, and all of December 2010 but not a day later. That is less than 100 days! The time is short.
I find it remarkable that Congress can pass a law which virtually expires before the general public knows about it. I attribute this law to the new world of social media. It used to be we obtained our news by reading a printed newspaper, a fine magazine, or a book. Now the news comes to us via Facebook, MySpace, and Twitter. And Congress knows it.
Is the day too far off when tax law will change this way? You'll look at your iphone and read the following tweet: For the next 15 hours, if you buy a new ipad, you can take 120% depreciation. But, remember, this offer is only good for the next 15 hours. 16 hours, and you are toast. Act now!
Internal Revenue Code meet the Kmart Blue Light Special!
SSARS NO. 19 IMPLEMENTATION DATE IMMINENT
The Accounting and Review Services Committee approved SSARS 19, Compilation and Review Engagements, on December 30, 2009. This standard becomes effective in 35 days; are you ready?
SSARS No. 19 is effective for compilations and reviews of financial statements for periods ending on or after December 15, 2010—that is, for 2010 calendar year-ends and later. Following is how the statement will affect your compilation and review engagements.
What SSARS No. 19 Does
Some of the more significant provisions of SSARS No. 19 include the following:
• Allows, but does not require, accountants to explain why they’re not independent in a compilation report.
• Separates the compilation requirements from the review requirements.
• Introduces the term review evidence into the review literature. Review evidence is defined as information the accountant uses to provide a reasonable basis for obtaining limited assurance.
• Provides guidance on how the accountant obtains limited assurance when performing review procedures.
• Requires tailoring review procedures for a particular engagement based on the accountant’s knowledge of the client, understanding of the client’s industry, and awareness of the risk that the accountant may knowingly fail to modify his or her report on materially misstated financial statements.
• Discuses the concept of materiality in the context of review engagements.
• Requires a written communication, (i.e. an engagement letter) documenting the understanding with the client regarding the services to be performed.
Documentation Requirements
In addition to the engagement letter, SSARS No. 19 requires the accountant to document the following items:
• Significant, unusual matters considered by the accountant during the performance of the compilation procedures, including their resolution.
• Analytical procedures performed, for review engagements, including management’s response to the accountant’s inquiries regarding fluctuations or relationships that are inconsistent with other information or that differ from expectations by a significant amount; additional review procedures performed and the results of those procedures; significant matters covered in the accountant’s inquiry procedures; significant findings or issues or unusual matters and their disposition; and the client representation letter.
• Communications regarding fraud or illegal acts that came to the accountant’s attention while performing the compilation or review engagement.
Reporting Changes
SSARS No.19 changes the language in standard compilation and review reports and provides illustrations of both types of reports. As previously noted, an accountant may now choose to include language in the accountant’s compilation report describing the reason the accountant is not independent. This disclosure would be added to the final paragraph of the report. There is no prescribed language the accountant must use in the report. Although accountants aren’t required to include the reason(s) for independence impairment, if disclosure is made, it must include all reasons independence is impaired.
Be sure that you and your staff are familiar with the new requirements of SSARS No.19 so you will be ready when the standard is effective.
SSARS No. 19 is effective for compilations and reviews of financial statements for periods ending on or after December 15, 2010—that is, for 2010 calendar year-ends and later. Following is how the statement will affect your compilation and review engagements.
What SSARS No. 19 Does
Some of the more significant provisions of SSARS No. 19 include the following:
• Allows, but does not require, accountants to explain why they’re not independent in a compilation report.
• Separates the compilation requirements from the review requirements.
• Introduces the term review evidence into the review literature. Review evidence is defined as information the accountant uses to provide a reasonable basis for obtaining limited assurance.
• Provides guidance on how the accountant obtains limited assurance when performing review procedures.
• Requires tailoring review procedures for a particular engagement based on the accountant’s knowledge of the client, understanding of the client’s industry, and awareness of the risk that the accountant may knowingly fail to modify his or her report on materially misstated financial statements.
• Discuses the concept of materiality in the context of review engagements.
• Requires a written communication, (i.e. an engagement letter) documenting the understanding with the client regarding the services to be performed.
Documentation Requirements
In addition to the engagement letter, SSARS No. 19 requires the accountant to document the following items:
• Significant, unusual matters considered by the accountant during the performance of the compilation procedures, including their resolution.
• Analytical procedures performed, for review engagements, including management’s response to the accountant’s inquiries regarding fluctuations or relationships that are inconsistent with other information or that differ from expectations by a significant amount; additional review procedures performed and the results of those procedures; significant matters covered in the accountant’s inquiry procedures; significant findings or issues or unusual matters and their disposition; and the client representation letter.
• Communications regarding fraud or illegal acts that came to the accountant’s attention while performing the compilation or review engagement.
Reporting Changes
SSARS No.19 changes the language in standard compilation and review reports and provides illustrations of both types of reports. As previously noted, an accountant may now choose to include language in the accountant’s compilation report describing the reason the accountant is not independent. This disclosure would be added to the final paragraph of the report. There is no prescribed language the accountant must use in the report. Although accountants aren’t required to include the reason(s) for independence impairment, if disclosure is made, it must include all reasons independence is impaired.
Be sure that you and your staff are familiar with the new requirements of SSARS No.19 so you will be ready when the standard is effective.
Friday, November 5, 2010
MAJOR LEAGE BASEBALL—MAJOR LEAGUE BUSINESS
Did you watch the World Series? Well, neither did a lot of other people since the games garnered the smallest TV audience in World Series history. My team didn’t win but it was great fun to watch. The Giants hadn’t won the World Series since the 1950’s and the Rangers had never even been to a World Series where they didn’t have to buy a ticket to get in.
As I watched the games, I thought a professional sports franchise must be an incredible business. One unlike any business most of us have ever been associated with. I know of no other business in the world where the average annual salary of its employees was over $3 million each in 2008. And that is up from an average of $1.1 million in 1995. The New York Yankees total player payroll for 2009 was a little over $210 million for a 40 man roster. And how about the fact that even if a player only bats .190, he will still be very well paid on pay-day.
Major league team owners complain that they lose money every year. I know you’re probably saying to yourself; “But what about all those TV and merchandise revenues?” In 2009 some $660 million (according to ESPN) was sent to the 30 clubs for TV rights. In addition the clubs participate in a revenue sharing program ($433million in 2009) that redistributes revenue from high earning clubs, like the New York Yankees, and gives it to clubs in need of assistance. Revenue from merchandise and licensing only accounts for a small part of a team’s revenues. The majority of a team’s income comes from league-wide revenue sharing, TV fees, ticket sales, and stadium revenues. To me it looks like you can’t lose, so why are they complaining?
For major league sports franchises, cash is definitely King, especially around payday. So, if your team is in need of cash where do you turn? To the guys with all the money; your employees. You may be able to talk some of the more highly paid players into deferring part of their salary to the end of their contract. If that doesn’t work, you can always trade your high-paid players to another team. These players are also usually your best players, so this option assures you a losing season next year.
So let’s summarize some of the unique aspects of the business of a major league baseball franchise:
1. Each of your employees, on average, makes more than $3 million a year.
2. Your employees don’t have to perform, but they will continue to receive their pay.
3. You share revenue from TV fees and merchandise sales with your competition.
4. If you don’t earn the highest revenues, don’t worry, your competitors will give you part of theirs.
5. If you make more money than your competitors, you have to give them part of yours.
6. The best place to borrow money is from your employees.
I think it’s a very unusual business, but still it’s a great game. What do you think?
As I watched the games, I thought a professional sports franchise must be an incredible business. One unlike any business most of us have ever been associated with. I know of no other business in the world where the average annual salary of its employees was over $3 million each in 2008. And that is up from an average of $1.1 million in 1995. The New York Yankees total player payroll for 2009 was a little over $210 million for a 40 man roster. And how about the fact that even if a player only bats .190, he will still be very well paid on pay-day.
Major league team owners complain that they lose money every year. I know you’re probably saying to yourself; “But what about all those TV and merchandise revenues?” In 2009 some $660 million (according to ESPN) was sent to the 30 clubs for TV rights. In addition the clubs participate in a revenue sharing program ($433million in 2009) that redistributes revenue from high earning clubs, like the New York Yankees, and gives it to clubs in need of assistance. Revenue from merchandise and licensing only accounts for a small part of a team’s revenues. The majority of a team’s income comes from league-wide revenue sharing, TV fees, ticket sales, and stadium revenues. To me it looks like you can’t lose, so why are they complaining?
For major league sports franchises, cash is definitely King, especially around payday. So, if your team is in need of cash where do you turn? To the guys with all the money; your employees. You may be able to talk some of the more highly paid players into deferring part of their salary to the end of their contract. If that doesn’t work, you can always trade your high-paid players to another team. These players are also usually your best players, so this option assures you a losing season next year.
So let’s summarize some of the unique aspects of the business of a major league baseball franchise:
1. Each of your employees, on average, makes more than $3 million a year.
2. Your employees don’t have to perform, but they will continue to receive their pay.
3. You share revenue from TV fees and merchandise sales with your competition.
4. If you don’t earn the highest revenues, don’t worry, your competitors will give you part of theirs.
5. If you make more money than your competitors, you have to give them part of yours.
6. The best place to borrow money is from your employees.
I think it’s a very unusual business, but still it’s a great game. What do you think?
Thursday, October 21, 2010
WEBINARS
Webinars are rapidly becoming one of the most popular types of CPE. However, some people may be confused about the difference between a webinar, a webcast, and a web conference. The confusion stems from the fact that the terms are often used interchangeably, but, while they are similar, each has its own unique attributes.
Defining the Terms
The term webinar is short for Web-based seminar. A webinar can be a presentation, lecture, workshop or seminar that is transmitted over the Internet. According to Wikipedia, “it is typically a one-way communication from the speaker to the participants with limited audience interaction. A webinar can be collaborative, however, and include polling questions, and questions and answer sessions to allow full participation between the audience and the presenter.” The presenter usually speaks over a standard telephone line while describing information being presented onscreen. The audience can respond over their own telephones or by using the Internet.
A webcast, according to Wikipedia, “is a media file distributed over the Internet using streaming media technology to distribute a single content source to many simultaneous listeners or viewers. A webcast may be distributed live or on-demand. Essentially, webcasting is ‘broadcasting’ over the Internet. The term webcasting usually refers to non-interactive linear streams of events.”
A web conference is used to conduct live meetings, training, or presentations via the Internet. In a web conference, each participant sits at their own computer and is connected to other participants via the Internet. With a web conference the presenter controls what participants see on their computer monitors by sharing their desktop. The presenter can also pass control of the screen to another attendee during the presentation without giving up control of the presentation.
Comparing the Differences
Webinars vs. Webcasts – One big differences between webinars and webcasts is that webinars are always live presentations; webcasts can be delivered live or on demand. Another difference is that, webinars are interactive; whereas web casts are non-interactive.
Webinars vs. Web Conferences – The difference between webinars and web conferences is that webinars allow only limited audience participation; whereas web conferences allow substantial audience participation.
Conclusion
Webinars are rapidly becoming the learning delivery method of choice because they are economical, easy to produce, and convenient for the participant. You can attend a webinar at home in your pajamas or at the office on your lunch hour. There is no travel, meal, or hotel expenses associated with a webinar. You don’t have to leave home to participate and best of all you don’t have to take an exam in order to receive CPE credit for the presentation. With a webinar you can easily build learning and CPE into your busy schedule; all you need is a high-speed Internet connection and a telephone.
If you are interested in learning more about webinars and the topics that are currently available, check out the Webinar Learning Network on Checkpoint Learning at: https://checkpointlearning.thomsonreuters.com/CPEBrands/WebinarLearningNetwork
Defining the Terms
The term webinar is short for Web-based seminar. A webinar can be a presentation, lecture, workshop or seminar that is transmitted over the Internet. According to Wikipedia, “it is typically a one-way communication from the speaker to the participants with limited audience interaction. A webinar can be collaborative, however, and include polling questions, and questions and answer sessions to allow full participation between the audience and the presenter.” The presenter usually speaks over a standard telephone line while describing information being presented onscreen. The audience can respond over their own telephones or by using the Internet.
A webcast, according to Wikipedia, “is a media file distributed over the Internet using streaming media technology to distribute a single content source to many simultaneous listeners or viewers. A webcast may be distributed live or on-demand. Essentially, webcasting is ‘broadcasting’ over the Internet. The term webcasting usually refers to non-interactive linear streams of events.”
A web conference is used to conduct live meetings, training, or presentations via the Internet. In a web conference, each participant sits at their own computer and is connected to other participants via the Internet. With a web conference the presenter controls what participants see on their computer monitors by sharing their desktop. The presenter can also pass control of the screen to another attendee during the presentation without giving up control of the presentation.
Comparing the Differences
Webinars vs. Webcasts – One big differences between webinars and webcasts is that webinars are always live presentations; webcasts can be delivered live or on demand. Another difference is that, webinars are interactive; whereas web casts are non-interactive.
Webinars vs. Web Conferences – The difference between webinars and web conferences is that webinars allow only limited audience participation; whereas web conferences allow substantial audience participation.
Conclusion
Webinars are rapidly becoming the learning delivery method of choice because they are economical, easy to produce, and convenient for the participant. You can attend a webinar at home in your pajamas or at the office on your lunch hour. There is no travel, meal, or hotel expenses associated with a webinar. You don’t have to leave home to participate and best of all you don’t have to take an exam in order to receive CPE credit for the presentation. With a webinar you can easily build learning and CPE into your busy schedule; all you need is a high-speed Internet connection and a telephone.
If you are interested in learning more about webinars and the topics that are currently available, check out the Webinar Learning Network on Checkpoint Learning at: https://checkpointlearning.thomsonreuters.com/CPEBrands/WebinarLearningNetwork
Wednesday, October 6, 2010
PTIN BEGINS & COMPETENCY IS COMING
Earlier this year the IRS announced their new tax preparer initiative (see my blog “Sign Me Up Boys” of May 6) that will require all paid tax preparers to obtain a Preparer Tax Identification Number (PTIN). Unenrolled tax preparers will also be required to pass a competency exam and take mandatory continuing professional education courses.
On September 28, the IRS launched the PTIN registration system component of its tax payer initiative program and provided further clarification of the unenrolled tax payer program. Here are some of the more significant items you should know.
New PTIN Requirements
1. All compensated tax return preparers or those assisting in preparing the return must obtain a PTIN.
2. All federal tax return preparers–even those who already have a PTIN–will need to register in the new system by December 31, 2010.
3. At least initially, non-signing preparers will not have to be disclosed on each return.
4. An employee of a business who prepares the business tax return as part of their job responsibilities will not be required to sign the return as a paid preparer or register and obtain a PTIN.
5. All paid tax return preparers are required to obtain a PTIN. This includes those who only prepare payroll or other non-1040 tax returns.
6. You must be at least 18 years of age to obtain a PTIN.
7. Individuals who prepare tax returns as a VITA volunteer are not required to have a PTIN.
Competency Testing
1. Those who pass the competency test will be called “registered tax return preparers.”
2. The test will only be available in English, initially.
3. The test will be open book. Certain resources will be permitted and provided by the testing center.
4. The passing percentage for the test still hasn’t been determined. You may take the test an unlimited number of times, but the fee will apply each time you take the course.
5. If you don’t pass the test by December 31, 2013, your PTIN will be deactivated and you can no longer prepare tax returns for compensation.
6. Testing is expected to begin by midyear 2011.
7. To take the test, you must physically go to the testing site.
Other Credentials
1. Accredited Council of Accountancy for Taxation (ACAT) credential holders must obtain a PTIN and pass the competency exam unless they are a CPA, attorney or enrolled agent.
2. Registered or Licensed Public Accountants (LPAs) that have the same rights and privileges as a certified public accountant will not be required to pass the competency exam or satisfy the CPE requirements. However, if they do not have the same rights and privileges as a certified public accountant, they will be required to pass the competency exam and satisfy the CPE requirements. (Check with your state regulator.)
For information on training to prepare you to pass the unenrolled tax preparers exam, go to the following website:
http://www.gearup.com/cart/BrowseByTopic.aspx?Code=10-s250
Is creating this fourth class of individuals who are approved to prepare federal tax returns good for taxpayers or the accounting profession? What do you think?
On September 28, the IRS launched the PTIN registration system component of its tax payer initiative program and provided further clarification of the unenrolled tax payer program. Here are some of the more significant items you should know.
New PTIN Requirements
1. All compensated tax return preparers or those assisting in preparing the return must obtain a PTIN.
2. All federal tax return preparers–even those who already have a PTIN–will need to register in the new system by December 31, 2010.
3. At least initially, non-signing preparers will not have to be disclosed on each return.
4. An employee of a business who prepares the business tax return as part of their job responsibilities will not be required to sign the return as a paid preparer or register and obtain a PTIN.
5. All paid tax return preparers are required to obtain a PTIN. This includes those who only prepare payroll or other non-1040 tax returns.
6. You must be at least 18 years of age to obtain a PTIN.
7. Individuals who prepare tax returns as a VITA volunteer are not required to have a PTIN.
Competency Testing
1. Those who pass the competency test will be called “registered tax return preparers.”
2. The test will only be available in English, initially.
3. The test will be open book. Certain resources will be permitted and provided by the testing center.
4. The passing percentage for the test still hasn’t been determined. You may take the test an unlimited number of times, but the fee will apply each time you take the course.
5. If you don’t pass the test by December 31, 2013, your PTIN will be deactivated and you can no longer prepare tax returns for compensation.
6. Testing is expected to begin by midyear 2011.
7. To take the test, you must physically go to the testing site.
Other Credentials
1. Accredited Council of Accountancy for Taxation (ACAT) credential holders must obtain a PTIN and pass the competency exam unless they are a CPA, attorney or enrolled agent.
2. Registered or Licensed Public Accountants (LPAs) that have the same rights and privileges as a certified public accountant will not be required to pass the competency exam or satisfy the CPE requirements. However, if they do not have the same rights and privileges as a certified public accountant, they will be required to pass the competency exam and satisfy the CPE requirements. (Check with your state regulator.)
For information on training to prepare you to pass the unenrolled tax preparers exam, go to the following website:
http://www.gearup.com/cart/BrowseByTopic.aspx?Code=10-s250
Is creating this fourth class of individuals who are approved to prepare federal tax returns good for taxpayers or the accounting profession? What do you think?
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