August 2010 AKCPA Newsletter

President's Message

John Rodgers, CPA

Are you enjoying our summer with all of our liquid sunshine?  I’ve managed to fish some, but have done very little to work on my tan!!  The tanning rays just don’t seem to penetrate the rain gear.

Our Board of Directors recently had our August meeting where we rolled out our Compiled Financial Statements and listened to committee reports.  My thanks to Marja Beltrami, our past Treasurer, and Blank and Smith CPAs for their expeditious work on the compilation.

It was brought to the Board’s attention that membership renewals have been trickling in slowly, so here is your reminder.   If you haven’t sent in your annual renewal please do so as soon as possible.

We also continue to tweak and change our new web site, listening to the member suggestions, and monitoring the usage.  If you have any suggestions or difficulties, please let us know so we can make this a useful resource for our membership and interested parties.

Many of us have probably been watching the developments on the new requirements for 1099s and the SECA tax hike looming for S firm owners.  We will be watching these two changes very closely and hopefully our associations will be doing some serious lobbying on these provisions.

The Board acknowledges the tragic loss of our State’s former Senator, Ted Stevens, and the GCI party. We will be sending our sincere condolences to the families.  Senator Stevens has always been an advocate and friend for this organization and its members.  He will always be remembered.

 

 

Financial Literacy Committee

This is the first year that the Alaska Society of CPAs had a booth at Bear Paw to promote financial literacy, and what a tremendous response!  During the 3 day event, we spoke with hundreds of people interested in saving money in this shaky economy, gave away reminders for “20 Ways to Feed the Pig”, and had over 800 people enter our drawing for “Free Money”.

Congratulations to Kim Harness, Thomas Salyers and Leanne Torrel who each won $100 savings bonds, and to 9-year old Braden Shackelford who was the overall winner, receiving a $500 savings bond.

Also many thanks to local CPA firms Mikunda Cottrell, Rulien & Associates, and Rogers & Company for providing the financial resources to make this event possible.

The 360 Degrees of Financial Literacy is the CPA profession's national, collective effort to improve the financial understanding of Americans.  The program encourages CPAs to take a broad leadership role in volunteering to educate the American public, from schoolchildren to retirees, on financial topics that apply specifically to their stage of life.  You can get more information on this effort at www.360FinancialLiteracy.org or www.FeedThePig.org .

Members of the AKCPA Financial Literacy program are reaching out to Alaskan's of all ages, from school-age children to retirees, teaching them how to make wise financial choices at each stage of life.  We are available to speak at community events or meetings about saving money and other financial issues.  You can reach us at 562-4334 or akcpa@ak.net .

Jacque Briskey, CPA  Eagle River

Upcoming Events

IRS Live Presentation: The Affordable Care Act – Learn about the tax provisions of recent health care legislation

Date: September 9, 2010 (archived* for later viewing)

Time: 2 p.m. Eastern

Learn about Affordable Care Act including:

• Current tax provisions
• What IRS is doing to educate the public
• Where to find future updates

How to register for the session: http://www.visualwebcaster.com/IRS/70323/reg.asp?id=70323

IRS Updates and News Releases

IRS Releases Proposed Regulations Related to Fees for Preparer Tax Identification Numbers

The Internal Revenue Service today released proposed regulations that would establish a fee for individuals who apply for a preparer tax identification number (PTIN). Proposed regulations that were issued in March would require certain tax return preparers to obtain a PTIN. The IRS is working to finalize those proposed regulations, which are the first of a series of steps planned to increase oversight of federal tax return preparation.

The proposed regulations (REG-139343-08) would establish a fee of $50, payable to the IRS, to cover technology costs, as well as compliance and outreach efforts associated with the new PTIN program. The proposed regulations would also provide for an additional fee (expected to be substantially lower than $50) to be charged by the third-party vendor chosen to operate the new online system. That fee amount is expected to be announced soon, as well as additional details about the launch of a new online application system. These fees could change in future years as program costs are reevaluated.

Agencies are directed by the Office of Management and Budget (OMB) to charge user fees to recover the cost of services that convey special benefits beyond those available to the general public, such as the authority to prepare federal tax returns for compensation.

Tax professionals and other interested parties have until Aug. 23, 2010, to submit comments regarding the proposed regulations. The official publication date of these proposed regulations is July 23.

Here are a couple of updated FAQs posted to IRS.gov.

Will the recommendations apply to individuals who only prepare payroll or other non-1040 series returns? (revised 7/20/10)

All paid tax return preparers will be required to obtain a preparer tax identification number (PTIN). If the preparer is not an attorney, certified public accountant, or enrolled agent, the preparer will need to satisfy the competency test and continuing education requirements. The initial two tests will be for individuals who prepare Form 1040 series returns.  Additional guidance for individuals who do not prepare any Form 1040 series returns and who are not an attorney, CPA, or enrolled agent will be provided when testing is implemented.

The two competency tests are described as covering: 1) Wage & non business 1040 and 2) Wage and Small Business 1040. What does small business include? And how would this impact those who prepare other business returns? (posted 7/20/10)

For competency testing purposes, small business will include Form 1040 Schedules C, E and F and various other 1040 related forms. Appendix I of the Return Preparer Review report contains a detailed list. Additional guidance for individuals who do not prepare any Form 1040 series returns and who are not an attorney, CPA, or enrolled agent will be provided when testing is implemented. The IRS plans to add a third test with regard to business tax rules after the three-year implementation phase is completed.

IRS Requests Public Input on Expanded 1099 Information Reporting Requirement.

The Internal Revenue Service today invited public comment on how to most effectively carry out a law change that, starting in 2012, will require businesses to report a wider range of payments to contractors, vendors and others, usually on Form 1099. These comments will help the IRS issue guidance that implements this provision in a manner that minimizes burden and avoids duplicate reporting.  Under a proposed regulation, many business purchases made with credit or debit cards would be exempt from the new reporting requirement because they are already reported by banks and other payment processors. The IRS seeks comments on additional circumstances in which duplicate reporting might otherwise occur and on rules that would prevent such duplicate reporting.

The change, enacted in March but not effective until 2012, expanded existing reporting requirements to include a business’s payments related to goods and other property, and payments to most corporations. With some exceptions, payments to corporations are currently exempt from this requirement.

There are three ways to submit comments.

• Email to:  Notice.Comments@irscounsel.treas.gov. Include “Notice 2010-51" in the subject line.
• Mail to: Internal Revenue Service, CC:PA:LPD:PR ( Notice 2010-51), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
• Hand deliver to: CC:PA:LPD:PR ( Notice 2010-51), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, between 8 a.m. and 4 p.m., Monday through Friday.

The deadline is Sept. 29, 2010. Further details are in Notice 2010-51, posted today on IRS.gov.

Closing Deadline Extended to Sept. 30 for Eligible Homebuyer Credit Purchases

http://www.irs.gov/irs/article/0,,id=225078,00.html

Eligible taxpayers who contracted to buy a home, qualifying for the first-time homebuyer credit, before the end of April now have until Sept. 30, 2010 to close the deal, according to the Internal Revenue Service.  The Homebuyer Assistance and Improvement Act of 2010, signed by the President today, extended the closing deadline from June 30 to Sept. 30 for any eligible homebuyer who entered into a binding purchase contract on or before April 30 to close on the purchase of the home on or before June 30, 2010. The new law addresses concerns that many homebuyers might be unable to meet the original June 30 closing deadline.  The IRS reminds taxpayers that special filing and documentation requirements apply to anyone claiming the homebuyer credit. To avoid refund delays, those who entered into a purchase contract on or before April 30, but closed after that date, should attach to their return a copy of the pages from the signed contract showing all parties' names and signatures if required by local law, the property address, the purchase price, and the date of the contract.

IRS Issues Regulations on 10-Percent Tax on Tanning Services Effective July 1

http://www.irs.gov/newsroom/article/0,,id=224313,00.html

The Internal Revenue Service today issued regulations outlining the administration of a 10-percent excise tax on indoor tanning services that goes into effect on July 1.

The regulations were published today in the Federal Register.  In general, providers of indoor tanning services will collect the tax at the time the purchaser pays for the tanning services. The provider then pays over these amounts to the government, quarterly, along with IRS Form 720, Quarterly Federal Excise Tax Return.  The tax does not apply to phototherapy services performed by a licensed medical professional on his or her premises. The regulations also provide an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee.  The IRS and Treasury Department invite comments.

Affordable Care Act Provides Expanded Tax Benefit to Health Professionals Working in Underserved Areas

http://www.irs.gov/newsroom/article/0,,id=224387,00.html

As part of a larger Administration announcement on efforts to strengthen the health care workforce, the Internal Revenue Service today announced that under the Affordable Care Act health care professionals who received student loan relief under state programs that reward those who work in underserved communities may qualify for refunds on their 2009 federal income tax returns as well as an annual tax cut going forward.

The Affordable Care Act included a change in the law, effective in 2009, that expands a tax exclusion for amounts received by health professionals under loan repayment and forgiveness programs. Prior to the new law, only amounts received under the National Health Service Corps Loan Repayment Program or certain state loan repayment programs eligible for funding under the Public Health Service Act qualified for a tax exclusion. Health care professionals who have not yet filed for 2009 need not report eligible loan repayment or forgiveness amounts when they file. Those who have already filed may exclude eligible amounts by filing Form 1040X, Amended U.S. Individual Income Tax Return.

IRS Begins Accepting Applications for Qualifying Therapeutic Discovery Project Program

http://www.irs.gov/newsroom/article/0,,id=224513,00.html

The Internal Revenue Service today announced that small firms may now begin applying for certification for tax credits or grants available under the Qualifying Therapeutic Discovery Project Program, created by the Affordable Care Act.  These credits or grants are available for projects that show significant potential to produce new cost-saving therapies, create U.S. jobs, and increase U.S. competitiveness.  Form 8942, Application for Certification of Qualified Investments Eligible for Credits and Grants Under the Qualifying Therapeutic Discovery Project Program, and its instructions are now available. Applications must be postmarked no later than July 21, 2010.

The qualifying therapeutic discovery project program is targeted to projects that show potential to produce new therapies, reduce long-term health care costs, or significantly advance the goal of curing cancer within the next 30 years.  The credit or grant covers up to 50 percent of the cost of qualifying biomedical research, up to a maximum credit of $5 million per firm and $1 billion overall, and is only available to firms with no more than 250 employees. Credits and grants are available for investments made in 2009 and 2010.

SSA/IRS Summer Issue 2010 Now Available.

The Summer issue of the SSA/IRS Reporter is now available.  This issue includes articles on the benefits of qualified joint ventures for family businesses and disaster assistance and emergency relief for individuals and businesses.

IRS TAX Map

The IRS Tax Map will help you find numerical lists of IRS Forms, Publications, and an alphabetical list of tax topics for which basic tax information is given.  It's a good quick reference to get familiar with an unknown form or topic.

Headliner Explains Limitations on Home Mortgage Interest Deductions

Headliner Volume 299 explains the limitations on home mortgage interest deductions.  Acquisition indebtedness is used to acquire, construct, or substantially improve a residence, and cannot exceed $1,000,000. Home equity indebtedness is any debt other than acquisition indebtedness and cannot exceed $100,000.

CPA Disbarred for Failure to Exercise Due Diligence and Compliance Problems

The Office of Professional Responsibility (OPR) has prevailed in an agency appeal involving issues which include the due diligence responsibilities of a CPA under the Rules of Practice before the IRS (Circular 230).  The May 28th decision of the Appellate Authority has upheld the Administrative Law Judge’s (“ALJ”) disbarment of CPA Tim W. Kaskey found, among other things, that Kaskey failed to exercise due diligence in preparing tax returns for a corporation and its husband and wife shareholders.

IRS Opens Dedicated Phone Line for Gulf Oil Spill Victims

The Internal Revenue Service today announced the opening of a special telephone line for taxpayers affected by the Gulf oil spill.

Individuals who have questions about the BP payments or who are experiencing filing or payment hardships because of the oil spill should contact the IRS at 866-562-5227.

The special services phone line will operate weekdays from 7 a.m. to 10 p.m. local time.

In certain cases, the IRS can assist oil spill victims by suspending collection and examination actions. Taxpayers who need this assistance must request it. Others may decide to continue making payments because interest will continue to accrue on outstanding balances, even if some penalties are abated.

In addition to postponing collection actions, the IRS continues to have a number of other ways to help taxpayers deal with oil spill issues or other economic hardships, including:

• Added flexibility for missed payments on installment agreements and offers in compromise for previously compliant individuals.
• Consideration of a taxpayer’s current income and potential for future income when negotiating an offer in compromise.
  Accelerated levy releases.
• Assistance of the Taxpayer Advocate Service for those experiencing economic harm and seeking help resolving tax problems that have not been resolved through normal channels.

Exempt Organization Update - July 2010

1. IRS Issues Prohibited Tax Shelter Final Regulations
2. IRS Live:  Free Webinar on Affordable Care Act
3. Help Wanted:  TE/GE Seeks Candidates for Senior Tax Law Specialist Positions
4. IRS Invites Public Comment on New Reporting of Payments Made in a Trade or Business
5. Nine Tax Tips on the Ten Percent Tax on Tanning Services

If you have a technical or procedural question relating to Exempt Organizations, visit the Charities and Nonprofits homepage on the IRS.gov Web site.  If you have a specific question about exempt organizations, call EO Customer Account Services at 1-877-829-5500.

National Taxpayer Advocate Submits Mid-Year Report to Congress

The National Taxpayer Advocate has released a report to Congress that identifies the priority issues the Taxpayer Advocate Service (TAS) will address during the coming fiscal year.

Employee Plans News – July 2010

Read the July Special edition of the Employee Plans News for articles on:

• New Form 8955-SSA
• Notice 2010-48
• Heads Up - User Fees to Increase February 1, 2011
• Help Wanted: TE/GE Seeks Candidates for Senior Tax Law Specialist Positions

To read the July 2010 Special Edition, please visit the Employee Plans News page in the Retirement Plans Community section of the IRS.gov Web site.

If you have a technical or procedural question relating to retirement plans, please visit the EP Customer Account Services page in the Retirement section of the IRS.gov Web site.  If you have a specific concern about your retirement plan, call EP CUSTOMER ACCOUNT SERVICES at 1-877-829-5500.

IRS Tax Stats Dispatch

Individual Income Tax Returns, 2008 - Publication 1304, Statistics of Income—2008 - Individual Income Tax Returns, is now available in electronic format.  The print version will be available in August.  The publication includes sections on changes in law, explanation of terms, and the description of the sample, as well as many statistical tabulations.  Tables from Publication 1304 are also available and present data for the number of returns filed, sources of income, exemptions, itemized deductions, and tax computations. Data in the tables are presented by size of adjusted gross income, marital status, age, type of tax computation, and rate at which tax was computed.

Technical Guidance

Notice 2010-51 invites public comments regarding guidance to be provided to payors and other affected persons concerning new requirements with respect to the reporting of payments made in the course of the payor’s trade or business.  Section 6041 of the Internal Revenue Code generally requires information returns to be made by every person who makes payments, as defined in section 6041(a), aggregating $600 or more in any taxable year to a single payee in the course of the payor’s trade or business; new amendments to section 6041 expand reporting to payments of gross proceeds and payments to corporations.

Notice 2010-52 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code.  It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), the 24-month average segment rates, and the funding transitional segment rates under § 430(h)(2).  In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007.

Revenue Ruling 2010-19 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.  The rates are published monthly for purposes of sections 42, 382, 412, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

This page shows the exposure drafts listed by organization, title and description along with their comment period deadline and includes website addresses for all of the outside organizations should you need to get more information.

We know that you receive e-mails and press releases on many exposure drafts but may not be notified of all of them, especially the external ones.  Therefore, we thought it would also be helpful for you to receive this since it is such a comprehensive listing.

Outstanding Internal and External Exposure Drafts

FASB

Issue date -- 5/26/10

Proposed ASU, Accounting for Financial Instruments and Revisions to the Accounting

for Derivative Instruments and Hedging Activities: Financial Instruments (Topic 825)

and Derivatives and Hedging (Topic 815)

Comment deadline -- 9/30/10

Issue date -- 5/26/10

Proposed ASU, Comprehensive Income (Topic 220): Statement of Comprehensive Income

Comment deadline -- 9/30/10

ARSC (AICPA)

Issue date -- 6/3/10

Proposed Statement on Standards for Attestation Engagements, Reporting on Compiled

Prospective Financial Statements When the Practitioner’s Independence Is Impaired

Comment deadline -- 9/10/10

ASB (AICPA)

Issue date -- 6/1/10

Proposed Statement on Auditing Standards, Filings With the U.S. Securities and Exchange

Commission Under the Securities Act of 1933

Comment deadline -- 8/2/10

GASB

Issue date -- 6/17/10

Accounting and Financial Reporting for Service Concession Arrangements (revised Exposure Draft)

Comment deadline -- 8/17/10

IFAC

Issue date -- 5/17/10

Professional Accountants in Business Strategy and Work Plan for 2010–2012

Comment deadline -- 7/14/10

CPA Crossings Best Practice Webinars

The Alaska Society of CPAs, in partnership with CPA Crossings, LLC, is offering special Accounting & Technology Best Practice Webinars. These webinars are designed to offer topics that provide practical tips to improve productivity within your firm. Take advantage of these conveniently scheduled two hour live presentations that can save time and money by participating from the convenience of your office or home.

• August 17 Outlook Part 1 – E-Mail Management Tips & Techniques (Basic) (11:00 am EDT)Outlook Part 2 – E-Mail Management Tips & Techniques (Advanced) (2:00 pm EDT)
• August 18 Outlook Part 3 – Calendar & Contact Management Tips & Techniques (11:00 am EDT)Microsoft Office 2007 – What’s New? (2:00 pm EDT)
• August 19 NEW Microsoft PowerPoint Level 1 - Creating Professional Presentations (11:00 am EDT)NEW Microsoft PowerPoint Level 2 - Advanced Presentation Design (2:00 pm EDT)
• August 24 Excel - Formulas and Functions (11:00 am EDT)Excel - Auditing Your Spreadsheets to Insure Data Integrity (2:00 pm EDT)
• August 25 Excel - Pivot Tables (11:00 am EDT)Excel – Tips, Tricks & Techniques (2:00 pm EDT)
• August 26 Client Portals – How to Develop A Strategic Model (11:00 am EDT)XBRL Level 1 – The Next Evolution in Financial Reporting (2:00 pm EDT)
• August 31 How To Go Paperless (11:00 am EDT)NEW Web Conferencing – The Next Best Thing To Being There (2:00 pm EDT)

Visit us at http://cpe.cpacrossings.com/akcpa to access full course descriptions and schedule of CPA Crossings upcoming webinars and registration information.
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