Happy Holidays! December 2010 Newsletter
IRS/CPA Practitioner Liaison Meeting
Anchorage, AK
November 9, 2010
Attendees:
Internal Revenue Service
- Mike Cvitkovic, Stakeholder Liaison
- Kari Gilje, Stakeholder Liaison
- Brenna Spence, W&I Field Assistance
- Diane Nesvick, TE/GE Indian Tribal Government Specialist
- John Williamson, SB/SE Collection Group Manager
- Kristia Douts, Local Taxpayer Advocate
- Lucinda Goodson, TAS Senior Analyst
- Marilyn Ames, SB/SE Division Counsel
- Sonia Oen, SB/SE Exam Group Manager
Practitioner Representatives
- Therese Sharp, Chair, ASCPA, Alaska Society of CPAs
- Cynthia Coulter, ASCPA
- John Rogers, ASCPA
- Karen Ague, ASCPA
- Lisa Rogers, ASCPA
- Shelda Duff, ASCPA
- Charles Schuetze, ABA, Alaska Bar Association
- Rodney Kleedehn, ABA
- Barbara Hompesch, EA, Alaska Society of Independent Accountants
- Kathy Riley, EA, ASIA
- Paula Laurion, EA, ASIA
Meeting Summary
Speaker 1 – Mike Cvitkovic, Stakeholder Liaison
The first item was the Return Preparer Initiative. On September 28, IRS opened the PTIN registration system for paid preparers to apply for or renew their PTINs. All tax return preparers, who are paid to prepare all or substantially all of any federal tax return or claim for refund, are required to register. Effective January 1, 2011, use of the PTIN is no longer optional; it is required. The first step in the registration process is to create an account. This return preparer account is a separate account from the e-services account that a preparer might have. The IRS has established a Return Preparer Office which will use the new return preparer account to provide program updates and other information. The first thing the return preparer account will do is e-mail a temporary password for the account. The preparer can then return to the sign-up system with the temporary password and create a permanent password. The temporary password e-mail will be sent right away. Some preparers have reported not receiving the email. If it is not received, check the junk or spam folder. If the email is not received in the regular or junk folder, the preparer should update the security filter to allow emails from TaxPro_PTIN@irs.gov. Then to generate a new temporary email password, go back into the sign-up system and click on “Forgot your password? Click here.” The second step in the registration process is to apply for a PTIN. This involves an authentication step. The applicant is authenticated by providing six pieces of information, five of which come from their last personal income tax return filed (first name, last name, SSN, address, and filing status). The remaining datum is date of birth. Preparers have reported problems authenticating. First name, last name, and address seem to be the cause. Preparers can call the Practitioner Priority Service at 1-866-860-4259 to check the information IRS has on record. Punctuation should be omitted when entering data. Spacing is important. Once authenticated the applicant must answer questions regarding felony convictions and tax compliance. If the applicant doesn’t have a SSN, either a Form 8945 (conscientious religious objection) or Form 8946 (foreign person) will need to be mailed in. The third step in the registration process is to pay a $64.25 fee either via credit card or direct debit. After confirmation of payment, the PTIN is provided. Whether a prior PTIN holder receives the old PTIN depends on whether the name, SSN, and date of birth entered on the application matches the name, SSN, and date of birth on the old PTIN database that was closed in August. An email containing a welcome letter is sent within 24 hours to the applicant. If the online application won’t work or isn’t desired, a paper Form W-12 may be submitted with a check or money order. The turn-around time is six weeks for the paper form. The second phase of the initiative involves preparers, who are not CPAs, Attorneys, or Enrolled Agents, passing a competency testing. IRS will select a vendor to administer the testing and plans to start testing in the late spring of 2011. The preparers involved will have until December 31, 2013 to pass the test. There will be two tests initially: Form 1040/non-business and Form 1040/business. The IRS Commissioner has indicated that there will be relief for testing requirements for people who do not sign a return and work in a professional firm under the supervision of an accountant, enrolled agent or lawyer. The third phase of the initiative involves continuing education for preparers, who are not CPAs, Attorneys, or Enrolled Agents. The requirement is 15 hours. The Commissioner has indicated that, during the first year of implementation, the requirement for continuing education will be waived. The best place to find the latest information on the return preparer program is by checking IRS.gov at http://www.irs.gov/taxpros/article/0,,id=210909,00.html.
Because of the $64.25 PTIN fee, the IRS will be reducing the $125 fee that enrolled agents usually pay. The amount of the reduced fee should be announced by year end. Enrolled agents whose SSNs end in 4, 5, or 6 have had their renewal period/payment deadline postponed. Announcement 2010-81
The first phase of the efile mandate begins on January 1, 2011. Preparers will be required to start using IRS e-file if they file 100 or more federal individual or trust tax returns during the year. See Issue #1 below for more information. http://www.irs.gov/taxpros/providers/article/0,,id=223832,00.html
Proposed regulations have been issued to eliminate making federal tax deposits by paper coupons after Dec. 31, 2010. The proposed regulations generally maintain existing rules for depositing federal taxes through the Electronic Federal Tax Payment System (EFTPS). A Letter 4631 has been sent payers who used coupons during the previous 18 months alerting them of the change and pre-enrolling them in EFTPS. http://www.irs.gov/newsroom/article/0,,id=226706,00.html
IRS is discontinuing the mailing of paper income tax packages. This affects both individual and business returns. In early October postcards were sent to affected taxpayers. http://www.irs.gov/businesses/small/article/0,,id=228152,00.html
Starting with next year’s tax filing season the “debt indicator” will no longer be provided to tax preparers and associated financial institutions. This information was used to facilitate refund anticipation loans (RALs). IRS plans to explore the possibility of providing a new tool for the 2012 tax filing season to give taxpayers a mechanism to use an appropriate portion of their tax refund to pay for the services of a professional tax return preparer. http://www.irs.gov/newsroom/article/0,,id=226310,00.html
The Small Business Jobs Act passed into law Sept.27, 2010. Sections of the bill affect Small Business Stock, General Business Credits, Section 179 Property, Bonus Depreciation, Start-Up Expenditures, and more. An exposition page on irs.gov is expected.
Notice 2010-68 maintains the current system in Alaska for fuel distribution and nontaxable use and provides that Alaska continues to remain exempt from the dyeing requirements for nontaxable use of diesel fuel and kerosene.
Notice 2010-58 provides guidance taxpayers electing a 3, 4, or 5-year net operating loss (NOL) carryback instead of a normal 2-year carryback. The election applies to an applicable NOL, which is an NOL for a taxable year ending after December 31, 2007, and beginning before January 1, 2010.
Form 1099-B, Proceeds from Broker and Barter Exchange Transactions will be expanded in 2011 to include the cost or other basis of stock and mutual fund shares sold or exchanged during the year. The expanded form will also be used to report whether gain or loss realized on these transactions is long-term or short-term. The expanded form, to be first used for calendar-year 2011 sales, must be filed with the IRS and furnished to investors in early 2012. Notice 2010-67.
The IRS will defer the reporting on Form W-2 of the cost of coverage under an employer-sponsored group health plan, making that reporting by employers optional in 2011. Employer-provided health care coverage remains not taxable.
IRS has realigned the Large and Mid-Size Business (LMSB) division to create a more centralized organization dedicated to improving international tax compliance. The name of the IRS’s large corporate unit — LMSB — changed on Oct. 1 to the Large Business and International division (LB&I).
Issues & Status
Issue #1: E-file Mandate Exceptions
Practitioner posed a question regarding the e-file mandate. How would a practitioner handle situations where a return can’t be e-filed due to system limitations or due to objection from a client? IRS is developing two new forms to address e-file mandate exceptions. Form 8948, Preparer Explanation for Not Filing Electronically, will be attached to the taxpayer’s Form 1040 and will indicate the reason that this particular return is not being filed electronically. Possible reasons include taxpayer election, religious exemption, unresolvable e-file reject condition, form not supported by e-file software, and other. Form 8944, Preparer Hardship Waiver Request, will be submitted by a preparer seeking exclusion from the e-file mandate entirely. Possible reasons include bankruptcy, economic, Presidential disaster area, and other.
Issue #2: Decedents Dying in 2010
Practitioner asked if the IRS is developing a form to attach to a decedent’s final income tax return reporting the assets, basis, fair market value at date of death, etc. as described in the Internal Revenue Code? Form 8939, Allocation of Increase in Basis for Property Received from a Decedent, is being developed to implement the modified carryover basis rules that replace IRC section 1014 fair market value basis for property acquired from a decedent dying in 2010. This information return is required by IRC section 6018.
Issue #3: Amended returns
Practitioner elevated concerns about submitting amended returns. With the redesign of the Form 1040X into a one-column format, will the IRS accept Forms 1040X generated generated by software that displays a three-column format? The Adjustments Unit will accept the three-column formatted forms during the transition period. (The next question was not addressed at the meeting, but is being answered here) When will amended returns be able to be filed electronically? No word on Form 1040X. The Following business forms can be amended electronically: 1065, 1065-B, 990, 990-EZ, 990-PF, 1120-F, 1120-POL, and 2290.
Issue #4: Contacting Alaska Offices
Practitioner queried how best to communicate with the local IRS office outside Anchorage. IRS has a six employee office in Fairbanks and a 3 employee office in Soldatna. The best method is to leave voice mail directly with the Revenue Officer or Revenue Agent involved with the case.
Issue #5: Taxpayer Records in Electronic Format
Practitioners raised concerns over the amount of information contained in the backup files that IRS personnel will be receiving, some of which is beyond the needs of an audit. Revenue agents have been trained and are now requesting and accepting taxpayer records in electronic formats, such as QuickBooks and Peachtree. This new audit tool will increase the speed and efficiency of field examinations, reduce taxpayer burden, and be a positive development for the audit process. Sonia distributed a list of the standard QuickBook reports that an agent would use in an examination. Regarding other information contained in the backup files, sensitive business information is protected by strict federal disclosure laws just like all other books and records submitted to the IRS in an examination. These laws impose severe fines and penalties on any IRS employee who improperly discloses the taxpayer’s information to unauthorized parties, making the laws a big deterrent on any improper release of this data.
Issue # 6: Testing Sites
Practitioner asked if Fairbanks will be one of the sites where the unenrolled return preparers would take the competency testing under the Return Preparer Initiative. At this time there is no word on that topic.
Issue #7 Which PTIN to use
Practitioner wanted to know which PTIN to use if a new PTIN is assigned and a prior year tax return containing an old PTIN is amended. The old PTIN database is now closed so the new PTIN should be used.
Roundtable & Comments
John noted that Collections is getting staff out into the field as much as possible. There has been a staff reduction of three over the last few months. Plan is to add ten staff if the Continuing Resolution permits.
Brenna indicated that Field Assistance will begin a new remittance project to process checks faster. Homebuyer credit repayment notices will be issued soon for the First-Time Homebuyers who must start repayments in 2010. Kurt Crist has transferred to the Spokane WA walk-in so new management is coming. The nature of Field Assistance staff duties are such that they are not always available to preparers and their clients.
Sonia mentioned that the Exam staff is at eleven with one in Fairbanks and one in Soldatna. Plan is to put office audit back up in Alaska with 4 staff. Staff will be doing compliance visit during the upcoming months. She reported that LB&I still has seven staff.
Marilyn stated that the calendar date is June 14th 2011. She will handling Counsel duties for Alaska and Houston TX.
Diane noted that her three staff deal with tribal governments, not native corporations. Three three-day workshops on payroll and excise taxes and other topics will be offered the last week in March and the first two weeks in April.
Next Scheduled Meeting
The next meeting will be scheduled for May 2011.
Surviving The Tax Season- Article #3
Have The Endorphins Kicked In Yet?
By Cheryl Leitschuh, Ed.D., RCC
Endorphins. They are that wonderfully natural hormone we all possess that gives us the feeling of sedation while operating at our peak performance. Through the release of endorphins we add energy and vitality to our everyday existence. In the midst of this tax season are you feeling sedated while operating at your peak performance? Do you feel increased energy and vitality in your everyday work?
Dale Carnegie told the story of two men who were out chopping wood. One man worked hard all day, took no breaks, and stopped only briefly for lunch. The other chopper took several breaks during the day and a short nap at lunch. At the end of the day, the woodsman who had taken no breaks was quite disturbed to see that the other woodsman had cut more wood than he. He said, “I don’t understand. Every time I looked around, you were sitting down, yet you cut more wood than I did.” He associate said, “Did you notice that while I was sitting down, I was sharpening my ax?”
Professional athletes know that to achieve best performance they need to work in cycles. They need to keep the target range of performance in sight. Working too fast or too slow, you move out of the target range and decrease performance. Knowing what is the target range and self-managing to this range is the key to increasing your energy and vitality.
Professional CPA’s can use the same strategies during their peak performance time of the year, tax season. Following are three key tips to achieving this vitality and energy.
Performance Enhancement #1: RECOGNIZE WHEN YOU ARE ‘IN THE ZONE’
What does it feel like when you are working on a project in your target zone of performance? How do you know you are there? What makes the difference? What do you do to make this event occur? The more answers you have to these questions, the more likely you can “sharpen the ax” to achieve peak performance.
Tip from the Coach: If you have no clue to the answers to these questions, do not despair. This is a good time to become an observer of YOU, to see what answers appear. Just like the woodsman, take a few moments throughout the day to ask yourself if you are “in the zone.” If you are, what is happening to keep you from being in your ideal zone? If you were not, what would you need to do to move to the zone?
Performance Enhancement #2: PACE YOURSELF
If endorphins occur when you are in your target range then the question becomes, “how do you pace yourself to stay in this range?” Just like the woodsman, taking time to “sharpen the ax” leads to increased performance. Recognize that you are the “ax” to get the work done during this intense time of year. What do you do to pace yourself and reenergize yourself throughout the day?
Tip from the Coach: Here are several ideas I have used successfully with others:
- Rename “coffee breaks” into “energy breaks”. Coffee does not create energy. Try substituting nutritional snacks such as nuts, fruit, bagels, and pretzels.
- Take a short walk at various times throughout the day. This can be up and down the stairs, a quick break outside or even a walk around your office.
- Take a power nap. Twenty to thirty minutes of rest and/or sleep will reenergize your system. Hang the “do not disturb” sign outside your office for this refreshing energy break.
Performance Enhancement #3: FOLLOW YOUR CIRCADIAN RHYTHMS
We all have rhythms to our day when our energy and creativity are highest and when it’s the lowest. This is called your circadian rhythm and it varies from person to person. In general, some people are “night owls”. Their highest energy levels occur later in the day. Others are “early birds”. Their highest energy levels occur early in the day. By understanding your own circadian rhythm and designing your day around this pattern, you can use your natural rhythms to enhance your performance as a CPA professional.
Tip from the Coach: Few of us are lucky enough to have a work schedule that follows our circadian rhythm. During tax season when you are working 10-15 hour days, it is impossible to only work at peak times. However, you can schedule your day based on your patterns. This means schedule high energy and creative tasks during your peak times and schedule maintenance and routine tasks during your lower times.
For additional resources or to contact Cheryl Leitschuh, visit www.FromStaffToPartner.com
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.
- December 1 Adobe Acrobat for Accountants I – Basic Features & Functions (11:00 am EST)Adobe Acrobat for Accountants II – Advanced Features & Functions (2:00 pm EST)
- December 2 XBRL – The Next Evolution in Financial Reporting (11:00 am EST) Cyber Security Best Practices – What You Should Know and Do (2:00 pm EST)
- December 7 Outlook Part 1 – E-Mail Management Tips & Techniques (Basic) (11:00 am EST)Outlook Part 2 – E-Mail Management Tips & Techniques (Advanced) (2:00 pm EST)
- December 9 Excel – Formulas and Functions (11:00 am EST) Word – Advanced Tips, Tricks & Techniques (2:00 pm EST)
- December 10 Outlook Part 3 – Calendar & Contact Management Tips & Techniques (11:00 am EST) NEW Windows 7 – Tips & Techniques (2:00 pm EST)
- December 14 Excel – Basic Techniques for the Novice User (11:00 am EST) How to Go Paperless (2:00 pm EST)
- December 15 Excel – Tips, Tricks & Techniques (2:00 pm EST) Auditing & Fraud Technology Tools (5:00 pm EST) Qualifies for A & A CPE! SPECIAL TIME!
- December 16 Document Management Systems Software Review (11:00 am EST) Client Portals – How To Develop A Strategic Model (2:00 pm EST)
- December 18 Adobe Acrobat for Accountants I – Basic Features & Functions (9:00 am EST) SPECIAL TIME! Excel - Auditing Your Spreadsheets to Insure Data Integrity (12:00 pm EST) SPECIAL TIME!
- December 20 NEW Windows 7 – Tips & Techniques (11:00 am EST) Adobe Acrobat Forms – Level 1 (2:00 pm EST)
- December 21 NEW Microsoft PowerPoint Level 1 - Creating Professional Presentations (11:00 am EST) NEW Microsoft PowerPoint Level 2 - Advanced Presentation Design (2:00 pm EST)
- December 22 NEW Tax Practice Ethics: Section 7216 Regulations (qualifies for Ethics CPE) (11:00 am EST) NEW Tax Implications of the Healthcare Reform Act (2:00 pm EST) NEW 2010 Year-End Tax Planning (5:00 pm EST) SPECIAL TIME!
- December 23 NEW Cloud Computing (11:00 am EST)
- December 27 NEW Excel – Basic Techniques for the Novice User (11:00 am EST) Excel – The Power of Pivot Tables (2:00 pm EST)
- December 28 Excel – Formulas & Functions (11:00 am EST) Excel - Auditing Your Spreadsheets to Insure Data Integrity (2:00 pm EST)
- December 29 Adobe Acrobat for Accountants I – Basic Features & Functions (11:00 am EST) Adobe Acrobat for Accountants II – Advanced Features & Functions (2:00 pm EST)
- December 30 Adobe Acrobat for Accountants III – Tips & Techniques for the Experienced User (11:00 am EST) Auditing & Fraud Technology Tools (2:00 pm EST) Qualifies for A & A CPE!
- December 31 Outlook Part 1 – E-Mail Management Tips & Techniques (Basic) (11:00 am EST)Outlook Part 2 – E-Mail Management Tips & Techniques (Advanced) (2:00 pm EST)
Stay focused… Save time… Save money… Avoid travel!
Take a Webinar
December
Visit us at http://cpe.cpacrossings.com/akcpa to access full course descriptions and schedule of CPA Crossings upcoming webinars and registration information.
Outstanding Internal and External Exposure Drafts –
FASB
Issue date -- 10/12/10
Proposed Accounting Standards Update, Receivables (Topic 310): Clarifications to Accounting for Troubled
Debt Restructurings by Creditors
Comment deadline -- 12/13/10
Issue date -- 10/6/10
Proposed Accounting Standards Update, Business Combinations (Topic 805): Disclosure of Supplementary
Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force)
Comment deadline -- 11/5/10
Issue date -- 10/6/10 Proposed Accounting Standards Update, Intangibles—Goodwill and Other (Topic 350): How the Carrying Amount of a Reporting Unit Should Be Calculated When Performing Step 1 of the Goodwill Impairment Test (a consensus of the FASB Emerging Issues Task Force)
Comment deadline -- 11/5/10
Issue date -- 10/6/10 Proposed Accounting Standards Update, Health Care Entities (Topic 954): Disclosure about Net Revenue and Allowance for Doubtful Accounts (a consensus of the FASB Emerging Issues Task Force)
Comment deadline -- 11/5/10
IFAC
Issue date -- 10/13/10 International Auditing Practice Statements, Proposals Relating to the Withdrawal of Existing IAPSs and Clarification of the Status and Authority of New IAPSs and Proposed IAPS 1000, Special onsiderations in Auditing Complex Financial Instruments
Comment deadline -- 2/11/11
GAO
Issue date -- 8/2010 Government Auditing Standards, 2010 Exposure Draft
Comment deadline -- 11/22/10
