August 2012 Newsletter

Bethe Davis enjoying hiking at Hatcher Pass

President's Message

Anyone who has kids (or can still remember being one) knows that the generations differ in many ways from clothing styles and music to the less obvious things such as values, cultural identity, and motivations.   Awareness and understanding of these differences can enhance our ability to attract, develop and retain key staff and clients.  I became interested in the generational differences after attending a presentation for the AICPA by Cam Marston, generational expert and founder of “Generational Insights” (see www.generationalinsights.com).  The presentation inspired me to look at the groups around me a little differently and I also began to ask some questions at home and at our firm… specifically “Do you really sleep with your cell phone?” 

The workforce today is composed of four distinct generational groups.  These groups share certain life experiences such as demographic trends, newsworthy public events, and hobbies and activities in addition to many other experiences.   These commonalities create a universal framework of values, perceptions, and goals across a generation.  While every person is an individual (a precept felt more strongly by some generations than others) this framework allows us to develop a collective understanding of the general motivations and to help us better attract and serve our clients as well as recruit, motivate, or manage employees.

While there is some argument and overlap on the dating and naming of the generational groupings, the following represents a common classification. 

1. Silents/Matures/Civics/Traditionals – these are people born prior to 1945. Age 67 and older. Not many in the workforce, especially in relation to boomers but some are still working.
2.  Baby Boomers – born 1946 to 1964. Ages 66 to 48
3. Gen X’s, also called the “Slacker generation” – born 1965 to 1979. Ages 47 to 33
4. Gen Y also called the “Millennials” or “Me generation”  - born 1980 to 2000.  Ages 32 to 12

The areas below describe some of the common characteristics of the groups.  It is by no means comprehensive, there may be significant overlap depending on where people fall for the cut off and (interestingly) what area of the country they were raised.  Remember, no one may fit exactly into a group, instead they represent general trends and commonalities.

Silents/Matures/Civics/Traditionals -  Are known for a strong work ethic.  The world shaping events they either lived through or were relayed from their parents include World War II, the Korean Conflict, The Depression, and the New Deal. Their value system idealizes hard work, careful budgeting, loyalty, and respect for authority and they were willing to sacrifice and do without for a better future for their children.  They are slow to embrace any change and may have difficulty with technology.  They may have trouble learning from those a lot younger than they are.  Most of this group are retired but may represent a client population.

Baby Boomers –   Boomers are generally optimistic, thrive on process, and appreciate conveniences. They are also characterized by a hard work ethic and will work long hours – with financial incentives.  They represent experience and a commitment to quality. They tend to look for meaning in life and may also enjoy office politics.  They tend to place greater value on face to face communications over electronic methods and generally do not do well at multitasking.  They tend not to be as flexible or accepting of change as the younger generations. They may be skeptical about benefits of “new” technology.  They tend to value teamwork. They tend to be flexible and value their work as part of their life rather than adjacent to or supporting their life.  Relationship building is key to success in life and business.

Gen X’s, also called the “Slacker generation” – This generation may prefer to work alone, tend to be more pessimistic and cynical, and can be antisocial.  They tend to trust peer to peer relations over an “expert” opinion and value their time off over working long hours (many of this generation had a parent that put in long hours).  They will work to build a relationship, but maybe only after the value is proven.  Time may be paramount.   Brought up in an uncertain, changing economic climate, they tend to be practical, goal driven, and independent.  They also tend to be better at planning and save more than the Boomers.  This generation was a product of soaring divorce rates and tends to value family.  Gen X likes ongoing training and learning new skills, and may enjoy casual, functional environments.

Gen Y also called the “Millennials” – This group tends to have excellent technical capabilities and can multitask.  Brought up in the information age, they are comfortable doing research online, value technology, and adapt to change well. They are used to constantly communicating with voice, social media, instant messaging, Skype, texting, and blogging.  Millennials may sleep with their cell phones.  They grew up in the climate of the “participation” trophy and have been well cared for and very shepherded through their early years.  Their parents may have told them to find a job that “makes them happy” and this may cause job hopping.  They are group oriented but like feeling “unique” within the group.  Some say they are “younger longer” – what the Boomers were doing at 21, the Millennials are waiting until they are 29 for.  They tend to have very good self esteem but may also have very high expectations, a high need for praise, and have some trouble with criticism.

So what does it all mean?  It means we have some very diverse groups, not that any one group is better or worse than another.  Gaining a good understanding of the differences between the generations is key to understanding the dynamics in play to be able to facilitate the best working environments or build strong client relationships.  The best managers will learn to be appreciative of each group’s strengths, aware of the differing needs, and structure strong teams that build on that knowledge. 

This small bit of information is by no means comprehensive but I hope to have piqued your interest and encourage you all to do more research on the subject.  The above information is based on Cam Marston’s “Gen X, the Millennials and Membership” presentation for the AICPA and notes from that discussion as well as several websites (as listed below).  For more information and learning try any of the sites or Google any variation of “generations”, “generational differences”, “generations in the workplace”, etc.  Cam also has a subscription to a blog on the subject you can sign up for at his website.

http://www.emeraldinsight.com/journals.htm?articleid=1752333&show=abstract

http://www.questia.com/googleScholar.qst?docId=5002317707

https://www.acui.org/publications/bulletin/article.aspx?issue=398&id=888

http://www.sc.edu/cte/dziuban/doc/blendedlearning.pdf

http://journals.lww.com/naqjournal/Abstract/2001/01000/Coaching_Generations_in_the_Workplace.5.aspx

A Beginning Look at Leadership

by: Marja Beltrami, CPA

You know, just about anything is possible if you put your mind to it. Put your mind to it, put your time to it, and then take the chance to apply what you learn. At the most recent Practitioner’s  conference I attended in June, more than one of the presenters mentioned that to become an expert in something, one has to bank approximately 10,000 hours practicing it, working it, applying it.

One week, 40 hours. One month 160 hours. One year 2080 hours. Five years 10,200. Five years if you work it full time. Ten years if you work it part time. Twenty years if you practice 2 hours a day. When a three year old begins to play the guitar, and mom and dad insist on practice, by the time the kid is twenty he is considered an expert. Kind of cool.  Short of physical limitations that we have no control over, the possibilities are limitless.

In public accounting, by the time you are a senior/manager, you are an expert! An expert in accounting, maybe auditing, maybe tax, maybe systems, maybe some combination of those and others. Something new caught your eye? Get going on it. It’s not too late. Time still to mold, time still to change, time still to grow. Some times in our busy lives, work or play, we forget the question. I catch myself telling myself and others all things I have to do. I forget the real question, what do I want to do?

I am finding new energy in my profession. I am finding it readily in programs aimed at small to midsized companies, sole practitioners, and large firms. I am finding it through the programs and seminars offered by the AICPA and by our own State Society. None of us live or work in a vacuum, nor do we need to. There is a lot of support and information around, so ask yourself the question. What do you want to do?  Light the fire.

“Why not go out on a limb? Isn’t that where the fruit is?” ~Frank Scully

May 10, 2012
Practitioner Liaison Meeting
Anchorage, AK

Attendees: 

Internal Revenue Service

• Kristen Hoiby, NW Area Manager, Stakeholder Liaison
• Mike Cvitkovic, Stakeholder Liaison
• Brian Lasselle, LB&I Group Manager
• Kris Ashley, W&I SPEC Tax Consultant 
• Brenna Spence, W&I Field Assistance
• Diane Nesvick, TE/GE Indian Tribal Governments
• Doug Hartford, SB/SE Collection Group Manager
• Julie Payne, SB/SE Associate Area Counsel
• Diane Wittman, SB/SEExamTerritoryManager

Practitioner Representatives

• Therese Sharp, Chair, ASCPA,AlaskaSociety of CPAs
• Cynthia Coulter, ASCPA
• John Rodgers, ASCPA
• Karen Ague, ASCPA
• Tom Hartshorn, ASCPA
• Lisa Rogers, ASCPA 
• Robert Rehfeld, ASCPA
• Rodney Kleedehn,ABA,AlaskaBar Association
• Chuck Schuetze,ABA
• Paula Laurion, EA,AlaskaSociety of Independent Accountants 
• Kathie Riley, EA,ASIA
• Barbara Hompesch, EA,ASIA 
• Ginger Curnow, EA,ASIA
• Sherry Whah, EA, National Association of Tax Professionals

 Meeting Summary

Mike Cvitkovic, Stakeholder Liaison, Seattle

Publication 4255, a bookmark titled IRS Tax Help, and Form 14157, Complaint: Tax return Preparer, were distributed. 

Mike described how the Return Preparer Initiative is moving forward on multiple fronts.  One major change is the relocation of tax practitioner registration, testing, continuing education, and administrative processing from the Office of Professional Responsibility to the new Return Preparer Office.  The OPR will now focus all its efforts on enforcement of Circular 230’s standards of conduct.  Complaints of a practitioner’s misconduct are referred to OPR, but a practitioner’s own tax compliance is reviewed in the Return Preparer Office.  In 2011, OPR reviewed 726 cases of which 7 resulted in disbarment, 161 in suspensions, 280 in reprimands, and the remainder were closed without sanctions.  The OPR mailbox is no longer in operation.  The OPR phone number is 202.927.3397. 

The Return Preparer Office has the following functions:  Communications and Outreach, Suitability, Competency Testing, Continuing Education, Compliance Enforcement, Referral Processing, and Enrolled Agent Program.  A PTIN must be obtained by all enrolled agents, as well as by all tax return preparers, including attorneys and CPAs, who are compensated for preparing, or assisting in the preparation of, all or substantially all of certainU.S. federal tax returns, claims for refund, or other tax forms submitted to the IRS.  As of early May the Return Preparer Office reported 715,046 PTINs were renewed for 2012.  Of that number 30,912 were identified as attorneys, 212,644 as CPAs, 42,837 as enrolled agents, and most of the remaining roughly 430,000 are the new category of return preparers. Within the new category around 54,000 are supervised preparers.  A supervised preparer is a non-signing preparer who is employed by a law firm, CPA firm or other recognized firm (a firm that is at least 80 percent owned by attorneys, CPAs, or enrolled agents).  The returns they prepare are signed by a supervising attorney, CPA or enrolled agent at the firm.  Also, within the new category are around 41,000 non-Form 1040 preparers.  Both the supervised and non-F1040 preparers are exempt from testing and continuing education requirements.

For the remaining 335,000 in the new category of return preparers the IRS began the new Registered Tax Return Preparer Competency Test in November 2011.  Currently, PTINs are issued with either an active or provisional status.  Active PTINs are given to Enrolled Agents, Certified Public Accountants and attorneys, among others, because these individuals are not required to take the competency test.  Tax return preparers who must pass the one-time competency test are given a provisional PTIN.  These individuals have until Dec. 31, 2013, to pass the test.  The fee for taking the Registered Tax Return Preparer competency test is $116. The test is a timed, 2½ hour exam that covers the Tax Year 2010 Form 1040 series and its related tax schedules. There are 120 questions in a combination of multiple choice and true or false formats. Test takers cannot bring any resource materials but they will have access to the Form 1040, Form 1040 instructions, and Publication 17, Your Federal Income Tax.  As of early May around 3,300 individuals had passed the test and received the credential Registered Tax Return Preparer.      

Kristen Hoiby, Stakeholder Liaison, Seattle

Kristen spoke next about the changes to continuing education.  Recently, she has been working with the Return Preparer Office to ensure that Stakeholder Liaisons will continue to be able to provide continuing education credits to Enrolled Agents and also to the new RTRPs and candidates.  With the need for education being greater than ever before, it is key that practitioner organizations as well as Stakeholder Liaisons understand the requirements for sponsors of continuing education.  Once an organization has been approved as a sponsor, adding additional programs is fairly straightforward through the on-line account.  One important item on the request for program number is the description of the program content.  Kristen suggests being fairly detailed in the description—for example, if you are proposing a panel discussion, be sure to list the subjects/questions that the panel will be addressing.  Additional information, including FAQs can be found on IRS.gov in the section on continuing education. 

Kristen also encouraged the organization representatives to consider using the PTIN listing, available through the FOIA program to help market their events and reach the many practitioners not affiliated with organizations.  The file comes in an Access format which can be converted to Excel for ease of use.  (Paula noted thatASIA had a copy of the file, but had not been able to make use of it because of the format.  After the meeting, Kristen obtained instructions for converting the file to Excel.)

Mike Cvitkovic, Stakeholder Liaison, Seattle

Mike mentioned that responsibility for the enrolled agent program moved from the OPR to the RPO.  The transition affected the timely processing of renewal applications for SSNs ending in 7, 8, 9, and null.  Applications are being processed as quickly as possible and should be completed by May 31, 2012.  The Special Enrollment Exam, a 300 question, 10.5 hour exam covering individual taxes, business taxes, and ethics, is now overseen by the RPO.

The revised Form 2848 and instructions issued Oct. 2011 include several changes. One of the most significant changes is for individuals who file joint returns. Each individual taxpayer will be required to submit separate Forms 2848 to the IRS Centralized Authorization File even if they are going to be represented by the same authorized representative(s). The individual(s) identified in the power of attorney will only be authorized to represent one person per Form 2848.  Other changes to the Form 2848 include: a new designation for registered tax return preparers, a new location for the check box to authorize the IRS to send notices to the representative, and removal of the ability of representatives to receive refund checks.

The IRS issued guidance that now allows partnerships to electronically provide Schedule K-1, Partner’s Share of Current Year Income, Deductions, Credits, and Other Items to recipients. Certain entities, such as partnerships, are required annually to file K-1s with the IRS and provide a copy to their partners. The new rules can make it easier for partnerships to provide this necessary information to their partners, and will reduce the expense associated with printing and mailing K-1s to partners who elect to receive them electronically.

A new online search tool, Exempt Organizations Select Check, will help users more easily find information about tax-exempt organizations. Users can now go to one location on IRS.gov to search for organizations eligible to receive tax-deductible contributions (formerly listed in electronic Publication 78), organizations whose federal tax exemption was automatically revoked for not filing a Form 990-series return or notice for three consecutive years, and Form 990-N (e-Postcard) filers and their submissions.

The Fresh Start program has been enhanced to allow more taxpayers the ability to use streamlined installment agreements.  The threshold for using an installment agreement without having to supply the IRS with a financial statement has been raised from $25,000 to $50,000. This is a significant reduction in taxpayer burden.  Taxpayers who owe up to $50,000 in back taxes will now be able to enter into a streamlined agreement with the IRS that stretches the payment out over a series of months or years. The maximum term for streamlined installment agreements has also been raised to 72 months from the current 60-month maximum.

Tax professionals responding to Campus Correspondence Examination calls and correspondence can access the new Practitioner Priority Service for Campus Correspondence Examinations by calling the PPS toll-free number and selecting the Correspondence Examination option. Additional prompts, based on the telephone number on the letter they are calling about, will direct the call to the Small Business/Self Employed Examination or Wage & Investment Examination line. CCE PPS will address up to five clients per call and transfer or refer issues outside the CCE scope to the appropriate IRS functions. 

The Freedom of Information Act requires the IRS to release certain information about preparer tax identification number (PTIN) holders. The IRS has created FOIA guidance for PTIN holders on what information is released and how a PTIN holder can update their contact information to maintain the privacy of personal information. The IRS is changing the “Permanent Mailing Address” box on the PTIN application to “Personal Mailing Address.” This change clarifies that the information is personal and exempt from public disclosure under FOIA rules. Also, the IRS is removing the prohibition on entering a post office box in the “Business Mailing Address” box on the PTIN application. PTIN holders may now enter a P.O. Box as their business mailing address. PTIN holders, who used a Personal Mailing Address as their Business Mailing Address or used a street address when they would have preferred to provide a P.O Box as their Business Mailing Address, may want to update their contact information.  

Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR) is due June 30.  The new Form 8938, Statement of Specified Foreign Financial Assets, filing requirement does not replace or otherwise affect a taxpayer’s obligation to file Form TD F 90-22.1. Individuals must file each form for which they meet the relevant reporting threshold.  The chart "Comparison of Form 8938 and FBAR Requirements"  provides a detailed breakdown.  

Revenue Procedure 2012-15 identifies circumstances under which the disclosure on a taxpayer's income tax return with respect to an item or a position is adequate for the purpose of reducing the understatement of income tax under section 6662(d) of the Internal Revenue Code (relating to the substantial understatement aspect of the accuracy-related penalty), and for the purpose of avoiding the tax return preparer penalty under section 6694(a) (relating to understatements due to unreasonable positions) with respect to income tax returns.

Mike reviewed some IMRS issues that have arisen since the last PLM.

A practitioner suggestion that collection activities be placed on hold while SFR returns, which will remove or greatly reduce a balance due, are processed.  IRS Collection is reviewing a mechanism that would freeze collection activity in such circumstances.

A practitioner identified a problem with the 2010 CP2000 process where decimal points were omitted in the processing of F1099s resulting in overstatements of income by a factor of 100.  The AUR unit was notified and provided a copy of the payer’s F1096.  The Payer Agent file in AUR was updated and instructions given to the AUR staff to verify decimal points on associated forms.

A practitioner prepared a net operating loss carryback using commercial software. The software treated unemployment compensation as non-business income when computing the NOL, but the IRS changed it to business income. The practitioner sought clarification of the treatment of unemployment compensation.  The 2011 revision of Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts, pages 2 & 3, has clarified the treatment of unemployment compensation. It states there that unemployment compensation included in gross income is not to be included in non-business income. The software vendor has been notified and will update their software.

The State ofAlaskaadministers the Electronic Health Record Incentive Program.  Payments from the Program are taxable.  A health care provider can join the Program and receive a payment from the State.  That health care provider can assign that payment to the clinic where the practice is.  A practitioner reported that the State ofAlaskahas issued both a Form 1099-G to the provider and a Form 1099-MISC to the clinic to report the same EHR payment.  Clarification on how to report these payments is being sought.     

 Roundtable & Comments

Julie Payne, SB/SE Counsel: Julie stated that the Exxon cases were closing and that Counsel had provided guidance on the handling of the payments.  

June 18^th is the next Tax Court Calendar and is at the Old Federal Building at 618 W. 4^th.  It should last about 3 days.  There are 28 cases on the calendar—11 regular cases (greater than $50,000) and 17 small tax cases (less than $50,000 with civil penalties).  In the small cases, the taxpayers may be representing themselves, or may have their CPA with them.  There will also be representatives from theGonzagaLawSchool participating. 

Diane Wittman, SB/SE Exam:  Diane participated remotely fromSeattle. She noted that retirements are affectingFairbanksandAnchorage.  She noted that they would be hiring 4 new staff. 

The preparer visits for the year have wrapped up. The NRP audits for 1040s are continuing and there will be 1120 cases starting the end of May.  Diane said that currently TCOs “Circuit ride” toFairbanksandAnchorage, and may also Circuit rideSE Alaskaas well. 

Brian Lasselle, LB&I:  LB&I expect to lose 1 agent at the end of the year, when Brian is also retiring.  They have no hiring authority.

Doug Hartford, SB/SE Collection:  Collection also losing a number of employees due to retirement.  2 Revenue Officers in Soldotna are retiring by the end of the year, 2 inAnchorageas well—and Doug will also be retiring leaving John Williamson the only Collection manager inAlaska.  Collection will hire 4-6 Rosas soon as possible. 

As for Offers in Compromise, theAlaskaoffers are being worked by specialists inCalifornia.  Therese added that she had heard that now 35% of offers are accepted when it used to be less than 5%.

Diane Nesvick, TE/GE Indian Tribal Governments:  Diane is also retiring at the end of the December (the Anchorageoffice is losing 12 to retirement by the end of the year.)  ITG is doing employment tax and excise audits as well as compliance checks.  They also continue to do payroll workshops—a recent one had 90 in attendance. On October 22^nd, they are hosting and advanced topics session for those tribal members more experiences with payroll issues.

Kris Ashley, SPEC:  The volunteers inAnchorageare taking a break from tax preparation, but will start up again in July.  If there are individuals needing this assistance, they can call 211 to find out where free return preparation is being done. 

Brenna Spence, Field Assistance: Brenna let the group know that the Taxpayer Assistance Centers stopped processing bulk returns for practitioners. 

Over the summer, there may be some circuit riding fromFairbankswhich means that office may sometimes close, though rarely.  They are now working more of the streamlined installment agreements due to Fresh Start, which has lengthened some wait times in the TAC. 

Next Scheduled Meeting

The next meeting is scheduled for November 16.