2013-08-23 TaxEalert: E-Services Extended, Opposition to Cash Method Restrictions, S Election Relief and more... 


    AICPA
     
    In the original E-Alert distributed earlier today, the headlines for the Late S Election article and the article on Reduced Corporate Refunds was inadvertently switched. This error has been fixed and the corrected newsletter is below, in its entirety. We apologize for any inconvenience and confusion.

    What is the AICPA doing for you? Learn more on the latest Tax Advocacy webpage.
           
      AICPA
    August 23, 2013
    Tax Section News
     
      Exclusive Tax Section member communications  
     
    In This Issue
        TOP NEWS  
    Retirement of IRS
    E-Services Pushed Back 3 Weeks
    AICPA Objects to Proposed Limits on Cash Method of Accounting
    Consolidated and Extended Relief Now Available for Late S Elections
    Sequestration Reduces Refunds for Corporations
    AICPA Recommends Changes to 3.8% NII Tax on International Entities
    AICPA Asks IRS to Keep Current Method for Section 382 AFRs
    IRS Opens Online FATCA Registration System
    Other Tax News from the Journal of Accountancy
    TOOLS & RESOURCES
    Begin Planning for the New Section 1411 Net Investment Income Tax
    Seven Ways to Stretch Your Practice’s Marketing Dollars
    Free Resources to Help With Your Business Development Efforts
    Check Out New ACA Tax Resources from IRS
    Master Excel with Self-Paced Course
      UPCOMING EVENTS
    AICPA Real Estate Conference
    AICPA 2013 Sophisticated Tax Planning for Your Wealthy Clients
    Advanced Tax: DOMA Brings Changes to the Nation
    PFP Power Hour
    Final "Repair" Regulations Dissected
    Planning After ATRA: Business Succession Planning
    Planning After ATRA: Taxation of Divorce
    Advanced Tax Quarterly - Q4 2013
     

    COMING UP ON THE
    TAX POWER HOUR

      • 9/19: Answering Questions on Tax Returns - Risks & Requirements
      • 10/17: Solo Practitioner Procedures
      • 11/14: Gearing Up for Tax Season
      • 12/19: Tax Return Engagement Letters
    Contact us

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    Upcoming Events
     

    Advanced Tax: DOMA Brings Changes to the Nation
    Sept. 18, 1pm - 3pm ET

    Registration Options:
    - Discounted CPE (2 hours)

    Final “Repair” Regulations Dissected
    Oct. 1, 1pm - 3pm ET

    Registration Options:
    - Discounted CPE (2 hours)
    - Free (without CPE)

    Business Succession Planning
    Oct. 31, 1pm - 2:45pm ET

    Registration Options:
    - Discounted CPE (2 hours)

    Taxation of Divorce
    Nov. 21, 1pm - 2:45pm ET

    Registration Options:
    - Discounted CPE (2 hours)

    Advanced Tax Quarterly - Q4 2013
    Dec. 18, 1pm - 3pm ET

    Registration Options:
    - Discounted CPE (2 hours)

    AICPA Real Estate Conference
    Nov. 7 - 8, Las Vegas, NV

    AICPA 2013 Sophisticated Tax Planning for Your Wealthy Clients
    Nov. 18 - 19, Boston, MA

    Next Tax Power Hour
     
    Answering Questions on Tax Returns - Risks & Requirements
    Sept. 19 from 1pm - 2pm ET

     

    How thoroughly do you read through the questions when you are preparing tax returns for your clients?  What are the implications and risks to preparers and their practices?  When preparing returns, many preparers may not give them adequate attention or might even ignore them, leave them blank or answer them without consulting their clients!

    This installment of the Tax Power Hour will walk you through the nuances, risks and issues with the questions that are included on tax returns, and give you a practitioner’s perspective of how to approach them. 

    The Tax Power Hour is only available free (without CPE) for Tax Section members!

     

     

     
    Top News
     
    Retirement of IRS E-Services Pushed Back 3 Weeks

    The planned retirement of the Disclosure Authorization (DA) and Electronic Account Resolution (EAR) from IRS e-services that was to take effect on Aug. 11 has been pushed back until Sept. 2, the IRS recently announced via its website.  In a recent letter, the AICPA urged IRS to keep these products up and running.  The reason for the delay, according to the IRS, is that the transition of services to their new web portal will take longer than originally expected.  This means practitioners can use the DA and EAR products an additional three weeks.  This news is only a small consolation to the many practitioners who use one or both of these products on a regular basis and who will, upon the retirement of the services, be required to go back to slower methods of obtaining the same information by mail or fax. 

    AICPA Objects to Proposed Limits on Cash Method of Accounting

    On Aug. 15, the AICPA sent a letter to House Ways and Means Committee Chairman Dave Camp, outlining its objections to a proposed limitation on the use of the cash method of accounting for taxpayers who don't qualify as natural persons for tax purposes.  The proposal eliminates exceptions for certain pass-through entities, including partnerships and S corporations, personal services corporations and farmers and is a part of the committee's Small Business Tax Reform discussion draft

    Also, the proposal would only allow for CPA firms organized as sole proprietorships or those with less than $10 million in gross receipts to use the cash basis for tax purposes.  The impact of this proposal on our members could be substantial as CPA firms operating as partnerships or S corporations would now be taxed currently on their receivables.

    Consolidated and Extended Relief Now Available for Late S Elections

    The IRS released Rev. Proc. 2013-30, which provides a simpler framework for requesting relief for late S corporation elections, including those for ESBT, QSST, QSub, and late corporate classifications that the taxpayer intended to start with the original election.  The procedure will provide a single source for requesting relief; the IRS also included a flowchart for determining availability.

    Sequestration Reduces Refunds for Corporations

    On Aug. 12, the IRS announced a reduced rate for the refundable portion of the credit for prior year minimum tax liability due to the sequester via their website. The refundable credit is reduced by 38% and applies to original and amended returns between August 13, 2013 and September 30, 2013. The IRS will inform affected corporations of this reduction. The reduction rate may be changed with the beginning of next fiscal year.

    AICPA Recommends Changes to 3.8% NII Tax on International Entities

    The AICPA recently submitted recommendations to the IRS for the proposed regulations that provided guidance for the Net Investment Income (NII) tax and its effects on international entities (controlled foreign corporations CFCs and passive foreign investment corporations PFICs).  Under section 1411, the new 3.8% NII tax imposes a tax on unearned income on investments of certain individuals, estates, and trusts, and certain foreign entities whose income is above the statutory threshold amounts.  Subpart F and PFIC income should be treated as “other income” and not dividend income for purposes of the 3.8% tax, the AICPA told the IRS.

    AICPA Asks IRS to Keep Current Method for Section 382 AFRs

    The AICPA urged the IRS to retain its current method of determining the long-term tax-exempt rate for section 382 purposes, instead of modifying it as proposed in Notice 2013-4.  The IRS notice would change the method used to determine the adjusted applicable Federal rates (adjusted AFRs), which are used for original issue discount and imputed interest rules and other purposes.
     
     “The AICPA understands that while the adjusted AFRs have multiple uses, a principal use relates to the application of the section 382 limitation on the use of net operating losses (NOL) of corporations that have undergone an ownership change,” the Institute wrote in its comment letter.  “Any change in methodology is likely to result in a lower limitation that, we believe, would be inconsistent with the purpose of section 382.” 

    IRS Opens Online FATCA Registration System

    The IRS announced the opening of a new online registration system for financial institutions that need to register under the Foreign Account Tax Compliance Act (FATCA).  Financial institutions that must register with the IRS to meet their FATCA obligations can now begin registering by creating an account and providing required information.  Financial institutions will also be able to provide required information for their branches of operation and other members of their expanded affiliate groups in which the financial institution is the lead organization.  The registration system, designed to enable secure account management and enables financial institutions to:

    • establish online accounts;
    • customize home pages to manage accounts;
    • designate points of contact to handle registrations;
    • oversee member and/or branch information; and
    • receive automatic notifications of status changes.  

    Access to the FATCA registration system and related support information can be found on the FATCA page of the IRS website.

    Other Tax News from the Journal of Accountancy
    • Tenth Circuit throws out decision striking down Colorado’s Amazon law (08/21/13)
    • Amounts on late-filed S corporation return were not disclosed on taxpayer’s return (08/19/13)
    • IRS issues draft FATCA report form (08/15/2013)
    • Final rules issued on IRS disclosure of tax return information under health care law (08/13/13)
    •  Proposed rules reset limitation for pursuing equitable innocent spouse relief (08/12/13)
    • “Private attorney general” can deduct his lawyers’ fees as trade or business expenses (08/09/13)
    • Aug. 30 IRS furlough day canceled (08/08/13)
     
    AICPA TOOLS & RESOURCES
     
    Begin Planning for the New Section 1411 Net Investment Income Tax

    To minimize the impact of the tax on individuals, estates and trusts, practitioners should understand what income it applies to and how the tax is calculated so they can help clients take the right steps.  The AICPA’s Section 1411 - Net Investment Income Tax webpage contains resources for members to better assist your clients in planning for the new 3.8% tax.

    Seven Ways to Stretch Your Practice’s Marketing Dollars

    Most CPAs are not natural-born marketers.  But marketing is an important aspect of business development, and accounting executives need to be able to identify internal and external resources that will help boost their firm’s top line.  AICPA CPA Insider columnist Blake Christian offers some tips to increase your marketing activity in a cost effective and measurable way.

    Free Resources to Help With Your Business Development Efforts

    You don’t need to shell out a lot of money when the AICPA has done a lot of the work for you! With the Tax Practitioner’s Toolkit you can:

    Got a question about the Tax Practitioner’s Toolkit? Email us at Toolkit@aicpa.org.

    Check Out New ACA Tax Resources from IRS

    The IRS has provided a new web page focusing on the tax provisions of the Affordable Care Act (ACA).  The site is a welcome resource to help practitioners, individuals and employers keep up with all of the tax laws and related effective dates mandated by the ACA.  The AICPA’s Health Care Reform Resources Center also has useful resources for getting you up to date on the ACA. 

    Master Excel with Self-Paced Course

    Do you want to take your Excel skills to the next level? Then, we have just the course for you! Written by a CPA, the "Advanced Excel" CPE self-study course includes the features you need, and skips the features you don't. Learn more.

    UPCOMING EVENTS
     
    AICPA Real Estate Conference

    Nov. 7 - 8,  Las Vegas, NV

    Every day, there are more optimistic signs that the real estate market is slowly growing. Yet financial professionals are still faced with daunting challenges, tight credit markets, and demanding clients who are looking for strategic solutions that will position them for success.  This conference zeroes in on those crucial challenges and is specifically designed to educate you on the newest ideas, technologies, techniques and rules to help you and your clients succeed.  Critical updates and issues are presented in a several dynamic learning tracks including Industry, Accounting & Tax, and Emerging Issues.

    AICPA 2013 Sophisticated Tax Planning for Your Wealthy Clients

    Nov. 18 - 19, Boston, MA

    Obtain the latest updates, cutting-edge strategies and governmental regulations that affect affluent individuals.  Learn the latest on the new income tax legislation, the impact of the 3.8% surtax, the effects of the healthcare law, as well as techniques for effective tax, retirement and estate planning, asset protection, and more.  All-star speakers and presenters will train and guide you so that you can implement the solutions you receive immediately.  Don’t miss the opportunity to network with these experts and peers.

    taxpowerhour

    Advanced Tax: DOMA Brings Changes to the Nation, Sept. 18, 1-3pm ET

    Many people did not think of the tax consequences when the Supreme Court declared certain parts of the Defense of Marriage Act (DOMA) to be unconstitutional.  There are approximately 114,000 married same-sex couples living in the United States today, and the majority of them live in states where their marriage is legally recognized.  The potential complications include filing amended tax returns, estate and income tax planning and state filing requirements for non-conforming states.  Learn how this monumental court decision impacts some of your clients and how to use it as a planning opportunity.

    PFP Power Hour

    Sept. 18, 3-4pm ET

    This free webcast will provide an overview of resources and support available from the AICPA Personal Financial Planning Section, how CPA financial planners have utilized these resources in their practices, as well as how to access tools on the PFP website.  In addition, you’ll hear the latest news from the PFP Division staff, including new member benefits and legislative and regulatory developments affecting CPA financial planners.

    Final "Repair" Regulations Dissected

    Oct. 1, 1-3pm ET

    Join us and learn about the highly anticipated final “repair” regulations. This session will cover the final regulations recently issued by the IRS and the impact on taxpayers. Our panelists will discuss many related topics, including:

    • The changes from the temporary regulations issued in 2012
    • What types of taxpayers are affected
    • The new safe harbor and de minimis rules
    • Determining whether an expenditure is a repair or a capitalizable improvement
    • Understanding the disposition and general asset accounting provisions
    • Method change rules
    • Impact of IRS directive to those taxpayers with repairs issues under examination
    • Changes from the temporary regulations issued in 2012.

    Tax Section members have the option of attending this event free, without CPE.

    Planning After ATRA: Business Succession Planning

    Oct. 31, 1-2:45pm ET

    One of the most difficult planning issues to address with a successful entrepreneur is what should be done with the business that person created and developed in the course of a career. There is often a reluctance to do anything. Succession planning is an area of concern too often put off by the persons who most need to address it. Planners need to understand the many options available for succession planning, both from a tax and non-tax perspective.

    Planning After ATRA: Taxation of Divorce

    Nov. 21, 1-2:45pm ET

    Statistics continue to indicate that nearly one-half of American marriages end in divorce – making the understanding of the tax consequences of divorce an essential element of every accounting professional’s knowledge. All too often, clients focus their concern on ending the marriage relationship, and ignore critical decisions that can affect their short and long-term tax situations. Steve Siegel will lead practitioners through a discussion on the various tax planning and compliance issues related to your client’s divorce.

    Advanced Tax Quarterly - Q4 2013

    Dec. 18, 1–3pm ET

    Tax accountants, preparers and business leaders across America are constantly faced with new regulations, planning and compliance matters.  This webcast will allow you to stay well connected to critical tax issues by taking an elaborate look into the complex tax rules and provisions that impact businesses and individuals. 

    Coming Up on the Tax Power Hour
    taxpowerhour

    Sept. 19: Answering Questions on Tax Returns - Risks & Requirements:
    Registration Options: Discounted CPE (1 hour) or Free without CPE.

    How thoroughly do you read through the questions when you are preparing tax returns for your clients?  What are the implications and risks to preparers and their practices?  When preparing returns, many preparers may not give them adequate attention or might even ignore them, leave them blank or answer them without consulting their clients!  This month we will walk you through the nuances, risks and issues with the questions that are included on tax returns, and give you a practitioner’s perspective of how to approach them.

    Oct. 17: Solo Practitioner Procedures:
    Registration Options: Discounted CPE (1 hour) or Free without CPE.

    With limited resources and staff, how can solo practitioners improve their practice and maximize efficiency?  This month, our presenters will explain the nuts and bolts of running an effective sole practitioner operation.  They’ll share tips on leveraging technology, tax return and accounting processes, handling administrative and client matters, and billing strategies.  Our speakers will also discuss best practices for firms of all sizes, and how they can be adapted to the solo practitioner.

    Nov. 14: Gearing Up for Tax Season:
    Registration Options: Discounted CPE (1.5 hour) or Free without CPE.

    Every year, we expand our “hour” to 90 minutes so we have time to review procedures and best practices for practitioners getting ready for their busiest time of year: tax season.  We will review firm operations and processes, office administration, quality control requirements and the importance of managing client expectations.

    Dec. 19:  Tax Return Engagement Letters:
    Registration Options: Discounted CPE (1 hour) or Free without CPE.

    We will have a practitioner and an insurance representative join us to discuss the importance of and various uses for engagement letters.  They define the services you are going to provide (e.g., which returns will you prepare this year), explain the scope of work and limitations of your services, can be used to set expectation for the client’s participation in the engagement and you can use them to set fee expectations.  Join us for this important discussion on leveraging engagement letters to improve and protect your tax practice.

    The Tax Power Hour is our the monthly Tax Section webcast that focuses on strategies to help tax practitioners save time, reduce stress and run an efficient practice through practical discussions on topics such as Practice Management, Business Development, Leveraging Technology and more.  Speakers are tax practitioners and other experts sharing their advice and best practices to help make you more profitable.

    If you missed a previous Tax Power Hour, you can listen again anytime.  Archives are available for one year after each event.

     
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