November 16, 2012 Tax E-Alert: Fiscal Cliff Tools and Predictions, More Disaster Relief Resources, IRS Plans for their 2013 Compliance Visits, Year-End Estate Planning Aids, and more... 

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Tax Return Billing: Hourly, Fixed Fee, Fee Schedule or Value Billing?
Dec. 13, 2012
1 – 2pm ET
Free, No CPE Available

How do you bill for tax returns? This month, we have invited four practitioners to share their stories. During the April 2012 Tax Power Hour, we asked participants how they billed for tax returns. Over 60% responded saying they used a combination of methods, not just one. Our panel will walk through each of these billing models and explore their pros and their cons. They will also share their experiences using multiple methods and transitioning from one model to another.

Budget cuts, tax extenders, debt ceiling, lame duck Congress—many factors are creating an uncertain future for taxpayers and the economy. Edward Karl, AICPA Vice President of Taxation, peers into his crystal ball and predicts some interesting results in this tongue-in-cheek blog post.

Find resources and information to help you and your clients assess next steps in the days and weeks ahead, including disaster and financial planning guides, checklists, how to apply for assistance and other materials on our Hurricane Sandy Relief resource page. The AICPA is here to support you at this challenging time. Please let us know how we can help you. In addition, you can find useful information on the Tax Section’s special e-alert regarding Hurricane Sandy. The newsletter includes several useful links to various governments and nongovernment cites, including New York, New Jersey, and Connecticut and links for your clients.

The Internal Revenue Service (IRS) website continues to post useful links for those affected by Hurricane Sandy. You can find all of the IRS press releases available on one page under the heading Help for Victims of Hurricane Sandy.

The IRS has issued Announcement 2012-42, which outlines delays in certain Foreign Account Tax Compliance Act (FATCA) related deadlines in response to taxpayer concerns that the existing deadlines were too close for them to comply. The announcement provides extensions to: The changes will become effective with the issuance of final regulations.

The changes will become effective with the issuance of final regulations.

While no formal announcement has been released publicly, the IRS has informed the AICPA that it plans to substantially revise and scale down its tax return preparer compliance initiative for the upcoming 2013 filing season. During its 2012 filing season initiative, the IRS sent about 21,000 letters to tax practitioners and conducted approximately 2,100 preparer office visits.

According to sources, the IRS plans to send approximately 5,000 letters to tax return preparers for its 2013 filing season compliance program, approximately 1,350 of those preparers will receive office visits from an agent. IRS sources stated that these 5,000 preparer letters and office visits will be “educational” in nature and will focus on automobile and truck expenses found on Form 1040, Schedule C. Senior IRS officials further revealed that all office visits will take place in December 2012 or early January 2013, just prior to the beginning of the 2013 filing season. We will keep you informed when we receive formal confirmation or public announcements about the Service’s 2013 preparer compliance initiative.

PTIN renewal season is now open!  CPAs and other tax return preparers need to register for or renew their Preparer Tax Identification Numbers (PTINs) by Dec. 31, 2012, to ensure they have a valid PTIN for the 2013 calendar year Preparers can renew online at www.irs.gov or by filing a paper Form W-12, IRS Paid Preparer Tax Identification (PTIN) Application and Renewal.

In general, a preparer must have a PTIN if the preparer is compensated for preparing, or assisting in the preparation of all or substantially all of any U.S. Federal tax return or claim for refund There are certain limited exceptions to this PTIN requirement for preparers that are highlighted in IRS frequently-asked-questions (FAQs) Additional information about the IRS’s PTIN and preparer registration requirements can be found on our Prepare Registration resources page.

The new rules for reporting offshore assets held by U.S. taxpayers impact more than just foreign financial institutions (or FFIs). One issue that practitioners should be aware of is the impact of FATCA on non-financial foreign entities, or NFFEs AICPA Tax Manager Kris Esposito discusses this matter in her blog Move Over FFIs, Here Come NFFEs.   

Do you own a duplex or other rental property for which you file a Schedule E?  Maybe you have a small business where you do minor home repair and report the income on Schedule C?  Or maybe you are a farmer that files a Schedule F? Individuals that operate such businesses may be impacted by new rules effective for 2012 regarding tangible property Many remain optimistic that final regulations may provide additional safe harbors or alternative methods for taxpayers below a certain size However, such exceptions do not exist today Therefore, all businesses, including those individuals, should evaluate the implications of these new rules and what steps they should be taking now.

On Nov. 2, the AICPA submitted comments on the proposed regulations (REG-109564-10) that withdraws the de minimis exception of Treas. Reg. § 1.704-1(b)(2)(iii)(e) (the “De Minimis Exception”) regarding a partner’s distributive share The proposed regulation was withdrawn because the rule may have resulted in unintended tax consequences.  The AICPA comments address the withdrawal of the De Minimis Exception and suggest an alternative that will reduce the burden of complying with the substantial economic effect rules without diminishing the safeguards that the current rules provide.  The AICPA believes that partnerships that pose little to no risk to the underlying policies of section 704(b) should be excluded from the complicated substantial economic effect rules.

In its Oct. 23 letter to the IRS, the AICPA recommended that the IRS incorporate two private letter rulings into regulations to allow distributions associated with taxable income to be made, regardless of the year in which taxable income is modified The AICPA’s letter also requests for the IRS to confirm that S corporation can make both pro rata distributions according to current stock ownership and other distributions that meet the varying interest rule Moreover, the letter requests the IRS to clarify that a distribution in the current year can take into account varying interests of both the preceding and current years without creating a second class of stock.

The AICPA has created a one-stop shop to help you navigate through the fiscal cliff and get the information and tools you need to educate and advise clients. Check in regularly for up-to-date news and analysis, webcasts, tools and resources regarding unresolved tax and budget issues, expiring tax provisions, health care reform, etc. Demonstrate your value and provide guidance, planning and tax expertise to your clients during this uncertain economic time.
 
New tools just added as part of the Tax Practitioners Toolkit:

• Client letters that explain the potential impact of what’ happening in Congress on individuals and small businesses and encourage the client to contact you
• A visually compelling Year-End Planning PowerPoint presentation with detailed speaker notes you can adapt for presentations to groups or clients – it covers the tax laws in play, what actions they should consider, and reinforces the need to contact a CPA.
• Proactive Planning for 2013 Toolkit by Bob Keebler

We are pleased to announce that we have just released the first set of 2012 checklists (1040, 1120S, 1120 and 165) and they are available now on the Interactive Tax Checklist. These checklist are current and up-to-date based on current legislation. The remaining checklists (1041, 706, 709, the 990 series and 5500) will be released as they are finalized over the next several weeks. We will continue to monitor for legislative changes and will work quickly to incorporate those changes and release an updated checklist version. You can start working with them now then log back in after the new versions are released to see how the changes impact your clients before you finalize their returns. Learn more about our new versions and platform updates by visiting our FAQs.

Once a taxpayer has made all the necessary tax accounting method changes necessary to be in compliance with the temporary regulations on tangible property, they may be confused about the host of potential annual elections that should be considered as they evaluate that particular year’s expenditures. Check out our chart summarizing key aspects associated with various annual elections. And in case you missed it, we previously made available a chart summarizing key aspects of each of the tax accounting method changes contained in Revenue Procedures 2012-19 and 2012-20, which provide the transition rules taxpayers need to come into compliance with the temporary regulations regarding tangible property. Learn more on the AICPA’s Tangible Property resources webpage.

To assist practitioners with preparing for, and talking to clients about, 2012 year-end estate planning, various new estate planning tools and resources are now available at the 2012 Year-End Estate Planning Resource Page. Some of the items and issues covered are:

• A customizable 2012 Year-End Estate Planning Postcard to mail to clients
• A customizable PowerPoint presentation to illustrate issues and planning strategies for estate, gift, and GST clients
• A client letter that identifies and encourages clients to begin planning now 
• Proactive Planning in Preparation for 2013 checklist(July 2012 edition of Journal of Accountancy)
• Dynasty Trust State Rankings Chart
• Domestic Asset Protection Trust State Rankings Chart
• Portability Resources, including a sample client letter

January 21 – 23, 2013
Aria Resort and Casino, Las Vegas, NV

For the first time, the PFP Division is offering a pre-conference workshop at the AICPA Advanced PFP Conference: The Next Generation Advisor:  An Interactive Case Study Approach to Communicating Personal Financial Planning Concepts to Your Clients. This workshop is for emerging CPA financial planners with a focus on deepening client relationships through communication. Practitioners with five or fewer years of experience in personal financial planning and up to 15 years in the CPA profession are invited to attend the Advanced PFP conference for a reduced price and will receive complimentary registration for this workshop, networking receptions and more

This is an excellent opportunity for an experienced practitioner to introduce less experienced staff to this conference. To take advantage of this offer, email financialplanning@aicpa.org with your or your emerging professional's name, contact information and brief professional history/CV. An AICPA PFP Division representative will respond to your email with next steps and registration information.

The Tax and Financial Implications of Hurricane Sandy
Nov. 20 from 1pm – 2pm ET

Victims of Hurricane Sandy have much to consider in the aftermath of the storm. While focusing on the normal cleanup, individuals and businesses sometimes forget about the maze of tax and financial implications. This webinar will provide CPAs with the valuable information they need to help their clients and employers work through the special tax-related provisions and other financial issues created by the hurricane. Discounted CPE is available for Tax Section members, or Tax Section members may opt to attend free, without CPE.

Health care reform has become a hot topic since the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act were signed into law in 2010 and upheld as constitutional by the U.S. Supreme Court earlier this year. This webinar will help you assist your clients and organizations deal with the short and long-term impacts of the law and provide practitioner insight on best practices that you can communicate to your clients and organizations.

Learn about the new rules developed as part of the IRS’s new “Fresh Start” initiative A rebroadcast of this webinar is scheduled for Dec. 11 from 1pm – 2pm ET Discounted CPE is available for Tax Section members, or Tax Section members may opt to attend free, without CPE.

Join us for this video webcast that will feature significant highlights from the conference, as well as a panel discussion on what has happened since. Hear about what has changed since the election and the status of ongoing negotiations on expiring – and likely – legislation. Tax Section members save $50!.

Nov. 29 from 1pm – 1:30pm ET

In this webinar, leading practitioners will share useful insights into using these tools in your practice to assist your clients through year-end planning The AICPA Personal Financial Planning Division is sharing these tools at no charge until Dec. 31, 2012, to help you educate and plan for your clients now. PFP Section members and CPA/PFS credential holders already have access to these resources as part of their membership. To access these tools, visit aicpa.org/PFP/YearEnd.

This webinar will discuss the latest developments in legislation, tax cases, IRS regulations and other guidance impacting C corporations, S corporations, partnerships, and limited liability companies A rebroadcast of this webinar is scheduled for Dec. 18 from 1 to 3 pm ET Discounted CPE is available for Tax Section members, or Tax Section members may opt to attend free, without CPE.

How do you bill for tax returns? This month, we have invited four practitioners to share their stories. During the April 2012 Tax Power Hour, we asked participants how they billed for tax returns. Over 60% responded saying they used a combination of methods, not just one. Our panel will walk through each of these billing models and explore their pros and their cons. They will also share their experiences using multiple methods and transitioning from one model to another.

The Tax Power Hour is our monthly webcast series for Tax Section members only. This free, hour-long talk 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.