Accurate Accounting.  It's Not Optional... It's ESSENTIAL!


Voluntary Preparer Certification

On Tuesday, June 24, 2014, the AICPA (American Institute of Certified Public Accountants) sent a 14 page letter to IRS Commissioner John Koskinen expressing its strong concerns that a proposed IRS voluntary certification program for unenrolled tax preparers “would cause significant legal problems that may ultimately frustrate the IRS’s goals, confuse the public and lead to litigation”.  Some of the “legal and policy concerns” raised by the AICPA included:

  1. no statute authorizes such a program;
  2. The program will be viewed as a way to circumvent the federal court’s Loving decision;
  3. The way the program has been developed does not comply with the notice and comment requirements of the Administrative Procedure Act, violates the Paperwork Reduction Act by collecting personal information from tax return preparers, and ignores a Cost/Benefit Analysis required by the Office of Information and Regulatory Affairs; and
  4. The proposed program is “arbitrary and capricious because it fails… Continue reading

IRS Conundrum

I just looked up “conundrum” in Webster’s and the 2nd of only 2 definitions was “any puzzeling question or problem”.  If this IRS “thing” going on in Washington DC isn’t a “puzzeling question or problem”, then I do not know what is!

I am an accountant.  I do accounting and accounting isn’t supposed to be political, thus I have tried to stay out of the political fray here because there aren’t any winners, as I see it.  The conversation/arguments can go on adinfinitum with absolutely nothing ever settled, in my opinion; however, I am making an exception with this IRS mess (you notice I didn’t call it a “scandal”).  The IRS is an entity EVERYONE in this country has to deal with; heck, tax preparation is one of the busiest times in the accounting industry, and it’s time, in my opinion, that the IRS is dealt… Continue reading

IRS Adopts “Taxpayer Bill of Rights”!

I know it’s been quite some time since I’ve made a post to this blog.  With tax season and all the garbage that has been going on in Washington, I just wasn’t “excited” to make a post; however, the IRS’s finally adopting a “Taxpayer Bill of Rights” inspired me to make this post.

As I said, there has been so much “happening” in Washington, it’s almost as if Congress can’t get its hands around one dilemma before another one pops up.  Fast-N-Furious; Benghazi; DOJ targeting reporters; Law changes without congressional oversight; etc., etc, etc.  When will it all end?  Personally, I don’t think it will until the current President is out of office; however, one thing did emerge yesterday that was significant enough to make a post: The IRS’s FINALLY adopting a “Taxpayer Bill of Rights“; a 10 point provision code, similiar… Continue reading

Are you paying more for or answering more questions than you should for your tax preparation?

By now, everyone has probably heard the new H&R Block commercial: ‘America, Get Back Your Billions”.  The commercial is mostly correct; many consumers doing their own taxes could be leaving a lot on the table when it comes to getting a refund check.  Then again, are consumers that use a tax preparation service or use a tax preparation program on their home computer paying too much or answering too many questions for what they are getting?

I have no doubt H&R Block provides a good service; it must, considering how big it has become, but, based on clients that have used its service, it’s expensive.  Tax preparation companies like H&R Block have software that have employees ask a lot of questions, know when answers lead to other questions and charge dearly for the service.  There is a better alternative:  Essential Accounting, LLC.  At… Continue reading

2014 Social Security Baselines

On Wednesday, October 30, 2013, the Social Security Administration (SSA) announced its “baselines” for 2014.  In this post, I will cover some of the items that might be of interest to most.

The tax rates for the SSA remain the same: Social Security Old Age, Survivors, and Disability Insurance (OSADI), 6.20% and Medicare Health Insurance (HI) 1.45% (total 7.65%), with employers paying their 7.65% for each employee as well. Self-employed folks pay 15.30%, but there is some tax maneuvering at year end for the self-employed.  Important to note, AS OF 01/01/2013, individuals with earned income of more than $200,000 ($250,000, Married filing jointly), will be paying an additional 0.9% in Medicare Taxes!

The MaximumTaxable Earnings for Social Security OSADI has increased from $113,700 in 2013 to $117,000 in 2014, an increase of $3,300 or 2.9%.

Tax Exempt Earnings while receiving Social Security OSADI have also changed:

For those… Continue reading

2013 IRS Limits

On Thursday, October 31, 2013, the IRS issued its category limits for 2013 via its IRS News IR-2013-87, refering to Revenue Proceedure 2013-35.  I have listed some of the limits for the 2013 tax year that might be of interest to some tax payers.  If you might like any additional information, please feel free to give me a call at 443-260-0555.

2013 Catrgory Limitations 2014 2013
Standard Deduction
   Single/Married filing Separate $      6,200 $     6,100
   Married       12,400      12,200
   Head of Household        9,100        8,950
Personal Exemption (1)        3,950        3,900
Alternative Minimum Tax Exemption
   Single/Married filing Separate       52,800       51,900
   Married       82,100      … Continue reading

Government: Cash or Accrual Accounting

Back in early October, I posted “Government or For-Profit Accounting“, where I quoted an article from Herbert M. Chubin, CPA, MBA, former internal auditor of the public school system of Trenton, NJ and current adjunct professor of accounting: “Time to abandon fund accounting in government“.  In this article, Mr. Chubin made the case for governments switching from their current method of accounting:

  • comparing actual revenue and expenses against budgeted revenue and expenses

to the for profit method of accounting:

  • taking expenses from revenues to arrive at a net gain or loss;

i.e.: governments knowing whether they are operating in the black or the red as opposed to how they are operating against their budgeted operations.

In this post, I will be quoting from an October 17, 2013 article in HuffPost Business written by Hon. Joseph J. DioGuardi, a former CPA, two term member of… Continue reading

Late Tax Season? Maybe!

According to the IRS Newswire, IR-2013-82, the IRS “announced a delay of approximately one to two weeks to the start of the 2014 filing season”.  The 16 day government closure was identified as the reason, with “about 90 percent of IRS operations closed during the shutdown … putting the IRS nearly three weeks behind its tight timetable for being ready to start the 2014 filing season”.  Evidently, according to the IRS release, “programming, testing and deployment of more than 50 IRS systems is needed to handle processing nearly 150 million tax returns”, with the shutdown being responsible for putting the IRS behind on being sure the systems are accurate and ready for the expected demands to be placed on them.  Acting IRS Commissioner Danny Warfel said “readying our systems to handle the tax season is an intricate, detailed process, and we must take the time to get… Continue reading

Lease Accounting: The Numbers

In my last post: “Lease Accounting: Type “A” or “B” Lease” I wrote about the open comment period and some of the comments that had been made concerning the proposed changes to Lease Accounting, which, when taken into consideration by the Finaicial and International Accounting Standards Boards, should help bring the proposed accounting changes into fruition.  An article written in the July 2013 issue of Acocunting Today by J. Edward Katz, an associate professor at Penn State University, titled “A lease accounting case study” might help to bring some clarity to the subject.  Again, as I stated in my last post, “this might be venturing a little “into-the-weeds” for some”; however, as Mr. Katz so plainly lays out in his article, the proposed changes “would eliminate the fiction of Operating Leases, requiring business entities to recognize the lease obligations and the leased resources… Continue reading

Lease Accounting: Type A” or “B” Lease

Getting into the “nuts-n-bolts” of lease accounting might be venturing a little “into-the-weeds” for some; however, for any businessperson that deals with finances or is interested in knowing how debt service is actually covered by cash flow, lease accounting should be an important issue.

Historically, leases have been broken into two categories: “Operating Leases”, or those where the asset is basically rented, and “Capital Leases”, those where the asset is actually being purchased, or rent-to-own.  Capital Leases, as the term implies, have always been capitalized, with the asset and the obligation shown on the Balance Sheet.  Operating Leases, on the other hand, the ones which are basically “renting” an asset are a different matter.  To date, Operating Leases are “expensed” through the Profit & Loss or Income Statement, with the totality of the obligation only to be found in the Notes to Financial Statements.  Back in… Continue reading