CPA Voice June 2011 : Page 1

June 2011 VOICE CPA The Ohio Society of Certifi ed Public Accountants Don’t forget! Dues deadline is July 1 www.ohioscpa.com www.ohioscpa.com Ohio budget inches closer to adoption A fter months of hearings and hundreds of changes, the pending “Jobs Budget,” also known as Ohio’s 2011-13 biennium budget bill (Am. Sub. H.B. 153), is expected to be completed in time for the state’s new fi scal year beginning July 1. As of press time, the legislation contains a number of signifi cant policy changes in addition to the usual agency appropriations, including proposals for privatization of state services, changes to Medicaid and permitting drilling in state parks. The bill also includes spending reductions, including K-12 and higher education, and contributions to the local government fund. Ohio Budget Reform A State of Change the Ohio House and Senate Ways and Means committees and would eliminate the estate tax starting Jan. 1, 2013. OSCPA testifi ed earlier this year on both bills, noting that the estate tax negatively impacts Ohio in a number of ways. “Unfortunately, it’s not just business owners and their capital resources we lose. It’s not just the entrepreneurial people we lose,” OSCPA explained in written testimony. “Many wage-earning Ohioans have, over the years, saved for their retirement and learned that they can move to a number of other states in our nation to provide more fi nancial resources to their heirs.” OSCPA Past Chair Matt Yuskewich, CPA testifi ed before the Senate Finance Committee in favor of numerous provisions contained in the budget. This included OSCPA’s Budget Advisory Task Force Continued on page 8 Public disclosure to be required for registered tax return preparers he IRS has announced that Circular 230 will be amended to require a Registered Tax Return Preparer include a disclosure statement with any paid advertising involving print, television or radio. The IRS is also restricting the use of the term “Registered Tax Return Preparer” until applicants pass a competency examination and conform with other requirements. Although it’s been fi ve months since the deadline for CPAs and other paid preparers to register and pay for a required PTIN, the IRS has yet to defi ne what will be on the competency exam or involved in meeting tax compliance and the process for developing suitability checks necessary for preparers to use the registered title. Continued on page 8 government support from $500,000 in the House budget to $750,000, meaning communities that receive $750,000 or less from the fund will not see a reduction. Among the OSCPA-backed provisions retained in the Senate’s latest version are the elimination of the estate tax, proposals for local government shared services and collaboration, and an economic development program that allows Ohio high school graduates who haven’t lived in Ohio for the past 12 months or more to qualify for in-state tuition for 10 years after graduation. T Ohio simply can no longer afford the status quo of business as usual. The $55.6 billion bill emerged from the House on a 59-40 vote in early May. The Senate unveiled its fi rst set of changes on May 31, including adding $115 million to education over the biennium and increasing the state’s contribution to the local government fund by $100 million. The version also increases baseline local Estate tax death march House Republicans paved the road to eliminate Ohio’s estate tax by adding language to the amended version of Gov. Kasich’s proposed two-year state budget. The plan mirrors legislation previously passed by IN THIS ISSUE fi ghts for private 2 AICPA company standards board considers IFRS 3 SEC endorsement approach as an option for FASB CPAs react to news of 3 Ohio new CGMA credential preparer Jackson 4 Tax Hewitt fi les for bankruptcy savings available for 10 Tax manufacturers with export sales OSCPA scores rare meeting with IRS Commissioner Unprecedented and groundbreaking. That describes the private face-to-face meetings OSCPA leaders held with Rep. Pat Tiberi, R-Ohio, chair of the House Subcommittee on Select Revenues, IRS Commissioner Doug Shulman and key members of their staff in Washington, D.C. last month. The meetings, arranged by Tiberi, were held in response to concerns expressed to OSCPA by Ohio CPAs over recent IRS initiatives that have positioned CPAs and tax practitioners in potentially adversarial relationships with clients and burdened the profession with what some view as unnecessary and duplicative administrative requirements. OSCPA tackled several issues with the IRS during meetings with Shulman and Small Business and Self Employed Division Commissioner Faris Fink. Topics included tax preparer regulations, the IRS letter campaign and practitioner tax season visits, accounting software requests during examinations, and duplication of uncertain tax position requests. Continued on page 7 ed goodwill testing: 11 Simplifi Proposed standard benefi ts private and public companies Time to step up your 13 CFOs: audit game journey to value 14 A pricing members connect with 19 OSCPA Washington power players

Ohio Budget Inches Closer To Adoption

After months of hearings and hundreds of changes, the pending “Jobs Budget,” also known as Ohio’s 2011-13 biennium budget bill (Am. Sub.H. B. 153), is expected to be completed in time for the state’s new fiscal year beginning July 1. As of press time, the legislation contains a number of significant policy changes in addition to the usual agency appropriations, including proposals for privatization of state services, changes to Medicaid and permitting drilling in state parks. The bill also includes spending reductions, including K-12 and higher education, and contributions to the local government fund.<br /> <br /> The $55.6 billion bill emerged from the House on a 59-40 vote in early May. The Senate unveiled its first set of changes on May 31, including adding $115 million to education over the biennium and increasing the state’s contribution to the local government fund by $100 million.The version also increases baseline local Government support from $500,000 in the House budget to $750,000, meaning communities that receive $750,000 or less from the fund will not see a reduction.<br /> <br /> Among the OSCPA-backed provisions retained in the Senate’s latest version are the elimination of the estate tax, proposals for local government shared services and collaboration, and an economic development program that allows Ohio high school graduates who haven’t lived in Ohio for the past 12 months or more to qualify for in-state tuition for 10 years after graduation.<br /> <br /> Estate tax death march<br /> <br /> House Republicans paved the road to eliminate Ohio’s estate tax by adding language to the amended version of Gov. Kasich’s proposed two-year state budget. The plan mirrors legislation previously passed by The Ohio House and Senate Ways and Means committees and would eliminate the estate tax starting Jan. 1, 2013.<br /> <br /> OSCPA testified earlier this year on both bills, noting that the estate tax negatively impacts Ohio in a number of ways.“Unfortunately, it’s not just business owners and their capital resources we lose. It’s not just the entrepreneurial people we lose,” OSCPA explained in written testimony. “Many wageearning Ohioans have, over the years, saved for their retirement and learned that they can move to a number of other states in our nation to provide more financial resources to their heirs.”<br /> <br /> OSCPA Past Chair Matt Yuskewich, CPA testified before the Senate Finance Committee in favor of numerous provisions contained in the budget. This included OSCPA’s Budget Advisory Task Force OSCPA’s Ohio Budget Advisory Task Force priorities that focused on enabling government at all levels to share services, streamline operations and collaborate to achieve cost savings and greater productivity. Yuskewich also pointed out OSCPA’s support of providing in-state tuition for returning Ohio grads, and eliminating the estate tax.<br /> <br /> Yuskewich told legislators, “We trust you will take advantage of this unique opportunity to drive the significant changes that will modernize Ohio government. We all want Ohio to once again be a place where people want to live and businesses want to locate. Ohio simply can no longer afford the status quo of business as usual.”<br /> <br /> Tax amnesty<br /> <br /> In a move projected to bring in $30 million for the state, the pending budget also includes a tax amnesty period from May 1 to June 15, 2012. The program would allow anyone with certain unpaid state and local taxes to pay without a penalty, including:<br /> <br /> • Personal income tax<br /> <br /> • Sales and use tax<br /> <br /> • Corporate franchise tax<br /> <br /> • Estate tax<br /> <br /> • Motor fuel tax<br /> <br /> • Cigarette tax<br /> <br /> • Commercial activity tax<br /> <br /> • Natural gas company excise tax<br /> <br /> • Dealers in intangibles tax<br /> <br /> • County and transit authority sales tax<br /> <br /> • School district income tax<br /> <br /> The pending Senate version also keeps a provision that stipulates the commercial activity tax applies to the gross receipts of a casino operator without deduction for casino user winnings and payouts.<br /> <br /> The Senate’s other major revisions include:<br /> <br /> • Creating the Joint Tax Expenditure Review Committee<br /> <br /> • Restoring the administration’s proposal to require local entities to pool health care coverage<br /> <br /> • Privatizing the Ohio Lottery<br /> <br /> • Adding $15 million to the PASSPORT program to support at-home care for Ohioans who prefer to live independently in their own homes<br /> <br /> • Requiring legislative approval for any sale or lease of the Ohio Turnpike<br /> <br /> • Increasing competitive bidding thresholds for townships and villages<br /> <br /> • Making changes to minimum wage law exemptions<br /> <br /> The creation of a review process for tax expenditures and the pooling of health care coverage were among suggestions contained in OSCPA’s Ohio Budget Advisory Task Force Report.<br /> <br /> While much of the news has focused on the cuts contained in the pending budget, Ohio is not alone in curtailing state expenditures. According to the National Association of State Budget Officers, Ohio is:<br /> <br /> • One of 16 states recommending cuts in K-12 education in fiscal year 2012<br /> <br /> • One of 25 states considering cuts to higher education<br /> <br /> • One of 14 considering cuts to prisons<br /> <br /> • One of 17 considering cuts to public assistance<br /> <br /> • One of 14 considering cuts to transportation

Oscpa Scores Rare Meeting With Irs Commissioner

Unprecedented and groundbreaking.That describes the private face-to-face meetings OSCPA leaders held with Rep.Pat Tiberi, R-Ohio, chair of the House Subcommittee on Select Revenues, IRS Commissioner Doug Shulman and key members of their staff in Washington,D. C. last month.<br /> <br /> The meetings, arranged by Tiberi, were held in response to concerns expressed to OSCPA by Ohio CPAs over recent IRS initiatives that have positioned CPAs and tax practitioners in potentially adversarial relationships with clients and burdened the profession with what some view as unnecessary and duplicative administrative requirements.<br /> <br /> OSCPA tackled several issues with the IRS during meetings with Shulman and Small Business and Self Employed Division Commissioner Faris Fink.Topics included tax preparer regulations, the IRS letter campaign and practitioner tax season visits, accounting software requests during examinations, and duplication of uncertain tax position requests.<br /> <br /> Two areas of possible agreement include a commitment to send next year’s round of practitioner visit letters a month earlier to allow more time to prepare for the visits. Discussions also centered on using the PTIN database to separate the timing of the visits for practitioners who practice year round versus those who are open only during tax time.<br /> <br /> “OSCPA is definitely willing to bring critical issues to the attention of the IRS and make sure our voice is heard,” OSCPA’s Incoming Chair of the Board James D. Gottfried, CPA, said of the meetings. “It’s clear that our willingness to have a dialogue about the tougher issues resonated with the IRS. We weren’t there to just complain but to help them understand our concerns and hopefully work with them to find resolutions.”<br /> <br /> Discussion points included:<br /> <br /> • The difficulty with scheduling visits to CPA firms during the January – April 15 tax time<br /> <br /> • The unintended consequences of a low threshold for the disclosure of a business’ uncertain tax positions<br /> <br /> • The ability to track unscrupulous tax preparers through the PTIN mandate set up under the tax preparer registration program<br /> <br /> The meetings, which were held during the AICPA Council meeting and visits to Ohio’s Congressional delegation on Capitol Hill, are due in large part to OSCPA’s long-time working relationship with Rep. Tiberi. The idea developed during a meeting last year with Tiberi on a variety of concerns with IRS proposals.<br /> <br /> The result is a prime example of how the Society is working more closely with Ohio’s congressional delegation in Washington to address federal issues important to CPAs, including the testimony of OSCPA member Dennis Tarnay, CPA before the U.S. House Ways and Means Subcommittee on Select Revenues in March. Tiberi, chair of that panel, has worked hard to bring the concerns of Ohio CPAs to the forefront.<br /> <br /> “We can’t thank Rep. Tiberi enough for working with us to bring these issues directly to the IRS,” said Amy Mignogna, CAE, OSCPA’s director of tax policy.<br /> <br /> David M. Reape, CPA, a member of OSCPA’s Tax Policy Committee, found the IRS meetings to be beneficial for everyone involved. “We had a great discussion with the IRS and Rep. Tiberi,” Reape said. “Commissioner Shulman was very open and committed to keeping the dialogue going.”<br /> <br /> “The Ohio Society’s outreach to the IRS and Rep. Tiberi sent a clear message that it is working diligently to shape public policy,” said Edward Karl, vice president of taxation for the AICPA.<br /> <br /> “OSCPA is dedicated to bringing the concerns of our members to the IRS and to our Congressional leaders,” OSCPA President and CEO Clarke Price, CAE, said. “The relationships we have developed gave us the opportunity to have a seat at the table with the IRS and to be in a position to make a real difference to the tax preparer community.We also expect that the IRS will modify their outreach to CPAs during subsequent tax seasons based on the concerns that we raised.”

Public Disclosure To Be Required For Registered Tax Return Preparers

The IRS has announced that Circular 230 will be amended to require a Registered Tax Return Preparer include a disclosure statement with any paid advertising involving print, television or radio.<br /> <br /> The IRS is also restricting the use of the term “Registered Tax Return Preparer” until applicants pass a competency examination and conform with other requirements. Although it’s been five months since the deadline for CPAs and other paid preparers to register and pay for a required PTIN, the IRS has yet to define what will be on the competency exam or involved in meeting tax compliance and the process for developing suitability checks necessary for preparers to use the registered title.<br /> <br /> Under Section 10.30 any individual representing himself or herself to be a Registered Tax Return Preparer will be required to display or broadcast the following statement: “The IRS does not endorse any particular individual tax return preparer. For more information on tax return preparers go to IRS.gov.”<br /> <br /> The announcement comes just a year after the IRS was urging preparers to register early for the PTIN number, saying they planned a national marketing campaign encouraging tax payers to check the to-be-developed IRS public database to ensure their preparer is a “registered return preparer.”<br /> <br /> Until that time, the IRS has said, “no individual may represent that he or she is a Registered Tax Return Preparer.”<br /> <br /> OSCPA has always been concerned about adding an additional layer of regulatory burden to CPAs and whether the mandatory registration process and accompanying fee will weed out unscrupulous preparers. Marketplace confusion is also a legitimate concern as well as whether the term Registered Tax Return Preparer legitimizes sub-par tax preparers.<br /> <br /> During a meeting last month with OSCPA representatives, Congressman Pat Tiberi, R-Ohio, and IRS Commissioner Doug Shulman, OSCPA raised practical issues about how the term Registered Tax Return Preparer will be used. “One of OSCPA’s concern is that Registered Tax Return Preparer will be shortened to the acronym RTRP and will effectively be used by some to connote a level of competence that isn’t justified,” said OSCPA President & CEO Clarke Price, CAE.<br /> <br /> An individual with a provisional PTIN may not represent that he is a Registered Tax Return Preparer or has passed the competency examination. Once the competency examination is available, only an individual who has met all of the conditions to becoming a Registered Tax Return Preparer, including passing the competency examination and the tax compliance and suitability checks, may represent that he or she is a registered tax return preparer.<br /> <br /> Read more details at www.irs.gov/pub/irsdrop/ n-11-45.pdf.

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