ASPA NEWSLETTER

March 2001

The Arkansas Public Accountant is the monthly publication of the Arkansas Society of Public Accountants. The society is a professional organization composed of Licensed Public Accountants, Enrolled agents and persons holding out to be accountants or tax preparers with their services available to the public. This organization is dedicated to helping our members give the best possible service to their clients. We are happy to accept articles and/or advertising that would be of interest to our members and ask that you submit any thing for publication by the 25^th of the month to be included in the next month’s publication. Please send to:
LaVERNE LONG, Editor
P.O. BOX 758
NEWPORT, AR 72112-0758
llonga@ipa.net

The Arkansas Public Accountant

OFFICERS & GOVERNORS
2000 - 2001

PRESIDENT...................................SHELLY RUSSELL
PRESIDENT ELECT........................JAMES C. HODGE
1ST VICE PRESIDENT...................DONNY J. WOODS
2ND VICE PRESIDENT..................BRIAN THOMPSON

GOVERNOR DISTRICT I....................SUZANNE BALTZ
GOVERNOR DISTRICT II....................DONNA GOWAN
GOVERNOR DISTRICT III...................LONNIE TAYLOR
GOVERNOR DISTRICT IV.............GEORGE SIMPSON
GOVERNOR DISTRICT V..........CARL DALRYMPLE JR.
GOVERNOR DISTRICT VI....................TOM SIMMONS

FROM THE PRESIDENT’S PEN

Dear Members:

This month's message will be relatively short I don't have the time to write a lot, and I know you don't have time to read it.

Donny Woods, Brian Thompson and I participated in the KATV "7 On Your Side" Tax Show February 20th. We were joined by four representatives of the Internal Revenue Service and four representatives from the Arkansas Society of CPAs. After a wonderful barbeque buffet, all eleven of us answered the phones constantly for two hours. I answered 34 calls myself, and I'm sure the rest took approximately the same number of calls. This was my first time to participate in this, and I'll have to say, I enjoyed it.

There were some very interesting questions, and the callers seemed most appreciative of our help. This is only of KATV's most popular shows, and it is a good opportunity for us to enhance thepublic image of our organization and the tax profession in general.

Many of you probably received the Drake newsletter, "Taxing Subjects." The article in the February issue entitled "Stress Full" is a very timely one for us. As it says, the long hours and a stressful work environment can be the norm from the beginning of January until the middle of April (we're all familiar with that). It basically reminds us to Plan Your Day (prioritize, done procrastinate, clean up as you go), get out of your cage (laugh and smile, listen to music that makes you happy, take a break, reward yourself), and Take Care of Yourself (exercise regularly, eat right, get a good night's sleep, take a deep breath). Now if we will just do it.

With Kindest regards,
Shelly Russell
President ASPA

EXPLANATION ABOUT WHY WE ARE NOT OFFERING THE GEAR UP COMPILATION AND REVIEW SEMINAR THIS YEAR

Most of you are not aware of the lead time involved in planning a seminar and you are not supposed to be, that is what I do. But in order for you to understand why we are not offering this seminar, I feel I must clue you in.

I start planning at least a year in advance and sometimes longer. The reason is that the ASPA Board as well as me, want to be sure that we have a facility that is convenient and comfortable.

Well, in order to do this I must coordinate the site with the Gear Up Seminars planners who deal with their scheduling. I planned last summer on the dates for the May seminar, the July seminar, and the convention. All was well, I thought. Then about a month ago, I received a call from Sue at Gear Up Seminars who informed me that Bob Jennings will not be doing any seminars from mid-July to mid-August. He will be on vacation. OK. Now we have to try and find the hotel space available and coordinate with Gear Up Seminars to do this seminar in June. It could not be worked out. Sorry but this is the way it came down.

We had been trying to work in a "Quickbooks' seminar either in May or June so we started looking at doing that in July and it worked on the dates that we had the hotel space reserved. How's that for luck?

So this is what is going to happen in July and I hope that a good number of you will be in attendance.

IRS LOSES: ERRONEOUS INFORMATION COSTLY.
Elbert Rice invested in what the IRS said was an improper tax shelter, and the dispute went to Tax Court. Rice then wrote the IRS asking how much tax he owed so he could prepay it to avoid interest and penalties. The IRS replied that he owed nothing because his assessment had been abated. But when the court case ended, it sent a bill for $7,000 of tax, plus $53,000 of interest and penalties. Rice sued to have the $53,000 lifted, saying he'd been mislead. The IRS replied that it had given accurate information because the assessment had been temporarily abated. The IRS had not said "temporarily" to Rice. If his claim is verified, he gets his money back.
Elbert Rice. DC Oregon, No. CV-99-1573-ST;85 AFTR2d p.2000-750.

NSA Governor' Column
Tax season seems like the perfect time to remind members of the National Society of Accountants that their professional society is busy planning programs and making benefits available to them that will render assistance now, during this busiest of all times, help them improve and market their practices, and provide assistance with their personal lives as well. This column will serve as an overview of NSA's affinity programs.

The following companies are committed to providing quality goods and services to NSA members at special member prices. All members are encouraged to take advantage of the services offered by these companies and recognize great savings and exceptional customer service. More information, telephone numbers, and a more detailed explanation of discounts and benefits are available on the NSA website at www.nsacct.org.

TAX ASSISTANCE

Tax Research. The first benefit is the call-in, staff-provided, tax research assistance through NSA.
CCH. Discounts are available on tax research products to NSA members.
Nelco. Serving the accounting profession for many years, Nelco's complete line of tax products is available to NSA members.
NTIS & ATX. Tax form bundles are available on CD including the official IRS 2000 forms, worksheets, diagnostics, client manager, etc. The price is $29.00.
Tax Essentials. NSA members may order a monthly, high quality audio magazine at a discounted subscription rate. The 90-minute tape delivers the latest news regarding taxation.

PRACTICE AIDS

Penny-wise. A deep discount is available to NSA members on office supplies.
Time Value. Widely-used software that provides answers to a variety of financial questions by performing a multitude of calculations.
Timeslips. Discounts are available to NSA members on time billing software.
UPS. Discounts are given to NSA members on shipping. Immediate tracking and delivery confirmation is provided.
Accountemps. Temporary financial specialists are available when help is needed most.
Flex$ystem. This Section 125 Cafeteria Plan allows employees to pay for certain medical expenses on a pre-tax basis.
AgriPlan/BisPlan. 100% tax deduction of family health care expenses available to Schedule C & F clients under IRC 125 is facilitated by this third-party administrator.
Insurance. Professional liability insurance if offered through Forrest T. Jones.

MARKETING

Client's Update. A bi-monthly client newsletter is available at a discount to NSA members and includes a free reproducible year-end tax letter.
CJM Planning. This financial planning service is NSA's newest affinity partner. NSA members receive discounts on training and earn a "preferred" commission.
NetgenShopper. A business portal is provided to help expand business and generate new clients via the Internet.
Digiton. Dynamic, interactive web systems at a discounted fee.

EDUCATION
Besides actively designing new programs and offering excellent seminars, these sources for
obtaining CPEs have been made available for NSA members.

Surgent. A premiere provider of quality self-study courses for accountants, tax practitioners, and financial planners, Surgent offers a 10% discount to NSA members.
Bisk Total Tape. Established long ago as a leader in the self-study market, Bisk makes their easy-to-use, quick-to-learn, pertinent-topic tapes available to NSA members at a discount.
Pro2Net. CPE is available online through this company at a discounted rate.

MISCELLANEOUS

Hertz. Discounted rates are offered NSA members on car rentals from this well-known company.
Royal Caribbean. About mid-March, what tax practitioner doesn't dream of a luxury cruise? Plan a vacation at the NSA members discounted rate through Caribbean or Celebrity.
Long-term Care Insurance. This is only one of the coverages offered through Forrest T. Jones.
Auto Insurance. GRICO offers a discount to NSA members on their auto insurance.
Credit Card. Recognized and accepted nationally, the MBNA Card is offered to members and proudly carries the NSA name.

I hope you will find some of these programs provide exactly what you need and that your Tax
Season is financially rewarding and personally fulfilling.

Wanda Samek
NSA District VIII Governor

The IRS admits its audit coverage now is almost nonexistent. The audit rate for 1999 was a tiny 0.025% of all returns. Problems with the earned income credit have forced shifts to low-income taxpayers, so 24% of audit resources now collect only 4% of revenue. Their (IRS) goal is to increase audit efficiency by targeting high-income individuals, especially business partners.

TAX INFORMATION FROM THE IRS

NEW FILING LOCATION FOR SOME ESTATE & GIFT TAX RETURNS
Beginning January 1, 2001, please file Form 706 returns due for decedents domiciled in Arkansas and file Form 709 returns due for tax year 2000 with the Cincinnati Service Center, Cincinnati, OH 45999.

FREE TAX HELP AVAILABLE AROUND THE CLOCK
Throughout the 2001 filing season, the IRS will provide telephone help 24 hours a day, seven days a week at 1-800-829-1040. Several other toll-free services are available day or night, such as automated refund information and TeleTax's recorded information on common tax topics (1-800-829-4477) or requesting copies of forms and publications (1-800-TAX FORM or 1-800-829-3676).

The IRS also added more features and helpful information on its award-winning web site at www.irs.gov. People downloaded more than 150 million forms and publications in fiscal 2000, helping make the site one of the most frequently visited on the Internet.

"Taxpayers can count on the IRS to get help around the clock, whether it's from the Internet or our toll-free services," Rossotti said.

If you prefer to visit an IRS office, walk in service is available at more than 400 locations nationwide. At many sites, walk in service will be offered on 12 Saturdays between January 27 and April 14, 2001.

This year's tax deadline will be April 16, 2001. Taxpayers get an extra day because the 15th of April falls on a Sunday.

MORE TAXPAYER HELP IN THE YEARS AHEAD
This marks the first filing season since the IRS reorganized in October 2000. The agency underwent its biggest transformation in nearly a half century, shifting from a geographically-based organization into one built around the needs of four different groups of taxpayers.

For this year, the first stages of this multi-year effort will be behind-the-scenes with little impact on taxpayers filing their returns.

One change is that people in a few states will mail their paper tax returns to a different IRS center. As in previous years, simply use the preprinted envelope in the tax package, or check the state-by-state listing in the package.

In the long run, taxpayers will see new ways of doing business as the IRS puts in place new programs and new technology to improve taxpayer service, with a special emphasis on solving problems before they start.

Throughout this process, the IRS will continue to work to make sure everyone pays their fair share while also ensuring taxpayer rights are respected and safeguarded.

"In the years ahead, the new organization will create an opportunity for revolutionizing how the IRS meets the needs of taxpayers," Rossotti said. "For this year, we'll work hard to make sure these changes move forward while ensuring that taxpayers still receive prompt service and refunds during the 2001 filing season."

TREASURY TO PROPOSE REVISED STANDARDS OF PRACTICE FOR TAX PRACTITIONERS
The Treasury Department has issued proposed regulations that would modernize the standards of practice for attorneys, accountants, and others who practice before the Internal Revenue Service. These standards, known as Circular 230, would be revised to include stricter requirements for rendering tax shelter opinions.

"Abusive tax shelters are the most serious compliance problem in the U.S. tax system," Treasury Secretary Lawrence H. Summers said. "These proposed measures would deter the purveyance of these shelters, protect the integrity of our tax system, and ultimately reduce the tax burdens of honest taxpayers."

The proposed regulations would modify existing standards of practice. In particular, the proposed regulations would revise standards for opinions rendered by tax practitioners regarding tax shelter transactions. These opinions give prospective investors an assurance that the purported tax benefit of a shelter is likely to be sustained if challenged by the IRS and may be offered in an effort to provide a potential investor comfort that penalties will not be imposed if the transaction is successfully challenged.

The new rules would strengthen the standards regarding factual due diligence and legal analysis. In particular, they would help ensure that practitioners analyze and address carefully whether a particular transaction has a legitimate business reason and is not being done solely for the tax benefits, and that they consider and analyze all potentially relevant judicial doctrines and anti-abuse rules. In addition, the proposed regulations would:

prohibit certain contingent fee arrangements where the practitioner's fee is based on the tax benefit being sustained
require that practitioners in firms who have responsibility for a firm's tax practice take reasonable steps to put in place adequate procedures to ensure compliance with the Circular 230 standards; and authorize the IRS to issue a public reprimand, or censure, in cases warranting a sanction less severe than suspension or disbarment.

Secretary Summers announced last February that the Circular 230 opinion standards would be revised to complement Treasury Department and IRS efforts to combat the proliferation of abusive tax shelters. The proposed regulations were completed following a period of public comment and input from the tax practitioner community, including the American Bar Association, the New York State Bar Association, and the American Institute of Certified Public Accountants. A public hearing on the proposed regulations is scheduled for May 2, 2001. The regulations will take effect only upon publication in final form in the Federal Register.

The Treasury Department has also issued regulations requiring the reporting and registration of tax shelters, shut down many tax shelter transactions that have come to the Treasury's attention, and proposed legislation to further halt the marketing and promotion of shelters. In addition, the IRS has created an Office of Tax Shelter Analysis to coordinate its anti-shelter activities and stepped up its efforts to curb abusive trusts based in tax havens.

OLSON NAMED NATIONAL TAXPAYER ADVOCATE
Nina E. Olson, the founder of the nation's first independent low-income taxpayer clinic, has been selected as the National Taxpayer Advocate, said Internal Revenue Service Commissioner Charles O. Rossotti.

"Nina is a distinguished member of the tax community and has established a strong record as an advocate for taxpayer rights," Rossotti said. "I am confident she will give a powerful voice to taxpayers who have unresolved matters with the IRS."

For more than 20 years, beginning with the establishment of the Taxpayer Ombudsman Office in 1979, the IRS has provided Americans with a means for resolving problems with the agency. The Ombudsman Office was replaced by the Office of the Taxpayer Advocate in 1996; and in 1998, Congress renamed the Advocate the National Taxpayer Advocate and granted the office expanded authority to assist taxpayers.

The National Taxpayer Advocate is appointed by the Treasury Secretary following consultations with the IRS Commissioner and the IRS Oversight Board. The National Taxpayer Advocate is an independent voice inside the IRS and reports directly to the IRS Commissioner.

Olson will oversee a nationwide system of local taxpayer advocates ensuring that tax problems, which have not been resolved through normal channels, are promptly and fairly handled.

Before joining the IRS, Olson was a practicing attorney specializing in tax controversy work. She also founded and served as executive director of the Richmond, Virginia-based Community Tax Law project, the first independent 501(c)(3) low-income taxpayer clinic in the U.S.

Olson, a native of Philadelphia, earned a bachelor of arts degree from Bryn Mawr College, a juris doctor degree from North Carolina Central University School of Law and a master's of laws in taxation, from Georgetown University Law Center. She has been an adjunct professor at Virginia Commonwealth University, the College of William and Mary School of Law and the University of Richmond School of Law.

Olson will assume her duties around the first of March, 2001.

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