November
2001
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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 25th of the month to be included in the next month’s publication. Please send to: LaVERNE
LONG, Editor |
The Arkansas Public Accountant
OFFICERS & GOVERNORS 2001 - 2002
OFFICERS
President President Elect 1st Vice-President 2nd Vice-President Executive Secretary |
DeQueen Hot Springs Newport |
BOARD OF GOVERNORS
District I District II District III District IV District V District VI |
Pocahontas Searcy West Memphis Little Rock Prescott Nashville |
FROM THE PRESIDENT’S PEN
Dear Members:
This is my first letter as your president and I would just like to express to each of you, what an honor it is to be serving our society in this capacity. Although I have observed many of my predecessors in this position, I know that I will need all the help you can spare. I will be calling on many of you to help us this year. We have a great slate of officers serving ASPA this year and I hope you will not hesitate when called upon to serve in some capacity.
We just completed our fifty-sixth annual convention October 18, 2001. For those of you who were not present, you missed a wonderful banquet and as usual a superb continuing education program on business entities, with Gear Up speakers, Joe Santoro and Abe Carnow.
I would again like to thank NSA District Governor Wanda Samek for being our installing officer at the banquet.
We had a magician to entertain at the banquet and he did a great job of pumping milk from Donny Woods elbow, burning a $100 dollar bill belonging to Fred Bailey and chopping off the head of Jerry Russell with a guillotine.
Donna Gowen, with the assistance of Shelly Russell did another great job on the silent auction. The total for our scholarship fund is over $500.
If you are not already aware, Shelly Russell is our new NSA State Director since Donna Gowan's term expired in August. Be sure to congratulate her when you see her and check out the candy dish at her display.
Everyone should mark their calendars for November 19 & 20, 2001. These are the dates for our annual Gear Up 1040 Seminar. I don't believe it was mentioned in the mailed material, the seminar is being held at the DoubleTree Hotel and Robinson center.
I look forward to a great year as your President.
Sincerely,
James
C. Hodge
President - ASPA
SILENT AUCTION REPORT
I THOUGHT ALL OF YOU MIGHT LIKE TO KNOW THAT THE SILENT AUCTION EARNED $501.00. This money is designated to go to the scholarship fund (NSA) each year.
Thanks to all of you who donated items, purchased items and helped watch over the tables.
- Donna Gowan
NSA District Governor' Column
IT'S A NEW DAY AT NSA!
The phrase ""It's a new day at NSA" was first promoted about two years ago by Gene Cole, Chair of the Membership Committee. It was catchy, but didn't seem to catch on. Times have changed. It really is a new day at NSA!
If I were asked when the change took place, I'd say a new, positive, and enthusiastic attitude probably began during (or around the time of) the convention in August. If I were asked why it happened, I'd reply that there were several reasons for it - good reasons.
First, NSA members wanted a vibrant society that was focused on meeting their needs, and they were active in making this desire known.
Second, District Governors selected by those members knew why they were elected and what was expected of them. They united in a way that brought differences to the table, permitted open discussion, and allowed the democratic process to work.
Third, a new Executive Vice-President brought to NSA a comprehensive set of skills and experiences that seemed tailor made for us. More importantly, his philosophy was music to our ears: My staff cannot effectively meet members needs, nor can I delegate effectively until we understand what the members want. His attention is focused on meeting members' expectations, protecting their practice rights, and providing education and other benefits styled and presented in ways appropriate to their needs.
We had a record number of first-timers at the Minneapolis Convention, and they are relating their convention experiences with enthusiasm and eagerness to participate in other NSA activities.
As the hallmark of his administration, President Steve Desdier is piloting the Board through a long-range planning process to assure the National Society of Accountants will be positioned and prepared to meet the challenges and opportunities that will arise during the next ten years. The Board of Governors will meet November 2-4, 2001, and these goals will be addressed:
To crease a professional environment where every practitioner feels that it is virtually impossible to be a responsible and successful professional without being a member of NSA>
Define the profession of "small business accountant (advisor)"
(1) Develop CPE platform without walls to provide CPE not available elsewhere
(2) Promulgate accounting standards for small business.
(3) A fully defined profession - complete strategy planning - 2002: credential of Accredited Small Business Accountant/Advisor (ASBA) up and running - 2003
(4) Develop public relations program – 2002
(5) Develop bylaws and administrative policies as necessary
(6) Develop public relations plan - 2002
Become the leader and innovator of the profession
Introduce NSA to the next generations of Accounting and tax professionals
These goals are lofty, to be sure, but they are attainable, and our members deserve no less. I'd like to hear your ideas and comments regarding our long-range mission and goals. My e-mail is samek@gte.net.
It is exhilarating to see enthusiasm returning to our Society. It really is a new day at NSA!
Wanda Samek
NSA District VIII
TAX INFORMATION FROM IRS
NOVEMBER 2001
PROVIDED BY SB/SE TAXPAYER EDUCATION & COMMUNICATION
NASHVILLE, TN
Q: What is "Tax Talk Today"?
A. "Tax Talk Today" is an interactive series that allows tax practitioners across the country to consult with nationally recognized experts about current tax and business and business issues of critical importance to them. Each month, the 60 minute program delivers practical, balanced information from the nation's leading tax practitioners, preparer organizations, and other professionals including IRS executives. The series is specifically designed to address the informational and continuing education need of Enrolled Agents, CPA's, Tax Attorneys, educators in law, business and accounting, as well as IRS personnel.
Q: What is the format of "Tax Talk Today"?
A: All of the programs in this unique monthly series feature a panel discussion, live questions from viewers, a briefing on the latest tax news, and entertaining segments like Tax Teasers, and Tax Tips, that further encourage viewer involvement.
Q: What are the topics of each "Tax Talk Today" program?
A: Live Programs Upcoming (2 PM ET;
October 30, 2001 The Real Marriage Penalty: Innocent
Spouse Claims
November 27, 2001 The filing Season Before the Filing
Season: Completing Forms W-2 & 1099
December 18, 2001 ‘Tis the Tax Filing Season: Get ready for
2002
Note: All programs are archived and available for viewing at any time over the internet as soon as 2 hours after the live webcast concludes . Programs are also available for sale on videotape.
Archived Programs (available for one year):
Aired on September 25, 2001 SPECIAL EDITION:
Disaster Relief
Aired on August 28, 2001 Is that Worker an Employee?
Aired on July 31, 2001 Your e-future with the IRS
Aired on June 26, 2001 If you don't agree, go to Appeals
Aired on May 29, 2001 Verification or Tax Returns: Not
The Same Old Audit
Aired on April 24, 2001 Paying the tax, now or later
Aired on February 27, 2001 Filing those returns: 200 Million
Submissions
Aired on January 30, 2001 Working with the IRS: Who to call
For what
Q: How were the topics for the series chosen?
A: The programs producers assembled a "Content Advisory Team" to provide direction and expert opinion in program content and development. The Lead Advisor is Don Alexander, Tax Attorney,, Akin, Gump, Strauss, Hauer & Feld L.L.P., and former Commissioner of the IRS (1973- 77). Other member of the team include:
Jeffery Adelstone, EA, CFP, ABA, ATA
Cosimo Borzumate, EA
Jim Dougherty, Director, Deloitte & Touche
Brian Gates, EA, Tax Analysts Advisory Services, Inc.
Regina Jefferson, Associate Dean & Professor, Columbia
School of Law, Catholic University
Ellen Murphy, IRS, Taxpayer Education & Communications, Area Director
Les Shapiro, President, Padgett Business Services Foundation
Dr. William Stevenson, EA, Chairman, Federal Taxation
Committee, Nat'l Society of Accountants
In addition, each topic was tested in focus groups with a variety of tax professionals nationwide. Through this process, topics were specifically developed to target the areas of greatest practical concern to tax professionals in their day-to-day dealings with the IRS.
Q: Who are the experts that will be featured in the series?
A: "Tax Talk Today" features experts from the nation's best - known accounting firms, top law and business schools, leading practitioner associations, as well as IRS executives.
For example: Tax Talk Today's June 26th program, "If you don't agree. go to appeals". Featured the following panelists:
Donald C. Alexander, Tax Attorney, Law firm of Akin, Gump, Strauss, Hauer & Feld, LLP, and former IRS Commissioner Jim Dougherty, Tax Division, National Office, Deloitte & Touche, former IRS Director of Appeals Daniel J. Black, National Chief, Appeals, IRS.
Q: How can I view the program?
A: The programs may be viewed live, via webcast at 2PM ET on the last Tuesday of each month (see program dates and topics listed above), and are also archived for viewing at any time in the following year either directly over the internet or by purchasing a video tape at the "Tax Talk Today" website store. Programs are archived and available for viewing as soon as 2 hours after the live webcast concludes.
Ed. Note: There was more questions and answers on this communication from the IRS but as my space is limited, I only printed the highlights. If you need more than I have given you, you can go to the website and get all the extra information you need.
NSA's FEDERAL TAXATION COMMITTEE ISSUES A CALL TO ARMS
It is time for members of the National Society of Accountants to STAND UP AND BE COUNTED.
As the tragic events of terrorist activities on our citizens continue to unfold, many of us in the professional tax and accounting profession have been left with a burning desire to play our part in supporting our nation and demonstrating our patriotism. Accordingly the NSA's Federal Taxation Committee is offering the following action plan to our professional community:
ELECTRONIC FILING
It is time to commit to the electronic filing of tax returns: personal and business. Many of us in Federal Taxation have resisted the process because it was inconvenient and costly. However it has now become an INCONVENIENCE OF HONOR. We must do everything that we can do to minimize the amount of mail being sent to our friends at the IRS and, more particularly, the Service Center Campuses.
PAYROLL TAXES
The Electronic Federal Tax Payment System (EFTPS) is easy and it works. Every payroll tax deposit, no matter how small should be sent electronically through the EFTPS system. There is a short learning curve that will cause some temporary inconvenience/ Consider it an INCONVENIENCE OF HONOR.
CORRESPONDENCE
Instead of mailing correspondence, call the Service and have them provide a fax number. We all have been through a great inconvenience in trying to resolve problems through the telephone system. Consider it an INCONVENIENCE OF HONOR.
PRO BONO REPRESENTATION SERVICES
NSA will be coordinating the offering of pro bono tax representation services to the citizens of our nation who qualify under the rules of the Low Income Tax Clinics. While we are waiting to receive a grant to help us get organized, we are going forward with the program effective immediately. While it may cause some inconvenience, we consider it to be an INCONVENIENCE OF HONOR.
INTERNAL REVENUE SERVICE
Please work with us.
FYI...CHECK THE BOX USE EXPENDED
IRS Commissioner Rossotti announced that several more forms would include the "Check the Box" feature that is already present on the Form 1040. As you know, the "Check the Box " refers to the allowing of the IRS to talk to a third party about a limited amount of information on an individual's tax return. Form 1040's check off box has been expanded this year to allow a taxpayer to designate anyone the taxpayer desires and using as identification a pin number that they can pick themselves.
IRS is including the Check the Box feature on some employment tax forms.
So far, the Check the Box will appear on the Form 940 for 2001 when it is mailed out in January. The first quarter Form 941 for 2002, usually mailed in March, will have the check off box. The other forms will be announced shortly.
WHY E-FILING MAKES SENSE FOR SMALL BUSINESS
Like individuals, businesses can file tax returns electronically. In most cases, businesses can choose to "E-file" or file paper returns. But there are often compelling reasons to choose E-filing...
- Returns can be filed before or after normal business hours.
- Preparation soft-ware can easily be tied to the business's accounting software.
- Owners may be able to prepare and file returns without the help of a tax professional.
E-filing is still in its infancy – it's about 10 years old. Many IRS forms can be filed this way, but not all. Here's what you currently can and cannot file electronically.
______________
income tax returns
Whether you can file your business income tax return electronically depends on how your business is set up.
- Sole proprietors can file income tax returns electronically. This filing method accepts Schedule C of Form 1040 and most of the other forms and schedules a business might need to file.
- Partnerships can file Form 1065 electronically. Small partnerships may choose to E-file. Large partnerships, defined as those with 100 or more partners, must file electronically unless they obtain a waiver. Individual partners can file their personal returns electronically., reporting their share of partnership income on Schedule E of their 1040.
- S corporations and C corporations cannot file their income tax returns electronically –yet. As E-filing expands, the IRS will no doubt make it possible for these entities to do away with paper returns. S corporation shareholders can, of course, file electronically to report their share of corporate income on their personal returns.
___________________
employment tax returns
- W-2s. Employers must furnish workers with Form W-2 to report annual compensation. A copy of the form must be sent to the Social Security Administration (SSA) so it can record Social Security and Medicare tax payments. Filing with the SSA can now be done electronically (www.ssa.gov/employer/esohome.htm) To file W-2s on line, you must register with the SSA to obtain a personal identification number.
- Tax assessment against partnership doesn't bind partners. A married couple who were general partners of a partnership declared personal bankruptcy. The IRS then filed a claim against them for more than $300,000 of taxes that had been assessed against the partnership. Court: The general partners of a partnership can be held liable for its debts, including taxes. But to actually hold them liable for taxes, they must be assessed as individuals. Here the IRS had never made individual assessments against the couple and the three-year time limit for doing so had lapsed. The IRS's claim was invalid and the couple escaped the tax. Abel C. Galletti, et ux. ( In re Abel C. Galletti, etal.) DC CD Ca., No. EDCV 00-00752; 88 Aftr2d p. 2001-5227.
- Deduction for company jet not limited to what employees report in income. A company jet was used primarily for business but two company officers also used it for personal travel. The company included the value of the personal travel in the officers' income using an IRS-approved formula, and deducted all costs of operating the jet. Snag: The IRS noted that jet operating cost attributable to the personal travel greatly exceeded the amount included in the officers' income. So it disallowed the company's deduction for the amount of the difference. Tax Court: The Tax Code does not impose any such deduction limit. The full costs of the jet are deductible. Midland Financial Co. TC Memo 2001-203.
- Business owners must update their retirement plans or face disqualification...Qualified retirement plans must be amended to incorporate law changes enacted as far back as 1995. And they must be amended according to strict deadlines.
Failure to update plan documents on time can devastate the company and plan participants. A plan that's not updated is disqualified – retroactive to 1995.
Impact:
- Deductions for contributions are disallowed – generally for three years or even more. Disqualification can cover all years not protected by the statute of limitations.
- Participants in some cases are taxable on all their benefits within the plan.
- The trust in which plan assets are held is not longer tax exempt, so it becomes taxable on all its earnings.
________________
what's the deadline?
The deadline for updating plans to incorporate laws enacted prior to 2001 depends on the type of plan involved.
There are three types.
- Prototypes – the kind available through banks, brokerage firms, and insurance companies.
- Volume plans – generally created en masse by law firms and accounting firms.
- Individually designed plans – specially created for a single business.
Individually designed plans must be updated no later then December 31, 2001.
Companies with prototype and volume plans have until December 31, 2002, to update them as long as they have already adopted a pre-approved plan.
THE FALLING IRS AUDIT RATE
A new study by Congress's General Accounting Office (GAO) examines the declining IRS audit rate and IRS audit patterns. It is now available to the public. Key findings.........
The overall audit rate has declined about 70% from 1996 to 2000 for individuals and businesses, regardless of income level.
In recent years, low-income tax payers have sometimes been audited at higher rates than high income taxpayers. Among individuals relying on ------
- Non business income - those with low incomes were audited sat a greater rate than those with high incomes in 1999.
- Business income – those with low incomes were audited at a greater rate than those with high incomes in 1999 and 2000.
High income taxpayers are more likely to incur face-to-face audits. Low income taxpayers are most often subject to correspondence audits.
The effect on compliance of the declining audit rate is unknown, as the IRS lacks valid recent data on compliance.
HAPPY
THANKSGIVING
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