May 2013 Newsletter

 Amy Cooper, President

“Challenges make you discover things about yourself that you never really knew. They're what make the instrument stretch -- what make you go beyond the norm." Cicely Tyson

On the cover sheet of every intermediate accounting exam I give, I put a quote.  It usually pertains to believing in yourself, overcoming adversity, working hard, etc. Maybe I hope that those few words will give them enough extra motivation to push themselves on the exam.  I have no idea if my theory works but I like to think it does.

When I was thinking about my year as president and what it might hold, I saw this Cicely Tyson quote.  Challenges are a part of every day life. They can come in the form of my four-year old who would much rather discuss Diego than put on his coat and boots each morning or a particular accounting topic that confounds my students or a budget deficit facing the Alaska Society of CPAs.  But it really is not about the challenges but rather how we handle them.  Can we take a challenge – simple or complex – and flip it into an opportunity? 

The Society is facing budget issues as many other state societies are.  Our CPE revenues are down yet costs are stable if not increasing.  A friend and well-respected colleague asked me recently if the Society was viable.  That is the challenge as I see it – having a society in place that brings value to its members.  Where is the opportunity?  In order to understand what our members find valuable, we have to take advantage of the opportunity to reach out to members and ask.  We have to take advantage of the opportunity to collaborate, stretch, create, and reshape services that will bring value to our members. 

I would like to offer several events that will be occurring in the next several months that give us the opportunity to reach out, have conversation, and discover what makes our Society and this profession so valuable – on both a local level and national level.

• May 29 – 31 is the 59^th annual meeting for the Alaska Society of CPAs.  I encourage you to take the journey up to Fairbanks and meet with your colleagues from around the state.  We have a great agenda planned and what a wonderful opportunity to touch base with those you may not have seen in a while. 
• In mid-November, the Society is offering its first leadership
  academy.  We are very excited about this academy and are still accepting applications. I encourage all those interested to look at the application and see if this unique opportunity is for you. 
• The AICPA is accepting applications for its annual leadership academy to be held in October 2013.  I was lucky enough to attend last fall and it was one of the best opportunities I have ever had.  If you meet the requirements, this is an opportunity you do not want to miss.

I hope, as we start this new year for the Alaska Society of CPAs, that you will join with me in flipping challenges – present and future – into opportunities for our members and our profession.  And may I, the next time I am challenged by four-year old son in my attempt to get us out the door in the morning, take the opportunity to listen and enjoy his creativity and imagination.

Report from AICPA Regional Council Meeting
By John Rodgers, CPA

I’ve just returned from the AICPA Regional Council Meeting and there are many new items on the agenda. Two specific issues are under consideration by AICPA and they are reaching out to the members for input and thoughts on these considerations before the vote in May.
The first key issue deals with the international professional accountant community and specifically globalizing specialized credentials. AICPA is considering a request made by Canada to grant access to Canadians the professional designations certifications, such as the ABV, PFS, CITP, CFF and CGMA. The AICPA’s position on this issue is that it could potentially broaden the reach and position of the organization on an international scale making AICPA designations premier to any other. There is a huge growth currently in specialized accounting services and offering our professional designations internationally could substantially grow the reach, presence and membership for AICPA positioning the organization as a global leader for accountants worldwide.

Currently AICPA is considering all the issues, risks and opportunities that exist for this collaborative approach to offering our designations on a global scale. For now there needs to be discussion on the state level for this opportunity and more input from members. 

• Do you agree that the council should authorize the AICPA board to offer credentials outside of the USA with the Canadians as a pilot program?
• Do you feel it’s important for AICPA to continue to investigate alternatives to offer specialty credentials both domestically and globally?
• Given the trends of globalization, specialization and CPA’s looking to other organizations for credentials, what else should the AICPA be considering?

The second key issue discussed dealt with expanding the Uniform Accounting Act (UAA) definition of Attest. The landscape of assurance and attestation services is changing and AICPA is looking to incorporate that into the definition of Attest services legislatively to include more non-traditional projects and services such as sustainability reports, system reliability, investment portfolio performance to name a few that are currently being performed by non-CPA’s. The goal to this change is to protect the public. The current language makes it confusing and misleading when non-CPA’s are allowed to issue reports using AICPA standards. This new language would make it clear that CPA’s are uniquely qualified to perform assurance services.  The proposed changes would continue to exclude compilations, would apply to performance by licensed CPA’s practicing in licensed CPA firms and would further make it unlawful for a nonCPA to perform these expanded non-traditional services under the new AICPA standards. If the AICPA board approves moving forward with this, stated would need to take this issue before their legislature in 2014. There were also other discussions held at the meeting dealing with the landscape of the accounting profession and changes coming up with aging and retiring CPA’s and how to bring in
new CPA’s. Tax reform was another hot topic but the overall theme was that this issue is going to be a long road and that there is no action expected in the short term. The issue of mobile work force was discussed along with the tax due dates for pass through entities, state fiscal instability, tax on professional services, GASB pension standards proposal and even government sustainability.

This is a lot to consider and think about. If you would like any further information on the conference or items discussed in this report please feel free to email or call me direct.

Best regards,
John Rodgers

Alaska State Board of Accountancy Report

Melody Schneider, Board Liaison

The Board of Public Accountancy’s April meeting, held in Anchorage, welcomed two new members:  Don Rulien, a CPA from Anchorage, and Craig Chapman, a CPA from Kenai.

Statutory and regulatory changes were discussed and approved by the Board. The changes were made mostly for cleanup and consistency.  The Board will be seeking legislative support for the following legislative changes, as well as the repeal of Sec. 08.04.080 to be consistent with State of Alaska, Department of Corporations, Community and Economic Development, Division of Professional Licensing statutes and provide consistency with regulations.   Please contact Cori Hondolero at cori.hondolero@alaska.gov if you have questions.

DRAFT Proposed Amendments/Additions

AS 08.04.680(15)  “practice of public accounting” means the offering to perform or the performance as a person holding a license, practice privilege, or permit for a client under this chapter of a service involving the use of accounting or auditing skills; in this paragraph, “accounting or auditing skills” includes preparing financial statements, issuing reports on
financial statements, furnishing management services, furnishing financial advisory services, providing consulting services, preparing tax returns, advising on tax matters, or consulting on tax matters.

AS 08.04.680(21) “client” means a person or entity other than the licensee’s employer, that engages a licensee or a licensee’s firm to perform professional services or a person or entity with respect to which professional services are performed. 

Sec. 08.04.080. Adoption of rules.  The board may adopt rules of professional conduct to establish and maintain a high standard of integrity and dignity in the profession of public accounting.  At least 60 days before the adoption of any rule or amendment, the board shall mail copies of the proposed rule or amendment together with a notice of its effective date to each hodler of a license or permit issued under this chapter to the address of the license or permit holder last known to the board.

Licensing fees were discussed at length, as a substantial increase was determined necessary due to the addition of the Executive Administrator and a reallocation of the prior surpluses of the Board, resulting in a removal of the surplus previously allocated.  Individuals are currently expected to see an increase of over 30 % ($290) and firms will likely see more than doubling ($310) of their fees.

The Board of Public Accountancy Listserv is a valuable source of news and information.  The subscription provides updates on recent events, meeting notifications, Board meeting agendas, and notices of proposed changes to regulations.  In particular, the new licensing fee schedule will be posted when it is finalized.  Subscribe via http://commerce.alaska.gov/occ/pcpa.cfm.

The following investigative cases resulted in public action:

Julie Desimone, case no. 2012-001558, lacking four hours of required Alaska-specific ethics

James A Stouffer, case no. 2012-001139, lacking four hours of required Alaska-specific ethics

Traci Weiland, case no. 2013-000575, lacking four hours of required Alaska-specific ethics

Stanislav Zolotarev, case no. 2012-001551, lacking four hours of required Alaska-specific ethics

The action agreements are posted as a matter of public record, and the investigation summaries may be viewed via the following link:  http://commerce.state.ak.us/occ/pub/CPA_Investigations_Summary.pdf.

The summaries are not under the management of the Board and therefore might not be current.

Information regarding any consent agreement considered part of the public record may be obtained through the office of Executive Administrator Cori Hondolero:

Atwood Building

550 West 7th Avenue, Ste. 1500

Anchorage, AK 99501-3567

cori.hondolero@alaska.gov

The next meeting will be held in Fairbanks on August 1-2, 2013.

New Member Spotlight

My name is Michelle Bullard and I was born and raised in Fairbanks, Alaska. Growing up in Alaska, I have always enjoyed camping, fishing, Nanook hockey, and snowmachining. Some other hobbies I love are sewing, knitting, and photography. 

I am currently pursuing my bachelor's degree in accounting at the University of Alaska Fairbanks, with a graduation date of May 2014. I got my first taste of accounting by doing the accounts payable for a small local business, and solidified my love for accounting during my first accounting course at UAF. For two years now, I have worked at the Bureau of Land Management as an office automation clerk. Being in this position, I have learned the essentials to working in an office and have been a contributing member in office tasks.

This last academic year, I was the recruiting officer with the GAAP student organization on campus, and I really took pleasure in getting more involved with other accounting students on campus and helping with all the events that GAAP holds throughout the year. I also had the pleasure of working in the accounting lab and assisting students with their accounting coursework during the year. When I graduate in May 2014, I will have 150 credit hours and will be studying to take the CPA exam during my last semester of college.  I hope to start my career in public accounting and work towards getting my CPA license after I graduate. 

Upcoming Events

The IRS Stakeholder Liaison Division (NW Area) invites practitioners to attend two free webinars. Each webinar qualifies for 1 hour of Federal Tax/Tax Related Continuing Education Credit for Enrolled Agents; other participants will be sent a certificate of completion and may receive credit if the webinar meets their organization's or state's CE requirements.

Post-Filing Season Practitioner Updates: What You Need to Know Now
Date:  Wednesday, May 8, 2013 Time:  9:00 a.m. (Alaska); 10:00 a.m. (Pacific); 11:00 a.m. (Mountain)

This free webinar will include:
• Review of the Filing Season and the American Taxpayer Relief Act (ATRA)
• IRS News, Headliners and Hot Topics
• Tax Law Updates
• Fresh Start Collection Updates
• New Tools for practitioners on IRS.gov, FBAR reminders and so much more. What the tax professional needs to know now--don't miss it!

To register for this event, use the following link:
https://events.na.collabserv.com/register.php?id=ebd946d47a&l=en-US
If clicking the above link does not work, please copy the entire link and paste it into your Web browser.

Special Programs to Reclassify Workers
Date:  Tuesday, May 14, 2013
Time:  8:30 a.m. (Alaska) 9:30 a.m. (Pacific); 10:30 a.m. (Mountain)
Featuring special guest:  John Tuzynski, Chief, Employment Tax, SB/SE Specialty Programs

What's Covered:
• The basics of employee vs. independent contractor
• What is the Voluntary Classification Settlement Program (VCSP)?
• VCSP eligibility and the application process
• VCSP acceptance and advantages
• Details about the new VCSP Temporary Eligibility Expansion program

To register for this event, use the following link:
https://events.na.collabserv.com/register.php?id=e412225f5c&l=en-US
If clicking the above link does not work, please copy the entire link and paste it into your Web browser.

May 13 Phone Forum: What You Need to Know About the IRS Final 401(k) Questionnaire Report and Next Steps Earn continuing education credit in this May 13 Phone Forum. The 401(k) Compliance Check Questionnaire Final Report covers plan form and operational issues compiled from data provided by 401(k) plan sponsors. IRS experts will highlight significant findings and next steps, including outreach, guidance and compliance projects. They’ll also discuss a new self-audit tool to help 401(k) plan sponsors avoid costly mistakes. If you have a specific matter that you would like addressed in the forum, send an email to ep.phoneforum@irs.gov by May 6.

IRS Updates and News Releases

Enrolled Agent Renewal Update
All enrolled agent renewal applications for SSNs ending in 0, 1, 2, or 3 that were timely submitted by January 31, 2013, have been processed. New renewal cards should be received within 10 days. For those submitted after the due date, processing continues and renewal cards should be received within the next 30 days. As long as you have submitted your renewal application, your enrolled agent status continues to be active between April 1, 2013 and the date you receive your renewal card.

Penalty Relief
The IRS recently announced special penalty relief to many taxpayers who requested an extension of time to file their 2012 federal income tax returns and some victims of the recent severe storms in parts of the South and Midwest. For details about these relief provisions, see IRS news releases IR-2013-31 and IR-2013-42. The IRS has also provided individual tax filing and payment extensions to those affected by the Boston explosions tragedy. See IR-2013-43 for more information.

2012 IRS Data Book
The Internal Revenue Service (IRS) has released the 2012 IRS Data Book, a snapshot of agency activities for fiscal year 2012—Oct. 1, 2011, to Sept. 30, 2012. In addition to information on taxes collected and returns processed, the report also includes information about enforcement, taxpayer assistance, and the IRS budget and workforce, among others.

IRS Expands Law Enforcement Assistance Program on Identity Theft to 50 States The Internal Revenue Service announced a nationwide expansion of a program designed to help law enforcement obtain tax return data vital to local efforts in investigating and prosecuting specific cases of identity theft.

Identity Theft Tops Dirty Dozen Tax Scams for 2013
The Internal Revenue Service issued its annual “Dirty Dozen” list of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.

Work Opportunity Tax Credit Changes under ATRA
The American Taxpayer Relief Act of 2012 expands the Work Opportunity Tax Credit for hiring certain workers through Dec. 31.  ATRA also extends the WOTC for qualified veterans hired before Jan. 1, 2014.

FICA Refunds to Medical Residents
Chief Counsel Advice CCA_2012062114582047, offers guidance to employers requesting refunds of FICA taxes for medical residents.

Get Connected to the IRS with Social Media
Consider using these IRS social media tools to help you or your website visitors navigate the tax deadline.
• IRS2Go.  IRS's free mobile app gives you your refund status, tax news updates, IRS You Tube videos and also lets you request your tax records.  IRS2Go is available for the iPhone, iTouch or Android mobile devices.
• YouTube.  IRS offers video tax tips on a variety of topics in English, Spanish and American Sign Language.
• Twitter.  Tweets from @IRSnews provide tax-related announcements and daily tax tips. Tweets from @IRStaxpros offer news and guidance for tax professionals. Tweets from @IRSenEspanol have news and information in Spanish, and @RecruitmentIRS provides updates for job seekers.
• Podcasts IRS has short audio recordings that offer one tax-related topic per podcast. They are available on iTunes or through the Multimedia Center. Transcripts of the Podcasts are also available.
• Tumblr.  IRS Tumblr is a microblogging platform where users can access IRS tax tips, videos, and podcasts. The IRS uses Tumblr to share information about important programs. Tumblr can be accessed from your browser, smartphone, tablet or desktop.

No Requirement to File Form 8938 with Forms 1120, 1120S, 1065 and 1041 for TY 2012 The IRS has received some Form 8938 submissions from Domestic Entity filers for TY12. Please be advised that these entities are not required to file Form 8938 for TY12. The IRS anticipates issuing regulations in the future that will require a domestic entity to file Form 8938 if the entity is formed or availed of to hold specified foreign financial assets and the value of those assets exceeds the appropriate reporting threshold. Until the IRS issues such regulations, only individuals must file Form 8938.  For more information on Form 8938 and FATCA legislation you may refer to FATCA Website. Also, please see page two of the Form 8938.

IRS Seeks Applicants for Information Reporting Program Advisory Committee The Internal Revenue Service is requesting nominations for membership to the Information Reporting Program Advisory Committee (IRPAC), a federal panel that advises the IRS on various tax administration issues.

IRS Updates Allowable Living Expense Standards for 2013
The Internal Revenue Service released the 2013 updates to the Allowable Living Expense Standards on April 1. The ALE standards are used to reduce subjectivity in determining what a taxpayer may claim as basic living expenses necessary to avoid undue hardship when the taxpayer must delay full payment of a delinquent tax. The standard allowances provide consistency and fairness in collection determinations by incorporating average expenditures for basic necessities for citizens in similar geographic areas.  More information on the ALE standards is available at the Collection Financial Standards Web page.

Retroactive Increase in Excludible Transit Benefits
The American Taxpayer Relief Act increased the exclusion for employer-provided transit benefits, retroactive to Jan. 1, 2012 and applicable to 2013 as well.  A new page on IRS.gov reviews procedures for employers and employees to recover income tax, social security tax, and Medicare tax, whether or not the employer was able to use the special administrative procedure outlined in Notice 2013-08.

Low Income Taxpayer Clinic Program Reports on Activities
The IRS’s Low Income Taxpayer Clinic (LITC) Program Office has issued its first report showing how LITCs provide pro bono legal services to help thousands of low income taxpayers nationwide resolve disputes with the IRS and learn about their taxpayer rights and responsibilities.

Tips on Reporting Natural Resource Income
Taxpayers who own land that contains valuable natural resources should be aware that arranging for the development of the resources by means of a lease creates tax consequences.

SSA/IRS Reporter
The spring edition of the SSA/IRS Reporter includes articles on:
• The Outreach Corner – a free resource for communicators
• Spring cleaning of your payroll records
• IRS wants your help to reduce taxpayer burden

IRS Budget FY 2014
This summarizes how the budget request will enable the agency to meet its strategic goals: improve customer service and enhance enforcement of the tax laws.

IRS Fresh Start Program Helps Taxpayers Who Owe the IRS
The IRS Fresh Start program makes it easier for taxpayers to pay back taxes and avoid tax liens. Even small business taxpayers may benefit from Fresh Start. Here are three important features of the Fresh Start program:

Tax Liens.  The Fresh Start program increased the amount that taxpayers can owe before the IRS generally will file a Notice of Federal Tax Lien. That amount is now $10,000. However, in some cases, the IRS may still file a lien notice on amounts less than $10,000.  When a taxpayer meets certain requirements and pays off their tax debt, the IRS may now withdraw a filed Notice of Federal Tax Lien. Taxpayers must request this in writing using Form 12277, Application for Withdrawal.

Some taxpayers may qualify to have their lien notice withdrawn if they are paying their tax debt through a Direct Debit installment agreement. Taxpayers also need to request this in writing by using Form 12277.
If a taxpayer defaults on the Direct Debit Installment Agreement, the IRS may file a new Notice of Federal Tax Lien and resume collection actions.

Installment Agreements.  The Fresh Start program expanded access to streamlined installment agreements. Now, individual taxpayers who owe up to $50,000 can pay through monthly direct debit payments for up to 72 months (six years). While the IRS generally will not need a financial statement, they may need some financial information from the taxpayer. The easiest way to apply for a payment plan is to use the Online Payment Agreement tool at IRS.gov. If you don’t have Web access you may file Form 9465, Installment Agreement, to apply. 

Taxpayers in need of installment agreements for tax debts more than $50,000 or longer than six years still need to provide the IRS with a financial statement. In these cases, the IRS may ask for one of two forms: either Collection Information Statement, Form 433-A or Form 433-F.

Offers in Compromise.  An Offer in Compromise is an agreement that allows taxpayers to settle their tax debt for less than the full amount. Fresh Start expanded and streamlined the OIC program. The IRS now has more flexibility when analyzing a taxpayer’s ability to pay. This makes the offer program available to a larger group of taxpayers.

Generally, the IRS will accept an offer if it represents the most the agency can expect to collect within a reasonable period of time. The IRS will not accept an offer if it believes that the taxpayer can pay the amount owed in full as a lump sum or through a payment agreement. The IRS looks at several factors, including the taxpayer’s income and assets, to make a decision regarding the taxpayer’s ability to pay. Use the Offer in Compromise Pre-Qualifier tool on IRS.gov to see if you may be eligible for an OIC.

Additional IRS Resources:

• Online Payment Agreement tool
• Fresh Start Notice of Federal Tax Liens
• Form 12277, Application for Withdrawal
• Understanding a Federal Tax Lien
• Offer in Compromise Pre-Qualifier tool
• Offer in Compromise
• Electronic Payment Options Home Page
• Payments (payment options)

Safeguarding Taxpayer Data
Tax professionals must implement safeguards to protect taxpayer data. The security of taxpayer accounts and personal information is a top priority for the IRS as referenced in Revenue Procedure 2007-40.
Related links:
• Publication 4557, Safeguarding Taxpayer Data, A Guide for Your Business
• Publication 4600, Safeguarding Taxpayer Information, Quick Reference Guide for Business

New on IRS.gov

Publications
2013 Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
Pub. 4436, General Rules and Specifications for Substitute Form 941 and Schedule B (Form 941) (Dated Dec. 10, 2012)

Forms
2013 Form W-2, Wage and Tax Statement (Info copy only)
2013 Form W-2GU, Guam Wage and Tax Statement (Info Copy Only)
2013 Form W-2VI, U.S. Virgin Islands Wage and Tax Statement (Info Copy Only)
2013 Form W-3, Transmittal of Wage and Tax Statements (Info Copy Only)
2013 General Instructions for Forms W-2 and W-3 (Including Forms W-2AS, W-2GU, W-2VI, W-3SS, W-2c, and W-3c)
2013 Form 941, Employer's Quarterly Federal Tax Return
2013 Inst. 941, Instructions for Form 941, Employer's Quarterly Federal Tax Return
2013 Form 943-X (PR), Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund 
2013 Inst. 943-X (PR), Instructions for Form 943-X (PR), Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund
2013 Form 944-X, Adjusted Employer's Annual Federal Tax Return or Claim for Refund
2013 Inst. 944-X, Instructions for Form 944-X, Adjusted Employer's Annual Federal Tax Return or Claim for Refund

Rev. Proc. 2013-18, General Rules and Specifications for Substitute Forms and Schedules provides the IRS and the SSA requirements for preparing and using substitute forms for Form W-2 and Form W-3 for wages paid during the 2012 calendar year.

Technical Guidance

Revenue Ruling 2013-11 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.

Revenue Procedure 2013-23 provides information to any individual who failed to meet the eligibility requirements of section 911(d)(1) of the Internal Revenue Code because adverse conditions in a foreign country precluded the individual from meeting those requirements for taxable year 2012.

Notice 2013-22 invites the public to submit recommendations for items that should be included on the 2013-2014 Guidance Priority List.

Notice 2013-25 announces the 2012 section 45K credit for fuel produced from a nonconventional source.  For 2012, the section 45K credit is only available for fuel produced from coke or coke gas (other than from petroleum based products) and is not subject to phase-out.

Notice 2013-26 allows addional time for filing claims for certain excise tax payments because ATRA extended various fuel tax credits that expired on December 31, 2011.  The due date for filing certain claims for payments related to biodiesel mixtures and alternative fuel had already passed by the date that ATRA was enacted. 

Announcement 2013-17 serves as the annual public report concerning Advance Pricing Agreements (APAs) and the APMA Program.  This report describes the experience, structure and activities of the APMA Program during calendar year 2012.

Notice 2013-17 addresses circumstances in which an Employee Stock Option Plan (ESOP) that satisfied the diversification requirements of § 401(a)(28)(B)(i) by allowing distribution of a portion of a participant’s account has become subject to the diversification requirements of § 401(a)(35).