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Last Chance to Participate in the 2014 MAP Survey

July 11th, 2014

Time is running out to participate in the AICPA/PCPS 2014 Management of an Accounting Practice Survey, the country’s largest CPA firm practice management benchmarking tool. The survey deadline is July 31.

You can sign up for the survey online. You’ll be prompted for your information and then you’ll receive an email with personalized sign-on information.

Head of Household Audit Questionnaires Coming

July 11th, 2014

In mid-August, the FTB will begin mailing head of household audit questionnaires. This year, the FTB expects to mail approximately 90,000 HOH Audit Letters for the 2013 tax year.

Completed questionnaires are reviewed to determine if taxpayers qualify for the HOH filing status. If the questionnaire is incomplete or provides conflicting information, the FTB will contact the taxpayer to resolve the issue. Once the FTB confirms the HOH filing status, it will mail an acceptance letter to the taxpayer. Tax-year specific acceptance letters only apply to the specific tax year examined and do not qualify the taxpayer for other tax years.

Taxpayers who fail to respond to the questionnaire or whose responses indicate they do not qualify for HOH can expect a Notice of Proposed Assessment that disallows their HOH filing status. If your clients receive an HOH Audit Letter, advise them to respond by the letter’s due date to avoid the Failure to Furnish Information penalty.

Find more information online.

Report: IRS Should Modernize Process of Filing Amended Tax Returns

July 11th, 2014

The IRS should revise Form 1040, U.S. Individual Income Tax Return, to allow for corrections to original tax return filings and expand e-filing to include amended tax returns, according to a new report released by the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA found that the IRS could reduce erroneous refunds, processing costs and taxpayer burden by revising the Form 1040 to allow for corrections to original tax return filings and expand e-filing to include amended tax returns. TIGTA’s review of a statistical sample of 259 amended tax returns claiming tax refunds of $500 or more in FY 2012 identified 44 (17 percent) tax returns for which the IRS issued potentially erroneous tax refunds totaling $103,270.

Based on the sample results, TIGTA estimates the IRS may have issued more than $439 million in potentially erroneous tax refunds claimed on 187,421 amended tax returns during FY 2012. As such, the IRS could issue more than $2.1 billion in potentially erroneous tax refunds claimed on amended tax returns over the next five years.

SEC Letters Sent to Public Companies Regarding XBRL Mandate

July 11th, 2014

The SEC has started sending letters to certain public companies regarding their reports on Form 10-Q and the Extensible Business Reporting Language (XBRL) requirement to include calculation relationships. Stay up-to-date with information concerning the XBRL interactive data-reporting standard at the SEC’s dedicated website.

For a more detailed look at XBRL, the CalCPA Education Foundation is offering “Introduction to XBRL: New Opportunities for CPAs” in the Burbank area July 23 or via webcast on the same day.

State Collects First Billion Dollars from Tax Modernization Project

July 11th, 2014

The FTB announced the recovery of an added $1 billion in state tax revenue resulting from its Enterprise to Date Revenue (EDR) project—a tax modernization project. EDR is a 66-month project modernizing existing systems and allowing the FTB to maximize revenue by using data faster and more effectively and, at the same time, minimize costs by automating manual processes.  During these 66 months, EDR is projected to raise more than $4.7 billion and an added $1 billion per year thereafter. In the first two years of the project, EDR’s actual revenue has nearly doubled the projected amount.

Upcoming Foundation Events: Courses Catered to Meet Your Needs

July 11th, 2014

AICPA: Proposed Voluntary Program for Tax Preparers Unlawful, Improper

June 30th, 2014

The AICPA has expressed strong concern that the IRS proposed voluntary certification program for tax return preparers “would cause significant legal problems that may ultimately frustrate the IRS’s goals, confuse the public and lead to litigation.”

In a letter to IRS commissioner, the AICPA emphasized:

  • No statute authorizes the proposed program;
  • The program will inevitably be viewed as an end-run around Loving v. IRS, (a federal court ruling rejecting an earlier IRS attempt to regulate tax return preparers);
  • The IRS has evidently concluded, in developing the proposed program, that it need not comply with the notice and comment requirements of the Administrative Procedure Act. This is incorrect; and
  • The current proposal is arbitrary and capricious because it fails to address the problems presented by unethical tax return preparers, runs counter to evidence presented to the IRS, and will create market confusion.

Temporary Fee Reductions, New ‘Retired Status’ to Take Effect

June 30th, 2014

Beginning July 1, 2014, those applying for their CPA licenses and those CPAs renewing their licenses will find the cost to do so cut from $120 to $50 for the next two years. In addition, the application fee for the CPA exam, the license application fee and the fee for registration as a partnership or corporation have also been reduced beginning July 1, 2014 through June 30, 2016.

A new “retired license” status takes effect July 1, 2014, said the California Board of Accountancy, to offer California CPAs who meet certain criteria the ability to retire without having to choose between allowing their CPA license to lapse and paying the full biennial renewal fee to enable them to keep ‘CPA’ after their name. A CPA using this status would need to display “retired” next to the CPA designation.

Finance Team’s Role Expands Beyond Accounting

June 30th, 2014

The role of the finance team is expanding beyond traditional accounting and financial reporting function to include areas such as information technology development, cyber security and strategic business planning, according to a new AICPA survey.

The survey showed that 30 percent reported experiencing significantly more complexity, 38 percent said they had seen a moderate increase in complexity and 25 percent indicated they have seen at least some increase. Less than 1 percent reported they had experienced less complexity.

PCAOB Guidance for Auditors of SEC-Registered Brokers and Dealers

June 30th, 2014

The Public Company Accounting Oversight Board released staff guidance to help auditors of brokers and dealers registered with the SEC to plan and perform audits in accordance with PCAOB standards as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act and SEC rules.

The guidance is tailored to help auditors of smaller broker-dealers develop a cost-effective, scaled approach to their audits, according to the PCAOB. The guidance highlights relevant requirements for SEC-registered broker-dealer audits and attestation engagements, and provides guidance on the application of PCAOB standards to these engagements, particularly for audits of smaller broker-dealers with less complex operations.


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