Disclosures Nov/Dec 2011

BROUGHT TO YOU BY THE VIRGINIA SOCIETY OF CPAs NOVEMBER/DECEMBER 2011 I VOL. 24 NO. 6 I WWW.VSCPA.COM

2011 Virginia Tax Toolkit14

20

24

Paperless Tax Efficiency

Clients with IRS Collections

TAX TOOLBOXFILL YOUR

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Your client could be a traditional family-run business faced with new W-2 reporting rules, a large corporation searching for a retirement plan, a small business experiencing growing

pains, or a not-for-profit that needs to better understand healthcare reform.

Join the more than 20,000 CPA firms that have broadened their service offerings and enhanced their roles as

trusted business advisors by referring their clients to Paychex.

Participation is free and there is no obligation. Enroll online at www.cpa2biz.com/paychex, by phone at 877.534.4198

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of payroll processingONE FREE MONTH

INSIDE this issue

FEATURES

FILL YOUR TAX TOOLBOX 16The 2011 Virginia General Assembly tackled legislation addressing conformity, Land Preservation Tax Credits and more this year.

GOODBYE, PAPER … HELLO, EFFICIENCY 20Six best practices can help you achieve the ultimate paperless tax workflow efficiency.

A SMART APPROACH TO CLIENTS’ IRS COLLECTION PROBLEMS 24The smartest and easiest way to handle IRS issues may be to refer your client to a qualified tax resolution service.

ARTICLES PUTTING A PRACTICE UP FOR SALE 8 Even if you have no intention of selling your practice, you should always be ready for an offer.

5 THINGS EVERY 401(K) FIDUCIARY SHOULD KNOW 10 The U.S. Department of Labor is stepping up 401(k) fiduciary oversight.

ADVERTISERS INDEXAccounting Practice Sales inside back cover • Audimation Services Inc. p. 19 • Beth A. Berk, CPA p. 23 • CPA2Biz, Inc. inside front cover • CPA Mutual p. 37 • ImagineTime p. 19 • Keiter, Stephens back cover • PNC Bank p. 3 • SunTrust Bank p. 43 • Tax Solutions Alliance p. 13 • Virginia Community Finance, Inc. p. 27 • VSCPA Insurance Service Center p. 22

SECTIONS

BACKTALK 2

LINE ITEMS 4

CPA IMAGE 6

DATA DRAFT 7

TAX TOOLKIT SECTION 14

TAXATION 28

SELF-ASSESSMENT 30

VSCPA NEWS 32

MEMBER NEWS 38

VSCPA EDUCATIONAL FOUNDATION 40

CLASSIFIEDS 42

I AM 44

disclosuresis published bimonthly for members of the Virginia Society of CPAs. Our mission is to enhance the success of CPAs.

DISCLOSURES • NOVEMBER/DECEMBER 2011 1

16 COVER STORY >>

Tax season is right around the corner. Are you prepared? Fill your tax toolbox with knowledge on changes to Virginia’s tax laws and regulations. And, if your practice hasn’t jumped on the paperless bandwagon yet, this may be the year! This special tax issue of Disclosures provides you with the tools you need for a successful tax season.

VIRGINIA SOCIETY OF CPAs

4309 Cox RoadGlen Allen, VA 23060Ph. (800) 733-8272Fx. (804) 273-1741www.vscpa.com

disclosures EDITORIAL STAFF

Jill EdmondsManaging [email protected] HansenCommunications [email protected] Lambert, CAEVice President, Member & Public [email protected]

EDITORIAL TASK FORCE

Joan D. Aaron, CPABill Barrett, CPA/ABV, CFFBeth A. Berk, CPAJames D. Cole, CPACheri G. David, CPA, CVAJames P. Davis Jr., CPAWilliam C. Foote, CPA/ABV, CVAElizabeth M. Helle, CPA Heather L. Judson, CPAClare K. Levison, CPAGabriele Lingenfelter, CPAHaven S. Pope, CPA, MBA, CFEGeorge D. Strudgeon, CPAPhilip H. Umansky, CPA, Ph.D.Thomas L. Visotsky, CPA

DEADLINES

Articles and advertising for future issues are due by 5 p.m. on the following dates:

Mar./Apr. 2012 Dec. 15, 2011May/June 2012 Feb. 15, 2012July/Aug. 2012 Apr. 15, 2012Sept./Oct. 2012 June 15, 2012Nov./Dec. 2012 Aug. 15, 2012Jan./Feb. 2013 Oct. 15, 2012

Statements of fact and opinion are made by the authors alone and do not imply an opinion on the part of the officers, members or editorial staff.

The Warren GroupDesign / Production / [email protected]

‘Real Housewives’ Article Earns PraiseI really enjoyed your recent article in Disclosures, “The Real Housewives of Accounting.” It was very well written and so accurately described the thoughts and struggles of a working mom. It’s always encouraging to hear from other working moms and to know you’re not alone in the constant juggling of career and family.

STEPHANIE F. STUMPF, CPA, SBK Financial, Inc., Richmond

Congratulations on an excellent article in the July/August issue of Disclosures. I distribute mail to our staff and, of course, the cover title caught my eye and I read it immediately — funny, concise, practical. I have a background in HR and appreciate your suggestions when dealing with managers and HR. Those ideas would work in many job-change situations. Good work!

JANA COTE, Colorado Society of CPAs

FROM VSCPA.COM >>A big THANK YOU to Whit & Steve for their service to the BOA & to our profession. [Comment on “VSCPA Members Broome, Holton Wrap Up Successful VBOA Terms”]

GREG LAWSON, CPA/ABV, Dixon Hughes Goodman LLP, Newport News

Great to see so many #VSCPA members today at the 41st Va. Accounting & Auditing Conference in Roanoke. — @VSCPAEMWALKER

Accounting Firm of the Future cover story article for the VSCPA September issue by Brian and Darren Wendroff! — @WENDROFFCPA

RT @financialfit: Still cleaning up after #Irene? #VSCPA member Jim Shepherd, CPA, offers disaster recovery tips @nbc12 http://ow.ly/6Di0l — @AMERICANOWNEWS

Get in touch At the Virginia Society of CPAs, we love to hear from you. Whether it’s a quick e-mail to a staff member, chat on the phone, Disclosures letter to the editor, tweet, blog comment or something different altogether, let us know what you’re talking about, how you feel about different issues affecting CPAs and how we can help.

BLOG: www.cpacafe.comTWITTER: @VSCPANews, @FinancialFitLINKEDIN: http://tinyurl.com/VSCPALinkedInGroupFACEBOOK: www.facebook.com/VSCPA

BACKTALK you said it

2 DISCLOSURES

From theTWITTERSPHERE >>

EXCLUSIVE EVENT! >>

Town Hall Meeting on Fiscal ResponsibilityFollowing the nation’s debt crisis, it’s no surprise that the financial viability of the United States is now watercooler conversation. Now you have a chance to learn more about the country’s fiscal situation — and discuss ways the CPA profession can help. This exclusive town hall meeting will be held Nov. 9 at the Richmond CPA Center from 8 a.m. to noon; it’s free for VSCPA members and qualifies for up to 4 CPE credits. Check out this lineup of esteemed speakers:

GREGORY ANTON, CPA, incoming chair of the American Institute of CPAs Board of Directors

RICHARD BROWN, Virginia Secretary of Finance

JOHN MONTORO, CPA, chair-elect of the VSCPA Board of Directors

EDWARD MAZUR, CPA, senior advisor for public sector services at Clifton Gunderson LLP

STANLEY CZERWINSKI, director for intergovernmental relations at the U.S. Government Accountability Office (GAO)

STEPHANIE PETERS, CAE, VSCPA president & CEO

Mazur and Montoro co-authored “At the Tipping Point? How Intergovernmental Financial Dependency Affects Us All,” from the March/April 2011 issue of Disclosures and reprinted in the October 2011 Journal of Accountancy.

Get more details at www.vscpa.com/FiscalResponsibility. n

4 DISCLOSURES • NOVEMBER/DECEMBER 2011

LINE items

MOBILITY UPDATE >>

Race to national mobility nears finish lineIt’s getting easier to be a CPA across state lines.

On Aug. 17, New York Gov. Andrew Cuomo signed legislation to modernize regulations for CPAs and allow them to have practice privileges in New York state — as long as the licensing requirements of those CPAs’ home states are substantially equivalent to those of New York. The state becomes the 48th to enact CPA mobility legislation.

Closer to home, Washington, D.C., is nearing its own conclusion to the mobility story. On Sept. 20, the Council of the District of Columbia passed the Accounting Mobility Act of 2011. At press time, it was going to the desk of Mayor Vincent Gray; after his signature, it will be subject to a 30-day congressional review period and be reconciled with next year,s city budget before becoming effective.

The Accounting Mobility Act would clear the headaches of many CPAs who complain that maintaining multiple CPA licenses to practice in D.C. is cumbersome. The VSCPA has long supported mobility in the District, and issued a letter of support to the D.C. Board of Accountancy in April.

Virginia was a pioneering state on the mobility front, passing substantial equivalency for nonresident CPAs in 1999.

If this is all a bit confusing, there’s now a place to go online to answer all your mobility questions. On July 28, the American Institute of CPAs and the National Association of State Boards of Accountancy announced CPAmobility.org, an online tool designed to help CPAs navigate practice privilege requirements across state borders.

To easily determine CPAs’ needs, the site immediately asks three questions: Where is your principal place of business? Where are you going to perform

services (target state)? And, what type of services will you perform? The site scours its database of state rules and regulations to provide CPAs with the right answers.

Scan the QR code with your smartphone or visit CPAmobility.org. n


LINE items

CPA HORIZONS 2025 >>

Charting the profession’s future courseHow will the forces changing the world also change the CPA profession? It’s a lofty question, and a new initiative from the American Institute of CPAs (AICPA) asked CPAs across the country to weigh in.

CPA Horizons 2025 builds upon the foundation developed by the CPA Vision Project in 1998. Thirteen years ago, the Vision Project identified a grassroots vision for the CPA profession in the 21st century, developing CPAs’ core competencies, values and services. Now, Horizons 2025 is reviewing that work in the context of a very different professional landscape.

Horizons 2025 focuses on four major forces affecting the profession: political/regulatory, economic, social/human resources and technological. For insight, the AICPA reached out to CPAs with a wide range of backgrounds, as well as regulators, state CPA societies, futurists and young professionals. The VSCPA also held focus groups around Virginia to discuss the future of the profession.

At press time, the Horizons 2025 report was being finalized for presentation to the AICPA Governing Council in October. Stay tuned for information on their recommendations. n

NEW APP FOR CPA EXAM STUDIERS

Now CPA candidates can study for the Exam in the palms of their hands. A mobile practice test application available on the iPad and iPhone (with Android

development anticipated in the future) allows candidates to access 1,000 multiple choice questions and generate customized practice tests. Users can try the app for free and then pay $19.99 to download a full section. Scan the QR code with your smartphone or visit www.cpagomobile.com for more info.

>> SMARTPHONE SMARTS

SEC whistleblower program goes liveNow citizens who want to report U.S. Securities and Exchange Commission (SEC) violations can take it online. The SEC’s new whistleblower program, which went into effect Aug. 12, includes a website where people can report a violation of federal securities laws and apply for a financial reward.

The Dodd-Frank Wall Street Reform and Consumer Protection Act granted the SEC the authority to pay financial rewards to whistleblowers providing new and timely information about violations of securities laws. To be eligible for a reward, a whistleblower must provide tips that lead to a successful SEC enforcement action with more than $1 million in monetary sanctions. Before the enactment of the Dodd-Frank Act, the SEC only had authority to reward whistleblowers in insider trading cases. n


CPA image

“Often, certified public accountants are pigeonholed as the treasurer of an organization,” Jamie Walker, CPA said. “But, they have so much depth and breadth about them; they have so much more to offer.” That’s why Walker championed the idea to participate in the CPA Day of Service when he served as chair of the VSCPA Board of Directors in 2009.

“It is very important as individuals and citizens to give back and for the CPA community to step out of what they would normally do,” he said.

This year, Walker and 12 staff members from his firm, Walker Consulting Group, spent the day painting what he expects will be used as a classroom at Junior Achievement’s (JA) new facility in Richmond. Part of JA’s mission is to “participate in the education of students in Central Virginia so that each child understands and believes in their potential to succeed,” and Walker said just one day spent at the facility has him and his co-workers brainstorming future opportunities to serve and a possible partnership with the organization.

Walker is just one of more than 700 CPAs and volunteers who took time out in the third annual CPA Day of Service on Sept. 23. The volunteer locations encompassed a variety of organizations all across the Commonwealth, including Arlington Food Assistance Center, Fredericksburg Baptist Church, Avalon Shelter for Battered Women in Chesapeake, St. Mary's Home for Disabled Children in Norfolk and Shalom Farms in Goochland.

Staff members at the VSCPA also took part in the day of service with an ongoing project to collect items for the Patricia Sullivan Haitian Outreach Foundation. The Day of Service was held in conjunction with governor-proclaimed Virginia CPA Week, Sept. 18–24, 2011. See page 37 for more information on this year’s CPA Week. n

SERVICE SUPERSTARS >>

A successful Day of Service

Yount, Hyde & Barbour in Culpeper assisted Manna Ministries by volunteering in their outreach program to serve meals to the community.

The American Society of Women Accountants sorted books for Read Aloud Virginia in Richmond.

Who’s following the new PTIN rules?

VIRGINIANS HAVE QUESTIONS >>

CPAs have answers

The state of sales and use taxes

820The number of VSCPA student members. That’s a lot of future CPAs (and the reason Disclosures sometimes has content for students, too).

DATA draft

As states, cities and counties encounter budget difficulties, many are raising or establishing new sales and use taxes. The combined rate for sales and use taxes as of the middle of 2011 is 9.63 percent, a slight increase over 9.61 percent at the end of 2010. Other sales and use trivia:

Since 2003, there have been 2,031 new sales and use taxes, an average 238 of per year.

Since 2003, there have been 3,631 sales and use tax changes, an average of 427 per year.

The combined number of new and changed sales and use tax rates since 2003 is 5,662, an average of 666 per year.

California used to have the highest state sales tax rate, at 7.25 percent, but reduced it to 6.25 percent on July 1, 2011.

Seven percent, the highest rate, is charged by Indiana, Mississippi, New Jersey, Rhode Island and Tennessee.

The highest city sales tax is 7 percent, charged by Wrangell, Alaska. n

Source: Vertex, Inc.

Every year, the VSCPA has several tax season volunteer opportunities open to members who want to provide free tax advice to the public. Check out how many citizens you helped in 2010:

900 callers rang the NBC12 Tax Call-In Program during tax season to ask VSCPA members a tax question.

The “Ask a CPA” Email Program received 66 questions this year.

Interested in volunteering for a tax season event or the email program? Contact Tracey Zink at [email protected]. n

In 2010, the Internal Revenue Service (IRS) launched new Preparer Tax Identification Number (PTIN) rules, which required all paid tax preparers to obtain a PTIN to use on returns (and re-register for a PTIN even if they already had one). Many preparers paid attention — but some did not:

Approximately 712,000 preparers have obtained new PTINs since the IRS launched the registration program last fall.

Approximately 100,000 preparers filed returns for clients in 2011 but failed to follow new PTIN requirements. The IRS is sending letters to this group.

Starting next year, paid preparers who are not CPAs, attorneys or enrolled agents must pass a competency exam and suitability check, and also complete 15 hours of continuing education each year.

And what about those “ghosts?” The IRS is trying to track down people who do not sign the returns they prepare. It will send letters to taxpayers who appear to have had assistance with their returns, but lack preparer signatures. n


>> BY THE NUMBERS


Putting a Practice Up for SaleBY HUGH DUFFY

MARKET knowledge

About a decade ago, in the heyday of firm consolidation, giants such as American Express gobbled up several firms a month — and not all of them were large. Many were small, local firms just ripe for the picking. Although the consolidators were usually mum about their payouts, the formula then, in terms of valuing a firm, was about 1.5 times annual billings plus 10 percent, according to professional journals and research at that time. More recently, the economy has made the market tougher for consolidators and valuations have dropped as a result.

If a consolidator wanted to purchase your firm today at a price slightly above market, would you be ready to sell?

The best exit plan is to make your firm more attractive to prospective buyers. Even if you have no intention of selling your firm, you should always be prepared for an offer to sell. As we all know, our health and well-being is uncertain. Sometimes, life just gets in the way and you may find yourself one day wishing you were sitting on the side of a mountain or possibly changing careers altogether.

Tactics vary on how to get your firm in shape, but it’s best to try and use every tool you can — and even more than that, keep a willingness to change how you do business and perhaps how you even think of your practice.

BOOST MARGINS

Every accountant knows that our profession has long enjoyed a high net profit margin. Firms heavily into tax prep, bookkeeping services and lower-end accounting software consulting have also historically notched even higher margins. These conditions indicate that positioning your firm for future sale might mean evolving toward quicker, high-turnover work and away from clients who require the time-consuming attentions of highly skilled, senior-level accountants.

That latter work and the “hand holding” it involves might be what you’ve found most satisfying through the years, but changing could boost the price of grooming your firm for sale. In other words, working with clients remotely rather than in person can produce enormous productivity gains in your practice. It can also make your practice easier to sell because it operates more like a franchise with well-defined business processes rather than a firm dependent on the current owner’s expertise and relationships.

Even though they can take time and attention to grow, niche markets are proven methods to increase fees and client retention. Besides the obvious advantage of your firm being a big fish in a somewhat smaller pond, niches are a great way to net referrals for other services.

Referrals are probably the surest way to build a niche. Though it isn’t necessarily fast, a great referral network can run itself after a while. A few years ago, one


Florida accountant reported that once he completed the tax return for a local priest, he soon found himself doing the returns of almost all the religious leaders in the area.

Do a self-assessment of your own skills and survey your staff to determine what skills and interests they have that could help your firm penetrate a niche. Next, find out about the networks of clients in those niches, such as trade groups or online business networks, and attend meetings or participate in online communities. Find the influential publications and bloggers of your prospective niche clients’ profession and offer your firm’s expertise by contributing articles, conducting lectures and workshops, and other methods to get your name known. After all, you have knowledge to offer; accountants tend to forget how urgently people in other professions want tax and estate planning expertise and guidance. And, perhaps most importantly, ask for referrals from satisfied niche clients.

GO TECH

A recent survey by INSIDE Public Accounting indicated that the most successful firms might expect to realize as much as $200,000 to $250,000 in billings

per employee. Many firms seem to think that technology, especially cutting-edge personal technology, can help staff realize even higher revenues.

Start with your accounting software; look for scalability and the ability to work in a heads-down data entry mode or in a drop-down, mouse-driven mode. Look for software that integrates well with mass-market, client-oriented accounting programs, such as QuickBooks, and software that integrates with tax-prep software. Look for programs that offer direct import of bank-cleared transactions, general ledger auto-fill and auto-populate, customizable reports, reporting flexibility, direct delivery of reports in real time, the ability to automate processes when needed, and programs that are web-based or cloud-friendly.

Even if you’re not sold on software-as-a-service (SAAS), you’ll want to be familiar with it in order to understand how it

could potentially help boost your firm.

Personal, portable smartphones, tablets and other devices continue to have explosive potential to streamline how we work because they sharpen our ability to get things done, while addressing client concerns and needs faster, and from anywhere, in real time. These devices also give your staff a way to conduct business with fewer support staff, thereby saving your firm some overhead.

REGULARLY ASSESS YOUR SITUATION

Are you ready for a sale? Every firm is different. Geographical location, firm history and other factors also come into play. Nevertheless, the best advice is to regularly review your firm’s “sale” potential. Again, even if you have no intention of selling the firm, finding ways to increase productivity, elevate profit margins and making the firm less dependent on the current ownership are always good for your firm — and keys to a solid exit strategy. n

MARKET knowledge

The best exit plan is to make your firm more attractive to prospective buyers.

HUGH DUFFY is co-founder and chief marketing officer of Build Your Firm, a practice development and marketing company for small accounting firms. Hugh teaches a series of accounting marketing workshops, writes an email newsletter reaching thousands of accountants and is frequently published in various publications. Contact him at (888) 999-9800, ext. 151 or at [email protected].


FINANCIAL planning

5 Things Every 401(k) Fiduciary Should KnowBY CRAIG M. STANLEY, CPA, QPFC

As the U.S. Department of Labor (DOL) continues to increase oversight of 401(k) plans, as well as the number of auditors on staff to enforce this oversight, now is a great time to give yourself and your 401(k) plan a “fiduciary gut check.”

Most corporate senior executives, along with certain HR personal and investment committee members, are considered, by either their titles or their actions, to be plan fiduciaries and are fully subject to the exposure of personal liability found under the Employee Retirement Income Security Act (ERISA).

Here are five things the DOL expects every fiduciary of a 401(k) to know:


FINANCIAL planning

1. DESPITE WHAT YOU MIGHT HAVE HEARD, FIDUCIARIES CANNOT FULLY DELEGATE THEIR LIABILITY TO SERVICE PROVIDERS.

The DOL has been very clear about this. There are certainly ways that fiduciaries can share this liability or even delegate certain functions to service providers. But completely removing the responsibilities and liability that comes with being a fiduciary is completely impossible and nothing more than a great sales pitch.

The selection and monitoring of investment options available in the plan is the most common function either shared with or fully delegated to a financial advisor. In either case, however, the fiduciary still maintains the very important role of selecting and monitoring the advisor performing this duty, an often overlooked responsibility. Fiduciaries must understand they can still be liable if a negligent decision was made by any service provider who was not properly selected and monitored — a duty that can never be delegated.

2. EVEN IF PARTICIPANTS CHOOSE THEIR OWN INVESTMENTS, FIDUCIARIES CAN STILL BE LIABLE FOR INVESTMENT RESULTS.

It is a common misconception that if a plan meets ERISA Section 404(c), the requirement that the plan offer a diversified lineup of investment options (e.g. stocks, bonds and cash), then the fiduciary is off the hook when it comes to investment results. However, if the fiduciaries are not regularly monitoring these investment options, a breach of duty can result.

Most 401(k) vendors offer a long list of options available on their platform, and fiduciaries choose which to offer their participants. But just because these options are offered by the vendor does not mean they are suitable for a plan. Related parties, revenue sharing and other biases can sometimes be the primary reason a certain investment is available, not that it is a best-of-class investment. Accordingly, by just relying on a review performed by a 401(k) vendor (whom does not claim to be a fiduciary to the plan) without any understanding of how their review process is performed does NOT satisfy this monitoring requirement.

The requirement to prudently select and monitor investment options does not just apply to the handful of mutual funds available in a plan. Company stock offered as an investment option should be treated and analyzed just as diligently, if not more so. It is no surprise that

company stock has been the subject of many lawsuits following the stock market crash in 2008.

For similar reasons, fiduciaries may also want to be wary of offering self-directed brokerage accounts, a portal through which participants can invest in virtually any type of security using their 401(k) accounts. Without proper controls over what participants choose, offering this feature could be asking for trouble.

Having an investment policy statement and ensuring a periodic, independent monitoring process is performed AND properly documented can make all the difference.

3. IF FIDUCIARIES LACK INVESTMENT AND RETIREMENT PLAN EXPERTISE, THEY ARE REQUIRED TO HIRE AN INDEPENDENT ADVISOR TO CARRY OUT THESE FUNCTIONS.

Surprisingly, though, many employers with plans have either not hired a retirement plan advisor, or have a financial advisor who doesn,t specialize in retirement plans.

The retirement plan industry has


FINANCIAL planning

experienced some enormous change over the last decade, most likely fueled by the decrease of defined benefit (pension) plans and the volatile, mediocre stock market. One of the primary changes has been a shift in the financial professionals deemed qualified to properly oversee retirement plans. “Expertise,” “fee transparency” and “retirement plan-focused” have all become common phrases and buzzwords surrounding 401(k) plans. As Americans become more and

more dependent on 401(k) plans for significant portions of retirement income, those adjectives clearly should not be ignored.

While the industry continues to simplify options to participants so they are comfortable making the right choices, the inner-workings of 401(k) plans have become increasingly complex. As a result, the DOL has been hard at work developing regulations specific to ensuring fiduciaries are provided with, and properly use, the resources necessary to prudently operate their plans, as well as hire the service providers and financial advisors capable of assisting them. Operating a plan without that appropriate expertise can easily lead to a breach of fiduciary duty.

4. HIRING A RETIREMENT PLAN ADVISOR IS A FIDUCIARY ACT AND SHOULD BE DONE THROUGH A PRUDENT, DOCUMENTED PROCESS.

Selecting an advisor for your retirement plan is a big deal and should

be performed through a prudent process with only the participants' best interests as the basis for the decision. Furthermore, ensuring this process is documented will show anyone asking (e.g., the DOL) that careful consideration was taken by the fiduciaries to review the advisor’s quality of service, fees and retirement plan expertise.

Documented or undocumented, however, hiring an advisor solely because they are a family member, old college roommate or a representative of the bank that carries your loan is a prohibited transaction under ERISA and a clear breach of duty. Unfortunately, this is still a fairly common scenario, and anyone who makes such a hire is just asking for trouble. Any fiduciaries that have any form of related party serving as the advisor to his or her plans should take extra precaution to ensure that, although the advisor may be related, their service, credentials and fees are beneficial to the participants and consistently monitored.

While the industry continues to simplify options to participants so they are comfortable making the right choices, the inner-workings of 401(k) plans have become increasingly complex.

Scan the QR code with your smartphone for a more thorough explanation of fiduciary responsibilities from the U.S. Department of Labor, or visit www.dol.gov/ebsa/publications/fiduciaryresponsibility.html.

>> FIDUCIARIES: KNOW YOUR RESPONSIBILITIES


FINANCIAL planning

[email protected] • www.TaxSolutionsAlliance.com

solutionsA L L I A NC E

ta

Learn how smart negotiationcan lighten the load.

Your client

Back taxes, interest and penalties due

CRAIG M. STANLEY, CPA, QPFC is a 401(k)/financial consultant with Summit Group of Virginia LLP in Virginia Beach. He leads its corporate retirement plan consulting practice, a fee-based and fee-transparent service that provides plan sponsors with an independent advisor and advocate to assist in overseeing all aspects of an organization’s retirement plan. Contact him at [email protected].

5. FIDUCIARIES ARE REQUIRED TO HAVE A FULL UNDERSTANDING OF ALL FEES CHARGED TO THE PLAN AND MUST PERIODICALLY MONITOR THESE FEES.

Knowing all the fees charged to a plan, as well as ensuring they remain “reasonable,” can be daunting. Hidden fees, revenue sharing between providers and various investment share-classes are only some of the factors that make this a challenging process. But without this process in place, a plan could easily be paying more than it should. This lack of due diligence has become one of the most common reasons fiduciaries have ended up in court. To help fiduciaries determine all costs associated with their plans, the DOL has released regulations set to become effective mid-2012 that will increase the transparency of plan fees.

Expenses should be reviewed at least annually. The plan should also be benchmarked against competing service providers every three years, at a minimum, to ensure that economies of scale are considered as the plan grows. What might be good for a $15 million plan may not be good once it grows to $30 million, so it is important that fiduciaries periodically ensure the proper fit. And, as with everything else, fiduciaries should properly document this process. Advisors specializing in retirement plans make these reviews a regular part of their services. n

Disclaimer: Securities and advisory services offered through Ameritas Investment Corp. (AIC). Member FINRA/SIPC. AIC and Summit Group of Virginia are not affiliated. Representatives of AIC do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation.

14 DISCLOSURES • SEPTEMBER/OCTOBER 2011


VIRGINIA TAX TOOLKIT

2011

Another year, another tax season. Are you ready? Before the long hours begin, fill your tax toolbox with:

> CHANGES TO VIRGINIA’S TAX LAWS AND REGULATIONS

> NEW AND UPDATED TAX CREDITS

> VIRGINIA DEPARTMENT OF TAXATION CONTACT INFO

> BEST PRACTICES FOR PAPERLESS TAX WORKFLOW EFFICIENCY

> HOW TO DEAL WITH CLIENTS’ INTERNAL REVENUE SERVICE (IRS) COLLECTIONS

Get some tax-related CPE behind you before tax season begins! Here’s a sample of courses available to you from the VSCPA this fall. Check them out, and others, in the CPE Catalog at www.vscpa.com.

• 2011 Federal & Virginia Income Tax Update & Choice of Entity Overview: Nov. 3, Abingdon

• Don Farmer’s Federal Tax Update: Nov. 7, Roanoke; Nov. 8, Springfield; Dec. 14, Richmond

• Advanced Technical Tax Forms Training — LLCs, S Corporations & Partnerships: Nov. 7, Richmond

• Income Taxation of Trusts & Estates: Planning & Preparation of Form 1041: Nov. 10, Fairfax

• Practical Tax Tips & Techniques for Closely Held Businesses: Nov. 11, Richmond

• 49 Tax-Cutting Moves for Individuals: Nov. 14, Fairfax• Strategies & Tactics in the New War Against Higher

Individual Taxes: Nov. 15, Charlottesville and Dec. 5, Alexandria

• Payroll Taxes, Benefits & 1099 Reporting: Everything You Need to Know: Nov. 28, Springfield

• Innovative Tax Tips for Small Businesses: Dec. 9, Fairfax• Effective & Efficient Senior-Level Review of Tax Returns in

Busy Season, Jan. 10, Springfield

>> CPE TO SLIP IN YOUR TOOLBELT


TAX toolkit

For a full report on all the changes (this list is not all-inclusive), read the “2011 Legislative Summary” from the Virginia Department of Taxation (TAX), available as a PDF at www.tax.virginia.gov. On the TAX homepage, you’ll find a quick link to the summary in the “Publications/Education” section in the lower right corner. You can also check out the Virginia Tax Policy Library website at www.policylibrary.tax.virginia.gov/OTP/Policy.nsf to view the tax code and policies as they currently stand.

Changes and updates to the 2011 tax filing season in Virginia.

Fill Your Tax Toolbox

ADVANCEMENT OF FIXED DATE OF CONFORMITY

Virginia’s date of conformity to the Internal Revenue Code was advanced from Jan. 22, 2010, to Dec. 31, 2010, with some exceptions. In addition, the legislation restored conformity to the qualified motor vehicle tax deduction.

Conformity allows Virginia taxpayers and businesses to reap the benefits of the following Congressional measures: The Reconciliation Act, the Patient Protection and Affordable Care Act, the Hiring Incentives to Restore Employment Act, the


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Education Jobs and Medicaid Assistance Act, the Small Business Jobs and Credit Act and the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.

In a unique situation this year, Gov. McDonnell recommended a change to the bill to expand the ability to spread the reacquisition of an “applicable debt instrument” over a three-taxable-year period. Previously, this could only be done for transactions that took place during 2009. The change allows transactions that occurred in 2010, on or before April 21, 2010, to be handled this way as well.

For taxable year 2010, Virginia will conform to the temporary increase in the federal earned income tax credit (EITC) under the Internal Revenue Code. However, though the EITC increase was extended to taxable year 2011 by Congress, Virginia law does not currently conform to this change for taxable year 2011.

Virginia still disallows any bonus depreciation allowed for certain assets under federal income taxation and any five year carry-back of federal net operating losses (NOLs). The following

federal income tax provisions deconform from the advancement: income tax deductions related to applicable high-yield discount obligations and deferral of certain cancellation of debt income realized in connection with a reacquisition of business debt after Dec. 31, 2008, and before Jan. 1, 2011. Virginia will partly deconform with the domestic production deduction for taxable years 2010 and thereafter.

By March 1, 2013, all state tax forms will be available at www.tax.virginia.gov as PDF documents with fillable form fields.

Say goodbye to obsolete provisions in the Commonwealth’s Tax Code! SB 1130 removed items related to corporate income taxes, estimated taxes, sales and use taxes and property taxes. Deleted references include:

>> TOBACCO LOSS ASSISTANCE PROGRAM: This program was repealed by the Fair and Equitable Tobacco Reform Act of 2004.

>> PEANUT QUOTA BUYOUT PROGRAM: This program expired in 2007.

>> AVIAN INFLUENZA INDEMNITY PAYMENTS: A major outbreak of avian flu in Virginia in 2002 prompted the General Assembly to enact a subtraction for indemnity payments made by the U.S. Department of Agriculture when it mandated that poultry that had contracted avian influenza be destroyed. The subtraction has expired.

For a full list of obsolete items, see the “2011 Legislative Summary” at www.tax.virginia.gov.

>> CLEANING UP THE CODE


A QUICK SNAPSHOT OF NEW AND UPDATED TAX CREDITS:

AGRICULTURAL BEST MANAGEMENT PRACTICES TAX CREDIT: Individual tax credits allowed for agricultural best management practices are amended so individuals can receive a refund of 100 percent of the credit amount that exceeds their Virginia tax liability.

COAL EMPLOYMENT AND PRODUCTION INCENTIVE TAX CREDIT: Sunset date extended from July 1, 2011, to July 1, 2016, for the redemption or refund by a person with an economic interest in coal credits earned by an electricity generator and allocated to him or her.

CLEAN FUEL VEHICLE AND ADVANCED CELLULOSIC BIOFUELS JOB CREATION TAX CREDIT: Sunset date extended from Dec. 31, 2011, to Dec. 31, 2014.

LONG-TERM CARE INSURANCE TAX CREDIT: Amount of the credit an individual may claim for long-term care insurance premiums increased from 15 percent to 30 percent of the amount paid.

LIVABLE HOME TAX CREDIT: Licensed contractors are eligible for the credit if they build new residences or retrofit existing residences to provide visitability or improve accessibility.

NEIGHBORHOOD ASSISTANCE TAX CREDIT: Eligibility expanded to included trusts and pharmacies and those providing professional services.

PORT CREDITS: Various new credits encourage businesses and taxpayers to take advantage of the Commonwealth’s ports, create new port jobs, transport goods via barge or rail instead of highway and invest in international trade facilities.

RESEARCH AND DEVELOPMENT EXPENSES TAX CREDIT: A refundable individual or corporate income tax credit for qualified research and development expenses paid or incurred during the taxable year. While the VSCPA took a neutral position on the bill introducing the credit, the VSCPA Tax Advisory Committee reviewed the bill and submitted suggestions for technical amendments, which were incorporated.

TELEWORK EXPENSES TAX CREDIT: Employers who incur eligible telework expenses or conduct telework assessments could qualify for this individual or corporate income tax credit.

WINERIES TAX CREDIT: Incentives exist to encourage the establishment of Virginia farm wineries and vineyards.

>> NEW INCENTIVES

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On Feb. 16, the Senate agreed to the bill in its entirety, including the change, and the bill immediately became law due to the inclusion of an emergency clause.

TAX FILINGS BY OVERNIGHT DELIVERY

The VSCPA supported legislation to allow state and local tax filings and payments to be submitted to TAX via overnight delivery service, as opposed to the previous requirement in which a tax return or payment was required to bear a postmark from the U.S. Postal Service. Documents sent through a delivery service must bear a confirmation of shipment dated on or before midnight of the day the return or payment is due. In a letter of support to the House Finance Committee, the VSCPA said, “Expanding the means by which tax returns and payments are considered to be timely filed is good customer service for the Commonwealth and its localities.”

LAND PRESERVATION TAX CREDITS

The General Assembly passed legislation in three areas surrounding Land Preservation Tax Credits: maximum credit amount, second appraisals and no reduction for unused credit amounts.

HB 1820/SB 1232 increased the maximum amount of Land Preservation Tax Credits that may be issued in a calendar year by any credit amounts that have been disallowed or invalidated


Website: www.tax.virginia.gov

Shipping address: Virginia Department of Taxation Attn: Forms Unit 1st Floor Suite #169 3600 West Broad Street Richmond, VA 23230-4915

Tax Practitioner Hotline: (804) 367-9286

Forms unit: [email protected]

Electronic filing unit: [email protected]

>> CONTACT THE VIRGINIA DEPARTMENT OF TAXATION

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by TAX. In addition, if TAX requires a second qualified appraisal within 30 days after an application for tax credits has been filed, an application for a Land Preservation Credit is not deemed complete until the fair market value of the donation is finally determined.

The VSCPA originally opposed SB 1232 because it required the use of a licensed transfer agent to transfer a Land Preservation Tax Credit to a taxpayer who is not an individual. Transfer agents would have been licensed by TAX. The final legislation removed the licensing requirement.

Under SB 1153, a Land Preservation Tax Credit cannot be reduced by the amount of unused credit that could have been claimed in a prior year by the taxpayer but was unclaimed. The amount of the credit that may be claimed by each taxpayer is limited to $50,000 for the 2009, 2010 and 2011 taxable years, and $100,000 for the 2012 taxable year and

for each taxable year thereafter. Any unused portion of a credit issued to a taxpayer may be carried forward for a maximum of 10 years.

STUDY: RESTRUCTURING THE BUSINESS, PROFESSIONAL & OCCUPATIONAL LICENSE TAX

The Joint Legislative Audit and Review Commission (JLARC) will undertake a two-year study to assess the impact on local revenue streams of restructuring the local Business, Professional, and Occupational License Tax. Specifically, JLARC will assess changing the basis of the tax from gross receipts to net income. The Commission plans to submit its final report by Nov. 1, 2013. n

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Goodbye, Paper … Hello, Efficiency Six best practices for paperless tax workflow efficiencyBY ED JENNINGS

Streamlining workflow is a constantly neglected to-do item for many CPA firms, especially as client demands increase and new regulations continue to come down the pike. With all that is involved, the complexity of the average firm’s tax workflow can seem overwhelming. Throw in the ongoing shortage of professional staff with the pressures of tax season deadlines, and it’s easy to understand why firms continue to prepare returns using the methods that have worked for them in the past.

However, in the tax and accounting industry, time is money, which is why accountants are always searching for ways to improve efficiency in their firms. These six best practices will ease the transition to a paperless tax workflow.

For firms that have moved to a paperless tax workflow, the efficiency gains have been phenomenal — some report time savings of up to 45 minutes per return. With the time saved, tax professionals are focusing on higher-value activities

and delivering better customer service to differentiate and grow their practices.

Achieving results like these is possible, and it’s easier than you might think. Firms that are running at peak efficiency have implemented the following best practices.

1. SCAN CLIENT DOCUMENTS BEFORE PREPARATION.

Scanning is the first step toward achieving the benefits of an automated tax workflow. By scanning client documents on the front end of the preparation process, firms position themselves for the efficiency gains that come from using electronic source documents.

Scanning up front creates a digital library of documents that can be immediately accessed throughout tax season. With source documents stored electronically, administrative staff can fulfill client requests in seconds during busy season — without interrupting billable work. When additional client documents arrive late, staff can easily scan and add them to the first set of documents. And finally, scanning eliminates the need for photocopying, reducing paper and filing cabinets and eliminating boxes of documents scattered on the floor.

Check your to-do list. Where does streamlining tax workflow land? If it’s not at the top, you’re not alone.

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2. INVEST IN A FAST SCANNER.

Scanning is an integral component of a highly efficient tax process; therefore, tax professionals should invest in a professional quality scanner to drive that process. A high-speed scanner is recommended — one that is designed for scanning documents and can scan both sides of the page simultaneously at 30–40 pages per minute.

What separates a document scanner from other types of scanners and multifunction devices are the advanced features that make it easy to scan tax documents. A document scanner can easily scan different sized documents from business card to legal size. A document scanner also includes advanced paper handling mechanisms to avoid misfeeds and paper jams so firms can scan with confidence, ensuring every page in a pile of documents is scanned.

Firms should also consider the “daily duty cycle” for a scanner. The duty cycle indicates how many pages per day the scanner is designed to scan. A low-cost scanner may only be designed to scan 200–300 pages per day, which may not deliver the reliability needed to get through tax season. Consider how many pages need to be scanned during tax season.

Good document scanners are more affordable than ever before, and don’t forget to consider the software that comes bundled with the scanner. Many high-end scanners include a copy of Adobe® Acrobat® Standard, which is used for scanning as well as annotating and tick marking source documents. The Fujitsu® 6130 is recommended as one of the best scanners for tax professionals. This scanner delivers fast double-sided scanning with

advanced features that make it easy to scan tax documents at an affordable price.

3. AUTOMATICALLY ORGANIZE SCANNED TAX DOCUMENTS.

There are solutions that will automatically organize and index scanned tax documents — eliminating the time-consuming manual task of sorting and identifying client documents. “Scan and organize” solutions automatically identify scanned tax documents and deliver them in an organized, bookmarked PDF file that makes it easy to find and review any tax document. These solutions will correct the orientation on documents that are scanned upside down or sideways. Blank pages and miscellaneous documents can be automatically identified in order to scan a pile of client documents without having to sort through it.

Using these solutions, client documents are consistently organized and bookmarked in a logical order that matches the tax preparation process — no matter who does the scanning. Simply click a bookmark to find any tax document.

There are additional benefits to going paperless beyond the tax preparation

process. Firms can “wow” clients by taking their shoebox of source documents and returning an organized electronic copy. Plus, the next time a client calls looking for last year’s W-2, any staff member can easily use the bookmarked PDF file to locate the document and fulfill the client request, so tax professionals can focus on higher value activities.

4. IMPLEMENT DUAL MONITORS.

The days of the one-monitor desktop are coming to an end, and for tax professionals who have experienced a dual-monitor setup, there is no going back. The value of being able to quickly view multiple programs and documents simultaneously cannot be overstated. With dual monitors, preparers can easily view a client’s current tax return side-by-side with the previous year’s return, source documents and a point sheet for easy preparation and review. A wide range of affordable solutions is available, so firms can choose the package that is right for them. These solutions include dual-monitor graphics cards for computers, laptop docking stations and external graphics expansion modules like the Matrox® DualHead2Go.

TWO SCREENS ARE BETTER THAN ONE >>

Ninety percent of CPA firms have implemented dual monitors for all tax personnel, and 37 percent have implemented three or more monitors for some staff.— ASSOCIATION FOR ACCOUNTING ADMINISTRATION’S 2009 BENCHMARKING

OFFICE BEST PRACTICES SURVEY


ED JENNINGS

is president and CEO of Copanion, a tax document automation company. He is an expert in tax document

automation, scanning, data security and the paperless tax workflow. Read more about automatic retrieval and the paperless tax workflow on Copanion’s blog at http://blog.copanion.com, or contact Ed at [email protected] Virginia Society of Certified Public Accountants endorses Dominion Benefits • www.dominionbenefits.com

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TAX toolkit

5. TRAIN YOUR TEAM ON THE PDF TOOLS AND PROCESS.

Training can help staff get up the learning curve quickly and mitigate concerns surrounding the change in traditional processes. Tools like Acrobat Standard offer all the capabilities needed to easily tick mark, annotate and review scanned tax documents. There are a number of third-party solutions that offer similar capabilities, and they all offer free trials so firms can evaluate which one best meets their needs.

Where is training for PDF tools offered? The VSCPA offers CPE classes on this subject: “Outlook, Word, Excel & Adobe Tips, Tricks & Techniques,” takes place Nov. 28 in Richmond and Nov. 29 in

Fairfax. Visit the CPE Catalog at www.vscpa.com for more information. There are also many consultants who can help firms go paperless, and there are free resources available on the Internet to guide firms through the transition. Finally, many of the tax and accounting trade publications and paperless tax solution providers offer free white papers and webcasts to help firms learn how to use these tools effectively.

6. CREATE A SINGLE LOCATION FOR STORING ELECTRONIC DOCUMENTS WITH CONSISTENT NAMING CONVENTIONS.

There is no one best solution for digital file storage; it really depends on the needs of each firm. For some, creating organized, consistently named folders within a Windows® file folder is adequate. These firms create a shared Windows folder on their network and the folder is typically organized by client ID and tax year. For other firms, a professional document management system (DMS) is preferred. A DMS provides the advantage of tighter integration with tax preparation software. Regardless of which solution firms implement, the main benefit is that it becomes easy to find client documents because everything is in one location with consistently named files and folders.

These best practices provide firms with an excellent guide for implementing an automated, paperless tax process. By moving away from manual tasks and eliminating paper, firms can save time, money and resources — all of which translates to a healthy bottom line. Overall, streamlining the tax process and significantly reducing the use of paper equals unprecedented efficiency gains. Follow these six best practices to get your firm there. n

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A Smart Approach to Clients’ IRS Collection ProblemsBY VAUGHAN LONG, EA

But what if a brand-new client has a problem? Or an existing client has a problem that originated before the beginning of your professional relationship? What if there was some big capital gain and your client lost the paperwork? What if your client didn’t realize that, as an employee with check-signing authority, he or she was personally liable for the employer’s failure to file 941 forms and pay withholding taxes?

It may not happen very often, but when it does, it’s a big deal, striking fear into the

hearts of taxpayers on the receiving end. When that happens, you’re the one the client will turn to for smart answers.

The first smart answer you’ll need to give is who should tackle the problem — your office or an outside tax resolution service. This is not a case in which doing it right means doing it yourself. For one thing, IRS negotiations can be incredibly time-consuming, and you have an ongoing practice with not just one, but many clients to look after. In addition to the time you need to prepare for and conduct the negotiations is the time it

There are two reasons you’re probably not thinking about what happens when a client gets a five- to six-figure Internal Revenue Service (IRS) bill for back taxes, interest and penalties. One is, it’s the height of tax season right now, and you’re busy with returns with no time to even think about previous years. The second is that as a qualified professional, you go out of your way to keep tax problems from happening.

TAX toolkit

Using an experienced tax resolution service may be the best way to quickly and easily take care of your clients’ collection issues.


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would take you to learn very specialized IRS procedures, forms, regulations and terminologies that are very different from those you work with daily on taxes, audits and general accounting. Even knowing the rules and procedures won’t necessarily tell you enough about the system’s ins and outs for you to know where all the flexibilities are. What’s worse, you’ll be negotiating with a total stranger who knows the system far better than you do.

This means you’re probably better off referring your client to a tax resolution firm. There are plenty of them out there. Googling “IRS problems” will get you 10,400,000 hits in a quarter-second. The problem is knowing which one’s right for both your client and you.

Check out the reasons why referring your clients out for tax resolution can be a smart decision, and ways you can help clients through the process.

REFERRING CLIENTS TO ALLIES IS SMARTER THAN REFERRING THEM TO COMPETITORS.

You want to help your clients, but not at the cost of losing them. Tax problem resolution is only part of what these firms do. Many offer tax-return work, bookkeeping, accounting, estate planning and other financial services and would gladly leverage a successful

IRS negotiation to woo the rest of your client’s business away from you.

Before you refer a resolution service, it makes sense to check their website and perhaps call them to make sure they’ll be allies, not competitors down the road.

PAYING FOR SOMETHING FREE ISN’T SMART.

How big a tax problem calls for outside help? Some resolution firms look for taxpayers with $15,000-plus in tax bills. Some say $10,000. One well-known firm even says they help taxpayers who owe as little as $4,000 or less.

Your clients can pay for an outside firm’s help, but unless the IRS wants $25,000 or more , there’s no need to. The IRS Taxpayer Advocate Service was set up specifically to help taxpayers who owe $25,000 or less. Their procedures are streamlined, simplified and less formal. Best of all, their help is free. (And you can be sure they don’t want to do your client’s regular tax work.)

LIVING IN THE PAST ISN’T SMART.

Many tax resolution firms boast of compromises saving taxpayers tens of thousands of dollars or more. Maybe they got deals like that in the distant past, but today’s a different era with a different

IRS. Under previous administrations, the IRS’s priority was to maximize clearance of cases, even if that meant forgoing some tax revenue. The current priority, in contrast, is to maximize revenue, which makes for harder bargaining.

In federal fiscal year 2010, the IRS filed more than 1 million tax liens. That’s a two-decade high and a 553 percent increase over fiscal 1999. Today’s IRS is not going to roll over and play dead, so be very wary of any resolution firm that claims it will.

THE WRONG KIND OF EXPERIENCE ISN’T SMART.

Three types of people are allowed to represent taxpayers in all types of IRS tax matters and in all IRS offices: CPAs, attorneys and enrolled agents. Becoming an enrolled agent requires passing a rigorous written exam. In addition, every applicant must undergo a background check. Past employees of the IRS may become enrolled agents without the exam by virtue of their years of experience. CPAs and attorneys can represent taxpayers by virtue of their own certification requirements, but any past misconduct that would have caused a CPA to be suspended or a lawyer to be disbarred means automatic disqualification.

Not all IRS experience is equal. Check the backgrounds of almost all


resolution services’ employees, and you’ll find former IRS revenue agents. What you won’t find is many former IRS revenue officers, and this distinction is important. Revenue agents handle returns and audits, but only revenue officers are authorized to conduct negotiations. A former IRS agent may know little more about the negotiating process than you do.

THOROUGH PREPARATION IS SMART.

Before approaching the IRS, it’s essential to thoroughly review your client’s financial situation. Is the IRS problem justified? If so, what factors — both obvious and underlying — caused it? Are there additional problems lurking in the background that the IRS hasn’t noticed yet? Are there issues that can be added to the same negotiation to spare your client added grief and expense in the future? Are there factors that could mitigate the liability or lower the payments? The resolution representatives you recommend should be willing to work with you to nail down the answers to these questions.

MOST APPEALS AND OFFERS IN COMPROMISE AREN’T SMART.

For most tax resolution firms, it’s practically a knee-jerk reaction: First, file an appeal or offer in compromise. That makes lots of sense for the resolution firm, because appeals and offers generate lots of billable hours. But it usually makes lots less sense for your client — and not just because that’s who will pay for them all.

In today’s IRS climate, this approach usually costs a lot but accomplishes little. The right representative for your client will be one who’s very selective about appeals and offers in compromise. The IRS rejects four offers in compromise for every one they accept, for example. Moreover, for most offers a significant down payment is required — and it’s nonrefundable, regardless of outcome.

An appeal makes sense only when a thorough review reveals factual and numerical grounds for dispute. For example, we once uncovered a mathematical error in the IRS’s software and based a client’s successful appeal on that issue.

HIGH-COST, LOW-RETURN STRATEGIES AREN’T SMART.

Many tax resolution firms tout penalty abatements. Like appeals and offers in compromise, they generate huge numbers of billable hours. But since penalties are only a percentage of the total liability, even the most successful penalty abatement negotiations leave the bulk of the liability untouched.

ALL-OR-NOTHING TACTICS AREN’T SMART.

When all-or-nothing tactics fail, your client is left with nothing. That’s why you should make sure the tax resolution service isn’t going to stake everything on one grand gesture such as an offer. There are less expensive strategies with more likelihood of success, and those are the ones to pursue first.

KNOWING THE IRS SYSTEM AND PEOPLE IS SMART.

No two taxpayers’ collection problems are identical, nor are their general finances. Similarly, no two IRS negotiations will be identical. Sure, they all follow the same overall rules and procedures, but how those rules and procedures are applied and interpreted will vary from IRS office to IRS office and, within those, from revenue officer to revenue officer. Different revenue officers can be relentless in some areas and lenient in others.

Representatives who negotiate daily learn the system and the people. They learn how to present your client’s case and which aspects of it will carry the most weight with the officer they’re dealing with. They know how to restate the tax information you’ve compiled in a way that addresses the revenue officer’s concerns. They know where, specifically, there’ll be give and take — and that this will vary from one revenue officer to another. That’s why a one-size-fits-all, cookie-cutter approach just won’t cut it.

GIVING SOMETHING TO GET SOMETHING IS SMART.

Like all negotiations, good tax resolution negotiations are two-sided, with neither side going away empty-handed. Just as your client’s representatives need something to show for their time and efforts, so do the IRS revenue officers. One thing they really value is completion of back returns. It’s a relatively minor concession on your client’s part, since you can prepare those with client input and taxpayers are required to file them in any event. But to revenue officers, getting

TAX toolkit


those back returns filed is a big deal — one that smart negotiators can use to gain significant bargaining leverage.

Knowing the difference between negotiations and demands can also help gain leverage. IRS revenue officers know and appreciate the difference. When tax resolution representatives make it clear they’re looking for solutions that work for both the taxpayer and the IRS — when they show that they’re there to negotiate fairly, professionally and in good faith — IRS revenue officers do likewise.

MINIMIZING PAYMENTS CAN BE SMARTER THAN MINIMIZING LIABILITIES.

The IRS exists to collect taxes, not to inflict undue hardships. Their regulations let taxpayers keep enough for necessary living expenses — food and clothing, housing and utilities, vehicle payments and operating costs, health insurance and health care expenses, child care and court-ordered payments — before the IRS can collect what’s owed them. Moreover, they have only 10 years in which to collect it. Preventive steps during the initial financial review and preparation of your client’s case can minimize total, long-term liability. Gathering supporting data and putting it into IRS form can maximize your client’s necessary expenses (up to allowable IRS standards) and minimize the monthly IRS outlay. That doesn’t sound as sexy as filing an appeal, but it’s a sure way to save your client money — not only in total IRS payments, but also in tax resolution service fees.

PREVENTING FUTURE PROBLEMS IS SMART.

The smartest way to deal with IRS problems is to prevent them. The best way to prevent them is for the tax resolution service to uncover them in the preliminary financial review, recommend changes, work with you to carry them out and educate your client how to keep that problem from recurring in the future.

SELECTING REPRESENTATIVES WHO’LL WORK WITH YOU IS SMART.

Just as a good tax resolution service is expert at negotiating with IRS revenue officers, you’re expert in your client’s specific finances. Just as you need to seek their expertise, they should be willing and eager to solicit yours. They build your client’s case, but your data is the raw material. So long before a client problem shows up on the radar screen, you should check out resolution firms’ websites, talk with one or two of the actual negotiators and get a feel for how they work — with the IRS, with your clients and especially with you.

It’s a smart way to keep your clients solvent — and to keep them as satisfied clients. n

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VAUGHAN LONG

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Tax Patent Strategies Put to Rest

Five years ago, VSCPA member Mary Anne McElmurray, CPA, called the Society with a concern.

McElmurray, tax director at the Roanoke and New River Valley offices of Brown, Edwards & Co., discovered the problem in a daily tax email in 2006. She had read that the U.S. Patent and Trademark Office had issued patents on tax strategies with more applications pending, and the more she thought about it, the more the idea bothered her.

McElmurray and the VSCPA both felt that the patenting of tax advice limited the accessibility of the tax code, potentially forcing a choice between paying more in taxes than required and paying a patent royalty. The VSCPA drafted a letter to the American Institute of CPAs (AICPA) Board of Directors

expressing its concern. Together, the AICPA and state CPA societies spent the next five years righting the wrong McElmurray had discovered.

On Sept. 16, the issue was finally put to bed when President Barack Obama signed the America Invents Act, formerly known as the Patent Reform Act. The bill has many provisions that clarify and make changes to the patenting and invention processes, such as amending patent law to define the “effective filing date” of a claimed invention, establishing a one-year grace period for inventors to file an application after certain disclosures of the claimed inventor, and revising conditions for patentability.

Section 14 of the Act addresses the tax patent issue. It “deems any strategy for reducing, avoiding or deferring tax liability insufficient to differentiate a claimed invention from the prior art when evaluating specified conditions of patentability.”

VSCPA President & CEO Stephanie R. Peters, CAE, was invited to attend the signing ceremony. “It was a satisfying feeling to observe the President signing this legislation,” Peters said. “One of our members sparked an important change that protects both taxpayers and the CPA profession nationwide. I am thankful to all of the VSCPA members and Virginia legislators who, over the past five years, worked so hard to resolve this issue.”

Tax strategies had been patentable as a type of business method since 1998, when the Federal Circuit Court of Appeals determined that business methods could be patented in State St.

Bank & Trust v. Signature Fin. Group. Since that decision, the U.S. Patent and Trademark Office had granted more than 130 patents on tax strategies.

Read a condensed history of this issue on the VSCPA’s blog, CPACafe.com, or check out the “VSCPA Positions” page under the Advocacy section of www.vscpa.com. (See page 44 for more on McElmurray as well.) n

TAXATION

The VSCPA’s position on tax patent strategies has remained over the last five years. In a letter to the AICPA Board of Directors in October 2006, the Society stated:

“The patenting of tax advice forces a choice between paying more in taxes than required or paying a patent royalty payment. We do not believe this represents good public policy. The inability of CPAs to defend against a patent infringement suit due to client confidentiality standards places CPAs in a position of potential exploitation by patent holders or in conflict with their professional duty to a client.

Allowing patents for tax advice is the same as allowing patents on criminal legal advice. Both are based on laws that are public domain. We do not believe that patents on tax advice are any more supportable than a patent on the process of defending against a criminal charge.“

>> JUST BAD PUBLIC POLICY

VSCPA President & CEO Stephanie R. Peters, CAE, attended the America Invents Act signing ceremony with Barry Melancon, CPA, president & CEO of the American Institute of CPAs (AICPA), left, and Paul Stahlin, CPA, AICPA chair (right).

President Obama signs the America Invents Act on September 16 in Alexandria.


Coming soon … a new way to connect!

Visit http://connect.vscpa.com for information on how you can get started!

VSCPA Connect is a members-only online community through which you can network, connect and share information with other members.

• Customizeyourprofile withyourphoto,jobhistory,interests and more

• Findandconnectwith colleagues through a members-only social network

• Participateingroup discussions based on your interests and needs

• Pickyourcommunication preferences

• Downloadandshare resources through a new searchable library

• Harnesstheknowledge of a diverse network 10,000 members strong

It’s your community. So connect!


VSCPA self-assessment

1. A 401(K) FIDUCIARY:a. Is always a company’s chief financial officer.b. Is fully subject to the exposure of personal liability

found under the Employee Retirement Income Security Act (ERISA).

c. Can remove his or her total liability by delegating to service providers.

d. Doesn’t need to monitor the advisor who selects investment options.

2. TO PERFORM DUE DILIGENCE, 401(K) FIDUCIARIES SHOULD:

a. Hire a plan advisor that is a representative of the bank that carries his or her loan.

b. Not regularly monitor investment options if those options are diversified and meet ERISA Section 404(c).

c. Know all fees charged to a plan and ensure they remain reasonable.

d. Rely solely on an investment review performed by a 401(k) vendor without understanding the review process.

3. TO GET A CPA FIRM IN SHAPE TO BE ATTRACTIVE TO A BUYER, OWNERS SHOULD:

a. Try to develop a niche practice.b. Only take on clients who require a lot of time and

attention.c. Consider working with clients in person, rather than

remotely.d. Make the firm dependent on the current ownership

for success.

4. WHICH OF THE FOLLOWING IS NOT TRUE ABOUT VIRGINIA’S CONFORMITY WITH THE INTERNAL REVENUE CODE?

a. The legislation restored conformity to the qualified motor vehicle tax deduction.

b. The legislation expanded the ability to spread the reacquisition of an “applicable debt instrument” over a two-taxable-year period.

c. Virginia will conform to the temporary increase in the federal earned income tax credit under the Internal Revenue Code for taxable year 2010.

d. Virginia disallows any five-year carry-back of federal net operating losses.

5. REGARDING LAND PRESERVATION TAX CREDITS IN VIRGINIA:

a. A licensed transfer agent is required to transfer a Land Preservation Tax Credit to a taxpayer who is not an individual.

b. The amount of Land Preservation Tax Credits that may be issued in a calendar year remains the same as in previous years.

c. Any unused portion of a Land Preservation Tax Credit issued to a taxpayer may not be carried forward past 10 years.

d. Each taxpayer can claim up to $100,000 in Land Preservation Tax Credits for taxable year 2011.

6. CHANGES AND UPDATES TO THE 2011 TAX FILING SEASON IN VIRGINIA INCLUDE:

a. Fixed date of conformity legislation that became immediately effective because of an emergency clause.

b. Obsolete clauses removed in the Virginia tax code related to corporate income taxes, estimated taxes, sales and use taxes and property taxes.

c. A new study on restructuring the local Business, Professional, and Occupational License Tax.

d. All of the above.

7. NEW AND UPDATED TAX CREDITS INCLUDE:

a. The amount of the credit an individual may claim for long-term care insurance premiums increased from 15 percent to 30 percent of the amount paid.

b. An extension of the sunset date until 2015 for the redemption of the Coal Employment and Production Incentive Tax Credit.

c. Individual tax credits allowed for agricultural best management practices are amended so individuals can receive only a partial refund of the credit amount that exceeds their Virginia tax liability.

d. A sunset date extension until 2012 for the Clean Fuel Tax Credit.

8. CPA FIRMS THAT HAVE IMPLEMENTED PAPERLESS TAX WORKFLOW:

a. Report not reaping benefits until several years after implementation.

b. Spend all their time filing paper documents.c. See increased efficiency and significant time savings

per return.d. Have not invested in high-quality scanners.

9. WHICH SHOULD CPA FIRMS NOT DO WHEN GOING PAPERLESS?

a. Scan client documents at the front end of the tax preparation process.

b. Make sure the scanner can scan both sides of a page at once.

c. Disregard the importance of how many pages will be scanned each day.

d. Invest in software that organizes and indexed scanned documents.

10.WHEN IMPLEMENTING PAPERLESS TAX WORKFLOW, CPA FIRM STAFF SHOULD:

a. Learn as they go rather than taking time out to undergo training.

b. Keep the same computer hardware they’ve always used.

c. Check out white papers and webcasts offered by accounting trade publications and software providers.

d. Implement individual document naming conventions rather than a firm-wide system.

11. TAX RESOLUTION COMPANIES:a. Are familiar with the specialized IRS procedures,

forms, regulations and terminologies related to clearing clients’ tax issues.

b. Can offer other services like tax-return work, bookkeeping, accounting and estate planning.

c. Are all different when it comes to how small a clients’ tax bill it will accept.

d. All of the above.

12. FOR YOUR CLIENT TO RECEIVE THE BEST SERVICE FROM A TAX RESOLUTION COMPANY, YOU SHOULD MAKE SURE THE COMPANY:

a. Has a former IRS revenue agent handle your client’s problems.

b. Conducts a preliminary financial review.c. Immediately files an offer in compromise.d. Immediately considers a penalty abatement.

SUBMISSION INSTRUCTIONSYou may submit this self-assessment and make the exam payment online at www.vscpa.com/November2011DisclosuresExam.

You may also circle your answer to each question and mail this paper exam to:

CPE TeamVirginia Society of CPAs4309 Cox RoadGlen Allen, VA 23060

Fax submissions are acceptable to (804) 273-1741.

Name _________________________

Address _______________________

_______________________________

Email Address __________________

Date __________________________

Method of Payment

• Check (payable to the VSCPA)

• Credit card

Credit Card Number

_______________________________

Expiration Date ________________

Signature _____________________

Date _________________________

SUBMISSION DEADLINE: Dec. 31, 2011. Exams received after this date will not be graded and your money returned.

COST: $15 for VSCPA members / $30 for nonmembers.

Please note that this exam will not be live online until Nov. 1, 2011.

Complete this 12-question test and submit to the VSCPA for 1 CPE credit. Exams will not be graded until after the submission deadline. A 75 percent or better pass rate is necessary to receive credit. After your exam is graded, you will receive either a certificate of completion via email for your records or an email notification that the 75 percent grade was not met.


Support the Future of the CPA Profession Contributions to the Virginia Society of CPAs (VSCPA) Educational Foundation and the CPA Political Action Committee (PAC) of Virginia make it possible for the Virginia accounting community to thrive. With your help, we can help safeguard your future as a CPA and attract the brightest students who will become tomorrow’s CPAs.

Educational Foundation

V S C P A

The VSCPA Educational Foundation supports students and educators in Virginia through scholarships and grants. The Foundation strives to improve awareness and perceptions by educating students, educators and the public about the exciting, challenging opportunities available to CPAs.

Donate online at www.VSCPAFoundation.com.

The CPA PAC of Virginia is a bipartisan committee that financially assists candi-dates and legislators who support CPA interests — people we need in office to support the CPA profession. CPA PAC contributions, in concert with strong ad-vocacy efforts from the VSCPA, safeguard your future by giving you a voice in the profession.

Make sure your interests are represented. Contribute today at www.CPAPACofVirginia.com.


VSCPA news

272 VSCPA members recognized as ‘Super CPAs’Virginia Business magazine partners with the VSCPA to offer a special program to highlight Virginia’s top CPAs for their contributions to the profession and the Commonwealth. Virginia Business sent an official ballot to Virginia CPAs asking them to identify the names of peers they consider to be the best at their craft. After the ballots were counted, more than 300 winners were selected in 12 categories. This year’s “Super CPA” contest in Virginia Business magazine identifies nearly 300 “best of the best” of the CPA profession. The winners are highlighted in a special “Super CPAs” report in the November issue of Virginia Business. VSCPA members who were selected as winners include:

ASSURANCE SERVICESDavid Acree, CPAKevin Allison, CPAThomas Brooks, CPARichard Castro, CPAJude Covas, CPAHarry Dickinson, CPAMartin Einhorn, CPAScott Finley, CPARichard Garbee, CPAJames Haggard, CPAKevin Keller, CPARichard Lewis, CPAYun-Pei Liu, CPAMaria Marston, CPAPaul Murman Jr., CPAA. Marshall Northington, CPAWayne Pankey, CPAHartwell Philips Jr., CPAThomas Puryear Jr., CPAJoseph Romagnoli, CPAGary Romer, CPAEdward Schmitz, CPAJeffrey Smith, CPADaryll Stephenson, CPAJo-Ann Swift, CPATracy Urig, CPARobert Vallejo Sr., CPAJackie White, CPAVaden Wright, CPA

BUSINESS VALUATION/LITIGATION SERVICESGary Baum, CPAPatrick Corbin, CPAMurray Coulter Jr., CPACatherine Eberly, CPAAlexander Eccard, CPAKristin Henningsen, CPARonald Lovelace, CPAHarold Martin Jr., CPAHolly Martin, CPANancy Nunn, CPAClifton Rutherford, CPAHarry Schwarz, CPARichard Smith, CPAStephanie St. Clair, CPAJohn Stewart, CPAJoseph Thornton, CPAMark Vogel, CPAHarold Whitbey, CPAHal Young, CPA

CORPORATE TAXATIONAlan Altschuler, CPARichard Andrews Jr., CPARobert Baldassari, CPARebecca Bartholomae, CPAMichael Bell, CPADian Calderone, CPAShannon Cook, CPA

David Creasy, CPAPaul Croston, CPAChristopher Davidson, CPAMelinda Davis, CPAPaul Di Nardo, CPAWinfred Eddins Jr., CPAGeorge Forsythe, CPAKathleen Gotshall, CPAL.M. Gracik Jr., CPAJohn Haffey III, CPABrian Keeler, CPAThomas Lohr, CPAJoseph Mastaler Jr., CPARyan McEntire, CPAMichelle Moomey, CPAJohn Murray, CPAJohn Neal, CPAJohn Nelson, CPAWilliam Satchell, CPAL. Samuel Saunders, CPAPatrick Shuler, CPAKendra Stribling, CPAMichael Straus, CPAMark Tuck, CPAGary Wallace, CPAGlenn Walker, CPA

EDUCATORO.W. Broome Jr., CPAHoward Busbee, CPABruce Chase, CPAPaul Copley, CPADaniel Hubbard, CPA

Tom Rosengarth, CPANancy Schneider, CPADouglas Ziegenfuss Sr., CPA

EMPLOYEE BENEFITSCourtney Barrack, CPAMartha Boone, CPARichard Busofsky, CPAChristopher Fallon, CPAKarl Headley, CPAThomas Healy, CPASabrina Holme, CPAAnna Hunter, CPADarren Iden, CPAMichelle Jones, CPAGary Kitts, CPAJennifer Lehman, CPALinda McIntyre, CPAC.S. Moulden, CPAJames Poti, CPAShelloy Ranhorn, CPACharles Snader, CPAJ.K. Timmons Jr., CPASandra Wendler, CPANathan White IV, CPAJ. Phillip Windschitl, CPA

ESTATE PLANNING & TRUSTDiane Acurso, CPARoger Anglin, CPA

VSCPA news


Michelle Calhoun, CPAJoseph Cobbe, CPAStephanie Cooker, CPAThomas Cox, CPAThomas Denson III, CPAElaine Farmer, CPAJanet Foote, CPAGregory Forman, CPAMichael Haigh, CPANancy Hall, CPAOksana Hoey, CPAGlenn Lankford, CPALawrence Malecky, CPALee Martin Jr., CPA,Katherine McDaniel, CPARoger Overton, CPAStephanie Saunders, CPADeborah Stokes, CPAEdith Weiss, CPAChristine Williamson, CPAJack Wright Jr., CPAWilliam Young Jr., CPA

FINANCIAL MANAGERS, CFOS & CONTROLLERSJennings Dawson III, CPAMary Gummo, CPADarrell Harris, CPADeborah Harris, CPACarolyn Luckadoo, CPAKatrina Walker, CPA

GOVERNMENT & NONPROFITPhillip Berry, CPADouglas Bowles, CPAWilliam Bradshaw, CPAJanet Brocklehurst, CPAGail Chambers, CPACaron Crouse, CPABrian Davet, CPACharles Dietz III, CPAHarry Fagan, CPAMitchell Hartson Jr., CPA

Charles Helme III, CPALeighann Hochstrasser, CPAOlivia Hutton, CPAJoey Jones, CPAJohn Kent Jr., CPACynthia Laporta, CPAAlfred Layne Jr., CPARichard Matthews, CPAElizabeth Moffett, CPARobert Moore Jr., CPAEllen Moseley, CPAKevin Reilly, CPAElsie Rose, CPADiane Smith, CPAJulie Sokolowski, CPAKristen Soles, CPALee Sullivan, CPADavid Will, CPABrian Windley, CPAJohn Wright, CPA

INDIVIDUAL TAXATIONCharles Bish, CPADavid Bowman, CPABeth Bradberry, CPAW. Joseph Bugg III, CPABryan Cowling, CPAJoseph English III, CPAErich Faber, CPAJennifer Flinchum, CPAHarry Franklin Jr., CPAElaine Gibberman, CPADaniel Hargrave, CPAAshley Heckman, CPAShawn Howard, CPAJohn Karaffa, CPAAnna Lloyd, CPALawrence Martin, CPARobert Moore Jr., CPAMarsha Murphy, CPAF.H. Myers Jr., CPAKathleen Poorbaugh, CPABrad Reynolds, CPAGlenn Shelton, CPA

Greta Tosi-Miller, CPAMelissa Tucker, CPAJeffrey Ulmer, CPADouglas Urquhart, CPAAmelia Walsh, CPAAlbert White III, CPA

PERSONAL FINANCIAL PLANNINGWalter Burger, CPADavid Bush, CPAClaude Carmack, CPARichard Forbes, CPAJerry Foster, CPACheryl Furlong, CPARoger Handy, CPABruce Holbrook, CPAEdward Hoppe III, CPACarl Loden, CPAMary McDaniel, CPAMichael Meegan, CPAJames Pearman Jr., CPAJames Shepherd, CPAMark Smith, CPAMichael Wicks, CPA

SMALL BUSINESS CONSULTINGEdward Blair, CPAAlexander Bowman Jr., CPADonald Britt, CPAJoanna Brumsey, CPAThomas Burdette, CPAMelinda Chitwood, CPAJ. Phillip Coley, CPAJeffrey Creskoff, CPAJacob Favaro, CPAKristin Flora, CPAMark Foster, CPARobert Gary IV, CPARonald Hall, CPAWilliam Haney, CPACarroll Hurst, CPA

Sirena Johnson, CPARichard Leonard, CPAE. Jeffreys Love, CPARebecca McDonald, CPAJohn McDowell Jr., CPAKelli Meadows, CPAElizabeth Moore, CPARandy Myers, CPAHerman Nobrega, CPACharles Pearson Jr., CPA David Reardon, CPAJames Snyder Jr., CPAJennifer Todd, CPAEverett Winn, CPALauren Wolcott, CPAJoanne Wolfley, CPA

YOUNG CPASLindsay Andrews, CPARobert Bishop, CPAEvan Bowling, CPADesiree Bryan, CPABryan Campbell, CPAAngie Caruana, CPAJaimie Crowder, CPADavid Damiani, CPAChristina Dondarski, CPAMarc Filer, CPARichard Groover, CPAJason Hart, CPAAliaksandr Hryb, CPAHarvey Johnson, CPAKevin Johnson, CPAToby Leslie, CPALaurie Livingston, CPAAndrew Martin, CPAMichael Mendelsohn, CPATerri O’Brien, CPAChristopher Parker, CPARyan Perry, CPAAyree Rice, CPARavann Sowa, CPABilly Robinson Jr., CPACarman Smith, CPANiki White, CPA n


VSCPA news

2011 SmartCPAs Reader’s Choice Award Winners

• Robert Baldassari, CPA Matthews, Carter & Boyce, PC

• Mark Callihan, CPA KPMG

• Christopher Carson, CPA Argy, Wiltse & Robinson, PC

• Monica Dalwadi, CPA Baker Tilly Virchow Krause, LLP

• William Duvall, CPA DuvallWheeler, LLP

• Kathleen Flaherty, CPA Matthews, Carter & Boyce, PC

• Mark Frye, CPA Frye & Wolcott, CPAs

• Gregg Funkhouser, CPA Dixon Hughes Goodman, LLP

• Shannon Hagerich, CPA DuvallWheeler, LLP

• Shawn Howard, CPA Thompson, Greenspon & Co., PC

• Stephen Mallard, CPA Stephen W. Mallard, CPA

• Sharon McMichael, CPA Dixon Hughes Goodman, LLP

• W. Thomas Miller, CPA Thompson, Greenspon & Co., PC

• Richard Philipson, CPA Robert Philipson & Company

• Jerry Pierce, CPA KPMG

• Grover Russell, CPA Russell, Evans & Thompson, PLLC

• James Scott Jr., CPA Penan & Scott, PC

• Elida Seretti-Pierson, CPA Fitzgerald Company CPAs, PC

• Manjit Singh, CPA Manjit Singh, CPA, PC

• Robert M. Sorrells, CPA BDO USA, LLP

• Jan Thompson, CPA Thompson, Greenspon & Co., PC

• Greta Tosi-Miller, CPA Dixon Hughes Goodman, LLP

• Brian Wendroff, CPA Wendroff & Associates

• Bruce Wolcott, CPA Frye & Wolcott, PC n

SmartCEO Magazine, covering Baltimore, Philadelphia and Washington, D.C., charged its readers, more than 15,000 CEOs and C-level executives across the Washington, D.C. metro area, with selecting the region’s top CPAs. SmartCEO honored 75 local CPAs as “a CEO’s best friend.” Many business leaders wrote testimonials about those selected, citing reasons why they felt their CPA was “exemplary.” Twenty-four members of the VSCPA made the list. Visit www.smartceo.com for a complete list of winners.


VSCPA news

The VSCPA is in search of volunteers for the 2012–2013 membership year, spanning May 1, 2012 – April 30, 2013, and we᾽d love to count you in!

VSCPA volunteers span many different backgrounds, interests and professional concentrations. Your time commitment is up to you — give as much or as little as you like while using your valuable skills to help your community or working in a new area to help build your professional expertise.

Show your commitment to helping others and represent the CPA profession in the following areas:

CONFERENCE PLANNING: Work with our Education Team to develop conference agendas, outline session topics, identify and secure speakers and act as moderators for all VSCPA conferences.

GENERAL COMMITTEES: Foster your leadership potential by serving on these committees.

LEADERSHIP APPOINTMENTS: Contribute your time through leadership appointments that have significant responsibilities for VSCPA governance.

LEGISLATIVE: Be a part of the VSCPA,s active legislative and advocacy programs.

PUBLIC SERVICE: Give back to the public by participating in these tax and accounting-related opportunities throughout the year.

TASK FORCES: Showcase your technical expertise and help the VSCPA plan yearly events with these specialized opportunities.

WRITING & SPEAKING: Sign up for one-time, short-term volunteer opportunities that involve speaking, writing and other media relations activities.

To sign up or get more information, visit www.vscpa.com/Volunteer. n

The VSCPA needs you!

Save the date: CPA Assembly DayWant the voice of the CPA to be heard at the Virginia Capitol? Go there yourself! Save the date for CPA Assembly Day on Tuesday, Jan. 17, 2012.

CPA Assembly Day 2011 was a smashing success as CPAs from around the Commonwealth met with legislators to discuss issues impacting the profession. Participants observed the General Assembly in session in the afternoon, and the VSCPA was introduced on the floor of both chambers.

If you can’t attend in person, you can sign up for Virtual Participation and send an email or letter to your state legislator to make your voice heard.

CPA Assembly Day is an integral part of the VSCPA’s grassroots advocacy efforts. Thanks to all who attended this year, and we’d love to see you again in January! n


VSCPA news

The VSCPA is soliciting nominations for its annual awards for 2012, to be presented at the Society’s annual business meeting in May. The VSCPA will give out its Outstanding Member of the Year and Top 5 Under 35 Awards and is looking for qualified nominees for both honors.

The Outstanding Member of the Year Award recognizes a CPA member who has provided outstanding service to the profession through participation in VSCPA activities, civic engagement and charitable activities that promote a positive image of accounting and the CPA profession. The 2011 winner was ELSIE ROSE,

CPA, of Yount, Hyde & Barbour in Richmond.

The Top 5 Under 35 Award recognizes CPA young professionals under the age of 35 who have notable professional achievement, VSCPA accomplishment on the state or chapter level, community contribution and/or dedication to the CPA profession. The 2011 winners were APRIL GUNN, CPA, of the Virginia Auditor of Public Accounts in Richmond; MARC

FILER, CPA, of PricewaterhouseCoopers in McLean; NATALIE

LENTZ, CPA, of the U.S. Securities and Exchange Commission (SEC) in Washington, D.C.; HOLLY RATWANI, CPA, of Bridgewater College in Bridgewater; and JAMIE WOHLERT,

CPA, of Navigant Consulting in Washington, D.C.

Submit your nominations online at www.vscpa.com/Awards by Dec. 2. n

Know a potential new member? Ask new CPAs!The VSCPA strives to protect the interests of all Virginia CPAs — and we can do a much better job of that when more CPAs are members. With that goal in mind, the VSCPA is making a push to enroll CPAs licensed within the past year.

The VSCPA is now offering free membership for the first year for all CPAs licensed within the past year. New CPAs who qualify for this membership should visit www.vscpa.com/Join for more information. n

The best of the best: VSCPA awards


VSCPA news

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CPAs do a lot for their clients and the citizens of the Commonwealth. That’s why Gov. Bob McDonnell again honored Virginia CPAs by designating Sept. 18–24 as “Virginia Certified Public Accountants Week.”

The VSCPA introduced the proclamation as part of its Centennial celebration in 2009, and has done so each year since.

The VSCPA holds the event to build awareness of the growth and importance of the CPA profession, members of which serve as trusted advisors to businesses, organizations and individuals and help them make sound financial decisions. Several successful events marked this year’s CPA Week:

NONPROFIT FINANCE SEMINAR: Through this CPA-led event, non-finance nonprofit executives gained a better understanding of effective accounting and business practices.

“BUDGETING 101”: Members of the public attended this free, CPA-led money management workshop.

CPA DAY OF SERVICE: See page 5 for a wrap of this year’s Day of Service on Sept. 23. n

Virginia CPA Week: Honoring CPAs

VSCPA news


Financial Advisor magazine’s list of Top Registered Investment Advisors in the July issue.

FIRM NEWS >>

GLOUCESTER COUNTY received a Certificate of Achievement for Excellence in Financial Reporting for the 15th consecutive year.

LESLIE & CO., a Rustburg firm, was named business of the month for July 2011 by the Appomattox County Chamber of Commerce.

MEADOWS URQUHART ACREE &

COOK was named to the Inc. list of the country’s fastest-growing companies.

VSCPA STAFF NEWS >>

VSCPA President & CEO STEPHANIE R. PETERS, CAE, celebrates her 14th anniversary with the Society on Dec. 1.

Community Relations Coordinator TRACEY ZINK marks 13 years with the VSCPA on Nov. 2.

Marketing Director JENNIFER HARRIS celebrates her seventh anniversary with the VSCPA on Nov. 1.

NEW HIRES >>

STEPHEN G. CARROLL, CPA, has joined Health Diagnostic Laboratory, Inc. as chief financial officer.

DAVID LAMB has joined the Manassas office of DuvallWheeler as a staff accountant.

PROMOTIONS >>

Gulfstream Aerospace Corporation has promoted JASON AIKEN, CPA, to chief financial officer.

Kositzka, Wicks & Company has promoted JENNA MANSTER, CPA, to supervisor and ASHLEY BURDETTE and TRAVIS FLOYD to semi-senior in the Alexandria office.

JULIE SOKOLOWSKI, CPA, has been named a shareholder at Wall, Einhorn & Chernitzer PC.

APPOINTMENTS & AWARDS >>

Bernhardt Wealth Management, led by founder and President GORDON

BERNHARDT, CPA, was named to

Congratulations to the following members!

The VSCPA mourns the loss of:CHARLES GAMBILL JR., CPA, a VSCPA life member from Richmond. He started his own firm, Gambill & Co., CPAs, after graduating from Richmond College, now the University of Richmond. He served as an artillery officer in the Sixth Marine Division in World War II and later served as a deacon, elder and treasurer at Richmond’s Third Presbyterian Church.

LARRY SAUNDERS, CPA, of Richmond. He started his own firm in Richmond, Larry Saunders and Associates, Certified Public Accountants, LLC, and was a founding partner of Saunders and White in Roanoke. He graduated from Virginia State University and served as president of the Virginia State University Foundation. He was a lifetime member of the Kappa Alpha Psi Fraternity, Inc., serving in various capacities to support the fraternity, and was also a member of Club 533, The Thebans and Jefferson Lakeside Country Club.

TONY WORLEY of Abingdon, who worked for Hicok, Fern, Brown & Garcia, CPAs for 27 years. He graduated from Steed College in Johnson City, Tenn., and served in the U.S. Air Force. n

Education Director LINDA NEWSOM celebrates four years with the Society on Nov. 13.

Communications Specialist CHIP KNIGHTON marks one year with the VSCPA on Dec. 13.


VSCPA 100% Member Firms VSCPA 100% Member Firms show their commitment to their employees, the profession and the association. A 100% Member Firm is simply a Virginia CPA firm or company that has all of its CPAs enrolled as members in the VSCPA. Interested in being listed as a 100% Member Firm? Contact VSCPA Member Relations Director Brenda Fogg at [email protected] or (804) 612-9409.

THANK YOU FOR YOUR COMMITMENT, 100% MEMBER FIRMS!Anderson & Reed, LLPBarnes, Brock, Cornwell & Heilman PLCBeale & Curran, PCBeck & Company, CPAs, PCBennett, Atkinson & Associates, PCBiegler & Associates, PCBlackHeath Company, PLCBowling, Franklin, & Co., LLPBoyce, Spady & Moore PLCBritt & Peak, PC, CPAsBurgess & Co., PC, CPAsCameron, Moberly & Hamrick, PCCharles S. Pearson, Jr., CPACharles W. Snader, PCCherie A. James, CPA, PLCChesapeake Accounting Group PCCole & Associates CPAs, LLCColey, Eubank & Company, PCCorbin & Company, PCCraver, Green and Company, PLCCreedle, Jones and Alga, PCCST Group, CPAs, PCDalal & CompanyDavid L Zimmer CPA PCDidawick & Company, PCDominion BenefitsDonald W. Coleman, CPA, Inc., PCDouglas L. Thompson, CPA PLLCDuvall Wheeler, LLPEggleston & Eggleston, PCElmore, Hupp & Company, PLCEverett O. Winn, CPA, PLCForrest & MarkosFrank Edward Sheffer & CompanyFritz & Company, PCGL Roberson CPA, PLLCGarland & Garland, CPAs, PCGarris and Company, PCGregg & Bailey, PCGregory & Associates, PLLCHantzmon WiebelHarris, Harvey, Neal & Co., LLP

Henry R. Hortenstine III, CPA, PCHogan & Reed, PC, CPAsHolland & Brown LLPHomes, Lowry, Horn & Johnson, Ltd.Honeycutt & McGuire CPAsHunt & Calderone, PC, CPAsJay E. Reiner CPA PLLCJohn M. Watkins, CPAJones, Adams & Delp, PCJones, Madden & Council, PLCKeiter, Stephens, Hurst, Gary & Shreaves, PCKositzka, Wicks and CompanyKuehl Shepherd Kozlowski & Associates, Inc.L.P. Martin & Company, PCLane & Associates, PCLarry D. Greene CPA PCLent & Hawthorne, PCM. Lee Winder & Associates, PCMartin, Beachy & Arehart, PLLCMcPhillips Roberts & Deans PLCMichael B. Cooke, CPA, PCMichael R. Anliker, CPA, PCMiller Foley GroupMitchell, Wiggins & Company, LLPMoss & Riggs, PLLCMurray, Jonson, White & Associates, Ltd., PCPBGHR.T. McCalpin & AssociatesRenner & Company, CPAs, PCRoger L. Handy, PCRubin, Koehmstedt & Nadler, PLCRussell, Evans & Thompson, PLLCRutherford & Johnson, PCSalter & Associates, PCScheulen, Patchett & Edwards, PCSells, Hogg & Jones, CPAs, PCSpencer, Hager & Mosdell, PCStephen Merritt CPA, PCSteve Guy & Associates, PCSteve Walls & Associates, PLLCStrickland & Jones, PCSullivan, Andrews & Taylor PCSwart, Lalande & Associates, PCTerry L. Jones, CPA, LLCThe Burdette Smith Group, PC

Thomas E. Fraley, CPAThompson, Greenspon & Co., PCTongelidis Consulting, LLCUpdegrove, Combs, McDaniel & Wilson, PLCValderas & Fishel, PCWalker Consulting Group Wall, Einhorn & ChernitzerWells, Coleman & Company, LLPYancey, Miller, Helsley & Bowman, CPAs, PLLCYount, Hyde & Barbour, PC

The above list was compiled Sept. 15, 2011. Check www.vscpa.com/100Percent for a complete, up-to-date list. n

VSCPA CPE & NETWORKINGVisit the CPE Catalog at www.vscpa.com for the latest VSCPA seminars, conferences, webcasts, networking event and more!

>> GET IT ALL ONLINE

Email [email protected] if you have exciting news to share. The VSCPA prints news of members’ awards, appointments and promotions as well as new hire and job change announcements. Firm news, as well as mergers and acquisitions, is also welcome.

>> WE WANT TO HEAR ABOUT IT!

VSCPA news

From the White House to the world

VSCPA educational foundation

The pool of accounting students at Virginia colleges and universities isn’t short on overachievers. But few students have had experiences quite like Johnny Amin.

Amin, a senior at George Mason University and the recipient of the VSCPA Educational Foundation’s Murray, Jonson, White & Associates Scholarship, spent the

first semester of his junior year as an intern in the Office of the President at the White House. Amin’s mother had worked for the government as an accountant, but this was his first firsthand experience with government work.

“I still am very proud, and kind of amazed, to say that my first government internship was at the White House,” he said. “Not many Americans can say they have even stepped foot inside such a historical landmark. I definitely enjoyed working with real numbers and seeing how they were applied.

“The White House is small, so you get to go from one end where you pull a transaction and see it implemented in a couple of days. This internship taught me how to apply many concepts I learned in my accounting classes to the real world. It was an excellent stepping stone into future accounting related positions as I was able to move about many sectors involved within the Office of the Chief Financial Officer during the duration of my internship.”

Amin never got to meet President Obama, although he met the first family’s dog, Bo. He has stayed in government since that internship ended, spending the last nine months working for the U.S. Treasury Department on Congressional inquiry reports and Circular A-123 audits on internal controls and assurance. Those experiences aren’t the only memorable times in his young life.

He has studied abroad in China on a U.S. Department of Education scholarship and organized charity projects in Kenya and Tanzania. He recently traveled to Europe as well and credits those trips with helping him gain perspective and ideas for future employment.

“I can apply many cultural and societal experiences to the work place as to gain a better understanding of where people come from and how to approach certain workplace activities and situations,” he said. “Traveling is a continual learning perspective, and each new country provides not only memories, but experiences to build on communication and leadership skills.”

Amin hopes to use those skills to continue with government work after graduation. He hopes to audit embassies for the State Department or banks for the Office of the Comptroller of the Currency, following in the footsteps of his mother, Susan Dailey, an assistant inspector general for a government agency. Through her work and his internships, he’s gotten a firsthand look at how accountants help keep governments honest.

“[Accountants] bring a little more transparency to government,” he said. “They provide accountability — when you see government waste, government spending, there should be an accountant there, asking questions.” n


You can continue your loyal support of the VSCPA Educational Foundation and leave a legacy for future Virginia CPAs by including the Foundation in your will or estate plans.

The most common form of deferred or planned giving is a charitable bequest. A will or living trust is an extremely personal matter and should be prepared with an attorney. If you are interested in helping protect the future of the profession through planned giving, contact the Foundation at (800) 733-8272 or [email protected] for more information.

>> PLANNED GIVING: LEAVING A LEGACY

Help with our annual efforts!The Foundation continues to work toward its Annual Fund goal of raising $60,400 in unrestricted funds and $59,850 in restricted funds. Gifts to the Annual Fund support important accounting scholarships and grants and help the Foundation cover its annual operating expenses.

The Foundation is also seeking contributions to the Austin M. Cloyd, Matthew G. Gwaltney and Maxine S. Turner Doctoral Scholarship Fund, which honors those three former Virginia Tech accounting students and is awarded to a doctoral candidate at the school each year.

To donate to the Annual Fund or any other VSCPA scholarship funds, visit www.VSCPAFoundation.com. n

FOUNDATION ANNUAL REPORT >>

The fruits of your donations

The 2010–2011 VSCPA Educational Foundation Annual Report is now available online. The report details the Foundation’s efforts in the 2010–2011 membership year, including scholarship and grant recipients, and also reports on the Foundation’s audited financial

statements. Learn about some current beneficiaries of the Foundation’s scholarships and grants and catch up with a former recipient who is now a donor. Visit www.vscpa.com/2011FoundationReport to learn more or scan the QR code with your smartphone. n

VSCPA educational foundation


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GROWTH, SALES & ACQUISITIONS

Northern Virginia CPA with small practice who teaches advanced tax classes in the fall and early winter desires to lease an office from established CPA firm. Possible future association. Respond to PO Box 2851, Fairfax VA 22031.

OFFICE SPACE CPA Firm in Oyster Point Area of Newport News seeks CPA to sublease office space. Reply in confidence to VSCPA CC # 84, 4309 Cox Road, Glen Allen, VA 23060 or [email protected].

CPA firm in Old Town Alexandria seeks growth through acquisition, merger or assisting someone in retirement or semi-retirement. Reply in confidence to VSCPA CC # 83, 4309 Cox Road, Glen Allen, VA 23060 or [email protected].


Winchester, VA — $95,000Great home based CPA practice. This quality block of accounts would be a great start or addition for a CPA. Clients are very loyal and accustomed to high quality service. Cash flow to owner is exceptional and fees are very good. This is the place to see some of our country’s most amazing history. Southwest VA — $140,000Blue Ridge Mountains CPA firm that serves clients in all kinds of industries. Clients are accustomed to exceptional service. Firm focuses on tax, payroll and bookkeeping. There are no reviews or audits. Firm caters to individuals with small businesses. Employees are very skilled and well liked by clients. They will help make a smooth transition.

SALE/MERGER OPPORTUNITYWell established and diversified small Northern VA CPA firm seeks sale/merger opportunities. Practice clientele includes reviews, compilations, write-up services and three nonprofit audits. The firm has a significant individual income tax practice as well as a variety of business tax returns. The firm enjoys a long-standing on-site and unqualified or pass peer review history. The firm is that of a sole practitioner seeking retirement or semi-retirement over the next two years. Growth and referral opportunities are excellent. Reply in confidence to VSCPA CC # 74, 4309 Cox Road, Glen Allen, VA 23060 or [email protected].

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MARY ANNE MCELMURRAY, CPA >>

A daily tax email sparked Mary Anne’s curious mind back in 2006 — and a war against tax patents began.

A SHARP EYE >>

Two minutes with Mary Anne McElmurray, CPAAs tax director at the Roanoke and New River Valley offices of Brown, Edwards & Co., McElmurray first discovered a problem that bothered her in a daily tax email in 2006. She read that the U.S. Patent and Trademark Office had issued patents on tax strategies and had more applications pending, and the more she thought about it, the more the idea bothered her.

McElmurray got in touch with the VSCPA in 2006 and contacted her Congressmen, Rep. Bob Goodlatte, and Sens. Mark Warner and Jim Webb. Spurred by McElmurray, the VSCPA — in concert with the American Institute of CPAs (AICPA) and various other state societies — pushed for a ban on tax strategy patents for the next few years, with several bills dying at various stages in the House or Senate.

See page 28 for more on the bill that will end tax strategy patents.

A DIFFERENT CAREER PATH…

McElmurray didn’t envision herself as an accountant coming out of college. She started her professional career in real estate after graduating from the University of Virginia in 1979 and only switched professions after thinking back on fond memories of her college accounting classes.

MAKING A DIFFERENCE… McElmurray found a chance to affect the community at Brown Edwards in her

native Roanoke. “You hear this all the time when you’re growing up in public accounting, but until you breathe it, you don’t understand it,” she said. “We listen to what people’s business issues are, and they might not even know what they need or what they’re really asking. But if we look at an issue and reach into our toolbox for things that can solve that issue, that’s what we do. We are not tax preparers, we’re problem solvers.” n

I AM the vscpa


“A CPA in the trenches read something and was incredulous, and that CPA spurred the system and something got done. It shows that if you make a valiant attempt, sometimes things do happen. I was very, very pleased with the result.”

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