Here is a copy of an email distributed by the Virginia Interfaith Center for Public Policy.
***
Speak Up and Help Keep Predatory Lenders in check in Chesterfield County!
Many of you have seen the story
about the hearing on Chesterfield’s proposed zoning ordinance up for
public hearing this week. On Wednesday our county leaders will be
considering whether to impose some of the most
strict local ordinance measures on predatory lenders or leave them take
advantage of the most vulnerable, bring down property values, and
encourage crime in the process. Please help put in place strict measures
on predatory lenders at this critical local level!
All eyes
are on Chesterfield as other localities wish to put in place similar
restrictions, but want to know that the public is behind them. Show your
support for these restrictions
by coming out at 6:30pm on Wednesday January 9th to tell the Board of
Supervisors that these restrictions are not only necessary, but that you
expect them to put them in place because this is everything in their
power to restrict predatory businesses that push families into
bankruptcy and foreclosure, leaving neighborhoods less safe and without
substantial business investment.
What: Public Hearing on the Proposed Regulation to Alternative Financial Institutions
When: Wednesday January 9th at 6:30PM. This policy is the only item on
the public hearing agenda, so we need as many folks as possible to
speak! I will be there with fact sheets at 6PM and will be happy to
answer additional questions as you prepare to speak.
Where: Public Meeting Room, 10001 Iron Bridge Road, Chesterfield, VA 23832
If you can’t come out, please consider emailing or calling your board
of supervisor member before the public hearing. Click here to see who your supervisor is; and then click here
to find their contact information. Ask your Supervisor to vote YES on
the proposal related to Alternative Financial Institutions.
***
As are all my posts to my blog, I alone am responsible for the content of this one. It should clear to the most casual reader that I speak for myself in these posts, not for anyone else, not for any organization or entity whether I'm a member of that organization or not.
Tuesday, January 8, 2013
Wednesday, January 2, 2013
Individual Tax Provisions of the American Taxpayer Relief Act of 2012
Here are some of the tax provisions of the ATR which affect individuals.
Permanent Provisions
Alternative Minimum Tax fix - The higher exclusion amount that has been effect for several years was restored for tax year 2012 and made permanent. Starting in 2013, the exclusion amount will increase as the Consumer Price Index (CPI) increases.
Bush era tax brackets (limited) - For married couples with income* of $450,000 or less, the maximum tax bracket continues to be 35%. For married couples making more in 2013, the top bracket is now 39.6%. After 2013, the threshold amount is indexed to changes in the CPI. (For heads of household, single taxpayers and married taxpayers filing separate tax returns, the threshold amounts are $425,000, $400,000 and $225,000 respectively.)
Phase out of personal exemptions and itemized deductions eliminated - For married couples with income of $300,000 or less, reduction in personal exemptions and itemized deductions is permanently eliminated. Again, the threshold amount is indexed to changes in the CPI. (For heads of household, single taxpayers and married taxpayers filing separate tax returns, the threshold amounts are $275000, $250,000 and $150,000 respectively.)
Estate Tax modified - The maximum estate tax rate is set at 40%. The exclusion amount for an estate is $5,000,000 in 2012 and indexed to the CPI beginning in 2013.
15% maximum tax rate on long term capital gains and qualified dividends (limited) - The maximum tax rate for these income items goes to 20% for taxpayers to the extent they have income in the 39.6% bracket.
"Marriage Penalty" Relief - The provisions providing relief for married couples with similar amounts of income, including standard deductions and tax brackets are made permanent. Note that about one third of married couples enjoyed a "marriage bonus" even without these provisions and another third had no significant penalty or bonus.
Expanded Coverdell Education Savings Accounts - Maximum annual contribution of $2,000 made permanent. Use of distributions to pay K-12 costs made permanent.
Employer-provided Educational Assistance - This provision, which allows employers to reimburse up to $5,250 per year of an employee's qualified education costs with the employer getting a tax deduction and the employee having no increase in taxable income, is made permanent.
2001 Modifications of Child Tax Credit - The $1,000 credit amount is made permanent. Expansion of refundability is made permanent.
Extenders
2003 Modifications of Child Tax Credit - Even greater expansion of refundability of this credit is extended five years through December 31, 2017.
American Opportunity Tax Credit - This education credit is extended five years to December 31, 2017.
Deduction of qualified tuition expenses - The above-the-line deduction for tuition is extended to December 31, 2013. This benefit phases out for higher income levels. It provides a deduction whether the taxpayer itemizes or not.
Deduction for certain expenses of elementary and secondary school teachers - The provision allowing classroom teachers to deduct above-the-line up to $250 of out of pocket costs for classroom supplies is extended to December 31, 2013. ("Above-the-line" means teachers get the deduction whether they itemize or not.)
Mortgage debt forgiveness - The provision allowing up to $2,000,000 of mortgage debt forgiveness to be excluded from taxation is extended to December 31, 2013.
Mortgage insurance deduction - The deductibility of mortgage insurance premiums as if they were mortgage interest is extended to December 31, 2013.
Option to deduct state/local sales taxes instead of income taxes - Of benefit mainly to taxpayers living in state with no individual income tax, the provisions has been extended to December 31, 2013.
Tax-free distributions from individual retirement plans for charitable purposes - This provision is of benefit to taxpayers who would otherwise not itemize their deductions and to taxpayers would otherwise be subject to phase-out of other tax benefits due to higher adjusted gross income. It has been extended to December 31, 2013.
____________
There are other less commonly useful individual provisions and a many business tax provisions in the bill.
Permanent Provisions
Alternative Minimum Tax fix - The higher exclusion amount that has been effect for several years was restored for tax year 2012 and made permanent. Starting in 2013, the exclusion amount will increase as the Consumer Price Index (CPI) increases.
Bush era tax brackets (limited) - For married couples with income* of $450,000 or less, the maximum tax bracket continues to be 35%. For married couples making more in 2013, the top bracket is now 39.6%. After 2013, the threshold amount is indexed to changes in the CPI. (For heads of household, single taxpayers and married taxpayers filing separate tax returns, the threshold amounts are $425,000, $400,000 and $225,000 respectively.)
Phase out of personal exemptions and itemized deductions eliminated - For married couples with income of $300,000 or less, reduction in personal exemptions and itemized deductions is permanently eliminated. Again, the threshold amount is indexed to changes in the CPI. (For heads of household, single taxpayers and married taxpayers filing separate tax returns, the threshold amounts are $275000, $250,000 and $150,000 respectively.)
Estate Tax modified - The maximum estate tax rate is set at 40%. The exclusion amount for an estate is $5,000,000 in 2012 and indexed to the CPI beginning in 2013.
15% maximum tax rate on long term capital gains and qualified dividends (limited) - The maximum tax rate for these income items goes to 20% for taxpayers to the extent they have income in the 39.6% bracket.
"Marriage Penalty" Relief - The provisions providing relief for married couples with similar amounts of income, including standard deductions and tax brackets are made permanent. Note that about one third of married couples enjoyed a "marriage bonus" even without these provisions and another third had no significant penalty or bonus.
Expanded Coverdell Education Savings Accounts - Maximum annual contribution of $2,000 made permanent. Use of distributions to pay K-12 costs made permanent.
Employer-provided Educational Assistance - This provision, which allows employers to reimburse up to $5,250 per year of an employee's qualified education costs with the employer getting a tax deduction and the employee having no increase in taxable income, is made permanent.
2001 Modifications of Child Tax Credit - The $1,000 credit amount is made permanent. Expansion of refundability is made permanent.
Extenders
2003 Modifications of Child Tax Credit - Even greater expansion of refundability of this credit is extended five years through December 31, 2017.
American Opportunity Tax Credit - This education credit is extended five years to December 31, 2017.
Deduction of qualified tuition expenses - The above-the-line deduction for tuition is extended to December 31, 2013. This benefit phases out for higher income levels. It provides a deduction whether the taxpayer itemizes or not.
Deduction for certain expenses of elementary and secondary school teachers - The provision allowing classroom teachers to deduct above-the-line up to $250 of out of pocket costs for classroom supplies is extended to December 31, 2013. ("Above-the-line" means teachers get the deduction whether they itemize or not.)
Mortgage debt forgiveness - The provision allowing up to $2,000,000 of mortgage debt forgiveness to be excluded from taxation is extended to December 31, 2013.
Mortgage insurance deduction - The deductibility of mortgage insurance premiums as if they were mortgage interest is extended to December 31, 2013.
Option to deduct state/local sales taxes instead of income taxes - Of benefit mainly to taxpayers living in state with no individual income tax, the provisions has been extended to December 31, 2013.
Tax-free distributions from individual retirement plans for charitable purposes - This provision is of benefit to taxpayers who would otherwise not itemize their deductions and to taxpayers would otherwise be subject to phase-out of other tax benefits due to higher adjusted gross income. It has been extended to December 31, 2013.
____________
There are other less commonly useful individual provisions and a many business tax provisions in the bill.
Thursday, December 20, 2012
Gun Control
People with children in their homes are acquiring guns at
record rates, supposedly to protect their homes and children. What those people
refuse to acknowledge is the chances of their children dying before maturity
increase markedly when guns are in their homes. Certainly, the chances of the
children dying of gunshot wounds goes through the roof. In each of 2008 and 2009 236 children died in
the United States from gunshots. That’s a two year total of 472 small children.
In 2008, 28 of those deaths were classified as accidental and in 2009, 33. [http://www.childrensdefense.org/child-research-data-publications/data/protect-children-not-guns-report-2009.html]
Claims by parents that they have educated their children to
leave the family arsenal alone are so much horse manure. Almost every child who has shot him/herself or
a playmate had been strictly instructed that guns were not toys, guns were to
be left alone, adults should be called if a gun were discovered, etc. etc. Kids
don't follow the rules. Kids believe themselves to be invulnerable. Kids don't
understand the permanency of death.
Perhaps worse are suggestions to arm school teachers. Cops spend hours every month renewing their
training, practicing, running scenarios and they still occasionally shoot the wrong
person. Anyone who thinks armed, half-trained school teachers will increase
safety in the schools is a lunatic or a moron.
Wednesday, July 25, 2012
Penn State and the NCAA
The National Collegiate Athletic Association (NCAA) has hammered Penn State and hammered hard. A $60,000,000 fine (money to be used in child abuse programs NOT affiliated with Penn State) and the vacating of the 112 Penn State victories that occurred after Joe Paterno learned of Sandusky's actions led the list. The sanctions generating the most controversy are a four year ban on participating in post-season bowl games or appearing on TV and a reduction in scholarships.
In his column in yesterday's Richmond Times-Dispatch, Paul Woody argues that those latter two punishments are too heavy. In a nutshell, Woody argues that the combination will consign Penn State's football program to second class status for much longer than the ban. As he noted, it is clear recruiting quality athletes will be, at best, a challenge. The best high school players will have pro football aspirations and those young men are not likely to give serious consideration to a program with zero post-season play or TV exposure. Even good players who aren't particularly hopeful of a professional football career will prefer programs with post-season hopes and TV coverage. Add to that the NCAA's concurrent ruling that current Penn State players can transfer to another school and play this fall (instead of waiting a year as is the norm) and the future looks very bleak for the Nittany Lions.
I almost always agree with Paul Woody who makes a good case on this issue. This time, however, I disagree with him.
The sanctions imposed by the NCAA have two purposes. One is to punish the wrong doers. Among the wrong doers are the Penn State board of trustees. They need a long lasting reminder of the costs incurred when they fail to meet their responsibilities. (The new president, vice-president, athletic director and football coach need that reminder, too, although the violations of human decency were not theirs.)
The other is to set an example for other colleges and universities that currently impose no meaningful limits on or oversight of their football or basketball programs. Many of the colleges and universities that allow too much power to athletics will ignore the example. But perhaps the academic leaders of one or two or three will see themselves when they look at Graham Spanier (former Penn State president) and decide to make changes. Heck, maybe even an AD will look at Tim Curley (former athletic director) and decide changes need to be made. Miracles happen.
To his credit, Paul Woody didn't offer a general whine lamenting the suffering of innocent people brought about by the NCAA decision. He offered a cogent argument that a specific likely outcome was not an appropriate punishment given the negative long term impact on the Penn State football program that will result and the limited impact on the specific five individual wrong doers. Others, however, have complained mostly (sometimes only) about the innocent students, the innocent players, the innocent faculty, even the innocent alumni who will suffer because their beloved Penn State football program will suffer. That alone isn't a valid reason for not doing justice.
The only question is whether the NCAA decision meted out justice. Paul Woody thinks is did not. I think it did.
In his column in yesterday's Richmond Times-Dispatch, Paul Woody argues that those latter two punishments are too heavy. In a nutshell, Woody argues that the combination will consign Penn State's football program to second class status for much longer than the ban. As he noted, it is clear recruiting quality athletes will be, at best, a challenge. The best high school players will have pro football aspirations and those young men are not likely to give serious consideration to a program with zero post-season play or TV exposure. Even good players who aren't particularly hopeful of a professional football career will prefer programs with post-season hopes and TV coverage. Add to that the NCAA's concurrent ruling that current Penn State players can transfer to another school and play this fall (instead of waiting a year as is the norm) and the future looks very bleak for the Nittany Lions.
I almost always agree with Paul Woody who makes a good case on this issue. This time, however, I disagree with him.
The sanctions imposed by the NCAA have two purposes. One is to punish the wrong doers. Among the wrong doers are the Penn State board of trustees. They need a long lasting reminder of the costs incurred when they fail to meet their responsibilities. (The new president, vice-president, athletic director and football coach need that reminder, too, although the violations of human decency were not theirs.)
The other is to set an example for other colleges and universities that currently impose no meaningful limits on or oversight of their football or basketball programs. Many of the colleges and universities that allow too much power to athletics will ignore the example. But perhaps the academic leaders of one or two or three will see themselves when they look at Graham Spanier (former Penn State president) and decide to make changes. Heck, maybe even an AD will look at Tim Curley (former athletic director) and decide changes need to be made. Miracles happen.
To his credit, Paul Woody didn't offer a general whine lamenting the suffering of innocent people brought about by the NCAA decision. He offered a cogent argument that a specific likely outcome was not an appropriate punishment given the negative long term impact on the Penn State football program that will result and the limited impact on the specific five individual wrong doers. Others, however, have complained mostly (sometimes only) about the innocent students, the innocent players, the innocent faculty, even the innocent alumni who will suffer because their beloved Penn State football program will suffer. That alone isn't a valid reason for not doing justice.
The only question is whether the NCAA decision meted out justice. Paul Woody thinks is did not. I think it did.
Thursday, July 19, 2012
"Alternative" Financial Institutions
"Alternative Financial Institution" is an
unfortunate choice of terms because in some contexts it means useful
organizations such as Community Development Financial Institutions. In the context of this post, however, the term
is better viewed as a synonym for vulture. In an editorial on July 17th,
the Virginian-Pilot said this: “If
predatory lenders had a trade publication – say, “Usury Today” – they’d
undoubtedly rank Virginia near the top in annual roundups of the best places in
the nation to do business.”
These institutions (vultures, predatory lenders, or whatever
other pejorative you wish to use) include pay day lenders and short-term car
title lenders both of which, in my opinion, exist to take advantage of people
who are down and out. In Virginia, a car title lender is restricted, if you can
call it a restriction, to charging not more than 22% per MONTH. That’s right,
these people (for want of a better family rated term) can charge 22% per month. The law, in its infinite mercy (recognize the
sarcasm?), does not allow compounding so 22% per month is 264% per year. Virginia law allows that
highest rate on the first $700 borrowed. Interest on the next $700 is “only”
18% per month. Above $1,400, a real bargain rate kicks in, 15% per month. Another crumb offered by the law -- up front
fees are limited actual costs of
recording a lien on the motor vehicle.
Tuesday afternoon (July 17) the Chesterfield County Planning
Commission, of which I am a member, heard a staff presentation of a proposed
ordinance to regulate where in the county alternative financial institutions
might be located along with other restrictions.
In a private conversation with me, one attorney noted the proposal would
allow these operations in only 3 locations in the county. My unspoken thought
was, “that many?” I let staff, including the assistant county attorney assigned
to advise the Planning Commission, know that I want an ordinance as restrictive as
possible, given limits placed on the county by state law and judicial precedence.
I clearly expressed my opinion of these
operations during the work session when I said, “They take people who are in a
hole (and) instead of handing them a ladder, they hand them a shovel.” The
Richmond Times-Dispatch has as article today reporting on this part of the
Commission’s meeting.
For more information, see this earlier Pilot Online article headlined, “New data
shows car title loans big business in Va.”
The above article reports that
repossession rates are about 6.5% of loans made resulted in repossession of the
motor vehicle (8,378 repos out of 128,500 loans). However, the article also reports
105,542 different individuals took out those 128,500 loans making the repo rate
per individual borrower be over 7.9%. Repossession rates on auto loans financed
by traditional means (banks, credit unions, new car dealers) don't seem to be readily available although using rough numbers and reasonable assumptions, that rate appears to be not more than the 3% to 4% range.
As always, comments are welcome.
Edited on July 24 to provide a working link to the news article, “New data shows car title loans big business in Va.”
Edited on July 24 to provide a working link to the news article, “New data shows car title loans big business in Va.”
Friday, June 29, 2012
AICPA - more
When I made my post, "American Institute of Certified Public Accountants," I was unaware of this article, "CGMA ploy brings Cognitors back as CoGMAtors; is AICPA 2.0 next?" which appeared March 1, 2012 on the Accounting Today web site.
The authors of this article clearly and succinctly express my views and concerns on this issue. Unfortunately, my agreement extends to their assertion, "Do not expect the Elite to repent and resign, no matter how embarrassing the situation. They are entrenched and got there by wittingly or unwittingly sacrificing some or all of their self-respect. Surely they would deny it, but their actions reflect these three premises: The institute exists for their benefit, they deserve to be on top, and they can do no wrong."
I also agree with this suggestion, "Do not resign your AICPA membership. Although you may be thoroughly repelled, even disgusted, the institute needs as many principled members as possible to vote this scheme down and provide real leadership." Unless a critical mass of caring, concerned AICPA members come together to restore the focus of that organization to serving its CPA membership and the profession of public accounting, nothing useful will be accomplished. Bailing out of the AICPA, as desirable as that may be, will do nothing to slow the "Elite's" devaluation of Certified Public Accountant as a meaningful professional certification. In fact, CPAs who are not members of the AICPA should seriously consider joining and adding their voice to those who oppose the course being taken by the current leadership.
The authors of this article clearly and succinctly express my views and concerns on this issue. Unfortunately, my agreement extends to their assertion, "Do not expect the Elite to repent and resign, no matter how embarrassing the situation. They are entrenched and got there by wittingly or unwittingly sacrificing some or all of their self-respect. Surely they would deny it, but their actions reflect these three premises: The institute exists for their benefit, they deserve to be on top, and they can do no wrong."
I also agree with this suggestion, "Do not resign your AICPA membership. Although you may be thoroughly repelled, even disgusted, the institute needs as many principled members as possible to vote this scheme down and provide real leadership." Unless a critical mass of caring, concerned AICPA members come together to restore the focus of that organization to serving its CPA membership and the profession of public accounting, nothing useful will be accomplished. Bailing out of the AICPA, as desirable as that may be, will do nothing to slow the "Elite's" devaluation of Certified Public Accountant as a meaningful professional certification. In fact, CPAs who are not members of the AICPA should seriously consider joining and adding their voice to those who oppose the course being taken by the current leadership.
Thursday, June 28, 2012
Here's a radical suggestion.
I suggest, after seeing a YouTube video of a woman being bullied, that people who want "to do something" get out their check books and donate money to the nearest shelter for abused women.
Just sayin'.
Just sayin'.
Wednesday, June 20, 2012
Faculty and Boards of Visitors
One of the great myths of public higher education in Virginia is held by the faculty. They think they make the final decision on anything. The faculty have input on a lot of decisions and sometimes that input is given significant weight by the actual decision makers, the Board of Visitors. One of the things the faculty don’t get to do is decide whether or not the university president is fired. Even though they don’t have final decision authority, faculty members are a valuable and motivated resource to use in making decisions about the mission of a university and how best to achieve that mission.
Another great myth of public higher education in Virginia is held by the Board of Visitors. They think they don't have to worry about faculty views and concerns unless it is convenient to do so. They think the decision style they use running their businesses should be used in their roles of being the final decision authority of their respective colleges and universities. Too many of them believe that once they’ve made a decision, such as coercing a president into resigning, that the rest of the organization should just quietly deal with it and move on. They aren’t used to having their decisions challenged, particularly in public, by those beneath them in the organizational chart.
At the University of Virginia, the Board of Visitors, particularly the rector and vice-rector (fancy academic words for chairman and vice-chairman), screwed up big time. Those two individuals decided the UVA president needed to go so she’s gone. Maybe they did it the way they did in a misguided effort to minimize public controversy; if so, they really do not understand the academic environment or the deep emotional investment faculty, along with staff and students, have in the well-being of their institution.
Maybe rector Helen Dragas and former vice-rector Mark Kington were bluffing when they told president Teresa Sullivan they had the votes to fire her or, maybe they weren’t. The way the entire board fell into line when they finally all got together, it seems they weren’t bluffing. Personally, I wish she had forced a meeting with the entire board before giving up to be absolutely sure the votes were there to force her out. Perhaps she didn’t do that because she realized this Board of Visitors was just never going to get it, was never going to understand the differences between running a first class university and running a business.
Complaints by Dragas that Sullivan wasn’t moving fast enough to make changes supports my belief that Dragas just does not understand that running a major university is not like running a business. Even though the faculty have no legal authority, only a fool would ignore them while making decisions affecting their professional lives and the university as a whole. Any competent change agent will tell you that the people affected by the change have to buy into it. The way you get that buy-in is to involve the affected people in the process from day one even if that involvement is only consultive. Sullivan did that in moving towards useful , successful change at UVA; that got her fired. Let me be clear. Sullivan was fired for using the correct process for bringing about effective, correct, desirable change at the University of Virginia. That process is slow but, any decision process other than absolute dictatorship is slower than a dictator prefers.
The timing of this action by Dragas and Kington does show some understanding of academe. They did it when the presence of faculty and students would be lowest. If that is how they selected the time, they learned that dedication and caring trump vacations and summer jobs.
Today’s issue of Charlottesville’s The Daily Progress reports that vice-rector Kington resigned right after the BOV appointed Carl Zeithaml (dean of the McIntire School of Commerce) as interim president. He didn’t actually admit he had screwed up but he at least recognizes that healing is needed at UVA.
A potential exodus of talented faculty may be starting. In the same article, The Daily Progress reports that William Wulf (AT&T Professor of Computer Science and University Professor) has resigned. Wulf is quoted as stating in his resignation letter, ”I do not wish to be associated with an institution being as badly run as the current UVA.” Note that few faculty members who can’t find another job will be able to do what Wulf did.
The ones who do leave will be the best and the brightest, the ones with the skill set that allows them options other than working for an organization they believe to be incompetently or unethically managed. I’m not saying everyone who stays at UVA couldn’t find another job. I am saying it takes a great deal of moral courage to do what Wulf did. Also, in a faculty as large as UVA’s there are, without doubt, those who will stay because they believe the Board of Visitors did the right thing even if in the wrong way. Others will remain because of a sense of duty to the university, either hoping they can help fix the problems or being resigned to going down with the ship.
There is one thing I am fairly certain of. Teresa Sullivan will not return as president of the University of Virginia without several more resignations by the Board of Visitors.
Monday, June 18, 2012
American Institute of Certified Public Accountants
I’m a member of the AICPA. I get really useful, relevant materials that greatly assist my practice of public accounting. I also get cheap insurance. So despite what I say below, I don’t believe the AICPA is all bad.
The AICPA's mission is to provide members with the resources, information and leadership that enable them to provide valuable services in the highest professional manner to benefit the public, employers and clients. In fulfilling its mission, the AICPA works with state CPA organizations and gives priority to those areas where public reliance on CPA skills is most significant.”
The mission statement used to be to provide CPAs with resources, etc. but no more. Since you do not have to be a licensed CPA to be a member of the AICPA it is not surprising that “CPAs” was changed to “members” in the first sentence . The last sentence of the current mission statement reads like an afterthought.
The “AICPA Values and Vision Statement” doesn’t mention CPAs at all. The first sentence reads, “The AICPA is the premier national professional association in the United States.” While that may be true, it used to read, “The AICPA is the premier national professional association in the United States of Certified Public Accountants.”
Over the past few years, a member of the AICPA could acquire another AICPA issued professional designation by claiming to have the required experience and paying a few hundred dollars. Part of the marketing campaign was to get in early so you wouldn’t have to take the exam which would become mandatory for the new designation in the near future. Examples include Certified Information Technology Professional (CITP) and Certified in Financial Forensics (CFF). With the newest “certification for dollars” (Chartered Global Management Accountant), people don’t even have to be AICPA members to get a few more letters to tack on behind their names.
Voting membership is now available to non-CPAs who have done everything (gotten the education, passed the exam, obtained the experience) but have never bothered to actually get licensed as CPAs. This is purely an effort to gain members and to increase revenue for the AICPA. It has nothing to do with serving what, so far, is still the core constituency of the AICPA, Certified Public Accountants.
I am not the only CPA member of the AICPA who believes the top management of the AICPA has forgotten its original mission, its primary reason for existing. The primary mission of the AICPA was and should be to help CPAs be better CPAs. Another important function was and should be to enhance and protect the CPA brand. I, for one, do not see "certification for dollars" sold by the major CPA professional organization as protecting the CPA brand or assisting CPAs in being better at what we do.
I'm not sure if I'm being cynical or just fatalistic when I ask when is the Institute going to put forth the idea of changing the organization's name to something like Global Institute of Accountants (GIA)? Since you no longer have to be a CPA to be a voting member, or even an accountant, it appears to me to be a real possibility.
If the AICPA were really concerned about the profession of being a CPA we would be seeing more focus on business ethics, as one example, than on growing our membership by adding non-CPAs to the rolls. As another example, if the AICPA were really concerned with enhancing the CPA brand then, the first, iron clad requirement for all these new certifications would be possession of an active CPA license. That latter used to be the case but the CGMA is the first exception.
So what do I recommend? First, the Virginia State Board of Accountancy should revise its rules so that only AICPA members who are licensed CPAs are allowed to use the phrase “Member of the AICPA” on their signage, business cards, advertising etc. A similar rule should be put in place for membership in other organizations using CPA or Certified Public Accountant in their names. Failure to prohibit such use could easily create the impression that those non-CPAs were licensed Certified Public Accountants.
Second, I suggest anyone seeking professional services use professional designations only as a first filter in making a choice of provider. If the AICPA will give you a credential simply because you say you have the necessary training and experience, then what are some other designations worth?
As I said in the first paragraph above, the AICPA is not all bad. In fact, it is a good organization of high value to CPAs. It should be noted that most of the useful work is done by volunteers and by AICPA staff who are well below the policy making level in the organization. I am concerned, however, that the Institute is heading down a path that will make it less useful to Certified Public Accountants. Its injudicious approach to membership requirements and manner of granting other certifications will make it less credible as an organization to government, business and the investing public.
The AICPA's mission is to provide members with the resources, information and leadership that enable them to provide valuable services in the highest professional manner to benefit the public, employers and clients. In fulfilling its mission, the AICPA works with state CPA organizations and gives priority to those areas where public reliance on CPA skills is most significant.”
The mission statement used to be to provide CPAs with resources, etc. but no more. Since you do not have to be a licensed CPA to be a member of the AICPA it is not surprising that “CPAs” was changed to “members” in the first sentence . The last sentence of the current mission statement reads like an afterthought.
The “AICPA Values and Vision Statement” doesn’t mention CPAs at all. The first sentence reads, “The AICPA is the premier national professional association in the United States.” While that may be true, it used to read, “The AICPA is the premier national professional association in the United States of Certified Public Accountants.”
Over the past few years, a member of the AICPA could acquire another AICPA issued professional designation by claiming to have the required experience and paying a few hundred dollars. Part of the marketing campaign was to get in early so you wouldn’t have to take the exam which would become mandatory for the new designation in the near future. Examples include Certified Information Technology Professional (CITP) and Certified in Financial Forensics (CFF). With the newest “certification for dollars” (Chartered Global Management Accountant), people don’t even have to be AICPA members to get a few more letters to tack on behind their names.
Voting membership is now available to non-CPAs who have done everything (gotten the education, passed the exam, obtained the experience) but have never bothered to actually get licensed as CPAs. This is purely an effort to gain members and to increase revenue for the AICPA. It has nothing to do with serving what, so far, is still the core constituency of the AICPA, Certified Public Accountants.
I am not the only CPA member of the AICPA who believes the top management of the AICPA has forgotten its original mission, its primary reason for existing. The primary mission of the AICPA was and should be to help CPAs be better CPAs. Another important function was and should be to enhance and protect the CPA brand. I, for one, do not see "certification for dollars" sold by the major CPA professional organization as protecting the CPA brand or assisting CPAs in being better at what we do.
I'm not sure if I'm being cynical or just fatalistic when I ask when is the Institute going to put forth the idea of changing the organization's name to something like Global Institute of Accountants (GIA)? Since you no longer have to be a CPA to be a voting member, or even an accountant, it appears to me to be a real possibility.
If the AICPA were really concerned about the profession of being a CPA we would be seeing more focus on business ethics, as one example, than on growing our membership by adding non-CPAs to the rolls. As another example, if the AICPA were really concerned with enhancing the CPA brand then, the first, iron clad requirement for all these new certifications would be possession of an active CPA license. That latter used to be the case but the CGMA is the first exception.
So what do I recommend? First, the Virginia State Board of Accountancy should revise its rules so that only AICPA members who are licensed CPAs are allowed to use the phrase “Member of the AICPA” on their signage, business cards, advertising etc. A similar rule should be put in place for membership in other organizations using CPA or Certified Public Accountant in their names. Failure to prohibit such use could easily create the impression that those non-CPAs were licensed Certified Public Accountants.
Second, I suggest anyone seeking professional services use professional designations only as a first filter in making a choice of provider. If the AICPA will give you a credential simply because you say you have the necessary training and experience, then what are some other designations worth?
As I said in the first paragraph above, the AICPA is not all bad. In fact, it is a good organization of high value to CPAs. It should be noted that most of the useful work is done by volunteers and by AICPA staff who are well below the policy making level in the organization. I am concerned, however, that the Institute is heading down a path that will make it less useful to Certified Public Accountants. Its injudicious approach to membership requirements and manner of granting other certifications will make it less credible as an organization to government, business and the investing public.
Friday, June 15, 2012
The Tolling of Interstate 95
In my role as a Chesterfield Planning Commission member I
was appointed, in January of this year, to the Richmond Area Metropolitan
Planning Organization (or RAMPO). RAMPO exists to allocate federal highway
money to specific projects in the Richmond area.
To do that, we need to know what highway projects are being
funded from other sources so we don't duplicate efforts and stuff like that.
Yesterday, we got an update on the tolling of I-95 proposed by Governor Bob
McDonnell back at the start of his term. VDOT is moving forward on that idea.
Their proposal is a single toll station in Sussex County north of Emporia
collecting from traffic travelling in both directions. The toll would be $4.00
each way ($12 for 18 wheelers). To reduce avoidance tactics, those leaving I-95 one or two exits before
the toll station in each direction would pay $2.00 and those entering I-95 one
or two on-ramps after the toll station would also pay $2.00. Thus, through travelers
would, in theory, still pay $4 (or drive on local roads for even more miles). This
plan is expected to generate $40 million per year.
There is a pot of federal money for maintenance of
Interstate highways. Virginia gets money from that pot but if a toll is put on
I-95, none of that Federal Interstate maintenance money can be spent on I-95.
We will still get all those dollars but they will have to be spent only on the
other Interstate highways in Virginia. So it appears as though the effect of
tolling I-95 will decrease the amount of maintenance done on I-95 by $10
million and increase the maintenance on other Virginia Interstates by
$50 million. That wouldn't be a bad deal except I-95 needs more maintenance, not less.
But, there's an out according to the VDOT person making the
presentation. Other federal highway money (he used bridge replacement as an
example) isn't restricted to a specific set of highways but is often restricted in other ways as to how it can be spent. Another Interstate's
maintenance activities could get a chunk of this $50 million being taken away from I-95 (say, $10 million
used to replace a bridge) and transfer over to I-95 a similar amount (say, $10
million of bridge replacement money).
This is all well and good as long as I-95 needs more bridge
replacement money than is currently planned to be spent on that highway. Well
then, the VDOT guy would say, transfer safety money instead or some other
specified use money to meet I-95's needs.
All well and good again as long as the restrictions on how
these other pots of federal highway money can be spent don't keep enough of those dollars
from being used on I-95.
In short, $50 million per year currently planned for use on other Virginia
highways will have to be spent on I-95. If that doesn't happen, the drivers
paying tolls on I-95 will be funding maintenance of other Interstates in
Virginia.
The VDOT proposal also calls for "open road
tolling." That is, drivers will be expected to have transponders in their
vehicles like EZ-Pass and to pay their tolls using that technology. As is the
case on 895 and the Powhite Parkway, photos will be taken of toll evader's
license plates and they will receive a bill in the mail. Guess for yourself how many
out-of-staters will respond favorably to that. (Don't forget, VDOT also wants
to add a $1.00 per month fee for having a transponder in your car.)
Finally, I'm not persuaded that tolling I-95 is worth the
costs. First, I find the projected toll revenues and operating costs to be
optimistic at best. Second, the costs imposed on people in Sussex county to
either pay $2 to $4 each way for local trips or to drive out of their way are
ignored. Those costs, measured in dollars may be low in the greater scheme of
things but they are significant to the people bearing those costs. Just ask
Brandermill/Wood Lake residents who pay around $8 per day in tolls just to
drive to and from work. (By the way, I don't whether people who live in
Brandermill or Woodlake and work in downtown Richmond to have much sympathy for
the potential plight of Sussex county commuters but, I expect those Chesterfield residents can guess the reactions of affected Sussex citizens.) Third,
the qualitative costs of having additional traffic on US 301, US 1 and other
local roads can't be measured in dollars so, even though they exist, those costs are ignored.
Public hearings haven't been scheduled yet but we're promised they will happen some day, real close to the time the application is due to the federal Department of Transportation.
For not much more information on tolling I-95, go to VDOT's Interstate 95 Corridor Improvement Program web page.
Friday, May 18, 2012
For those who would be Christian (or would behave like one)
Matthew 22: 36-39
36 “Teacher, which is the greatest commandment in the Law?”
37 Jesus replied: “‘Love the Lord your God with all your heart and with all your soul and with all your mind.’ 38 This is the first and greatest commandment. 39 And the second is like it: ‘Love your neighbor as yourself.
Luke 10: 25-37
25 On one occasion an expert in the law stood up to test Jesus. “Teacher,” he asked, “what must I do to inherit eternal life?”
26 “What is written in the Law?” he replied. “How do you read it?”
27 He answered, “‘Love the Lord your God with all your heart and with all your soul and with all your strength and with all your mind’; and, ‘Love your neighbor as yourself.’”
28 “You have answered correctly,” Jesus replied. “Do this and you will live.”
29 But he wanted to justify himself, so he asked Jesus, “And who is my neighbor?”
30 In reply Jesus said: “A man was going down from Jerusalem to Jericho, when he was attacked by robbers. They stripped him of his clothes, beat him and went away, leaving him half dead. 31 A priest happened to be going down the same road, and when he saw the man, he passed by on the other side. 32 So too, a Levite, when he came to the place and saw him, passed by on the other side. 33 But a Samaritan, as he traveled, came where the man was; and when he saw him, he took pity on him. 34 He went to him and bandaged his wounds, pouring on oil and wine. Then he put the man on his own donkey, brought him to an inn and took care of him. 35 The next day he took out two denarii and gave them to the innkeeper. ‘Look after him,’ he said, ‘and when I return, I will reimburse you for any extra expense you may have.’
36 “Which of these three do you think was a neighbor to the man who fell into the hands of robbers?”
37 The expert in the law replied, “The one who had mercy on him.”
Jesus told him, “Go and do likewise.”
36 “Teacher, which is the greatest commandment in the Law?”
37 Jesus replied: “‘Love the Lord your God with all your heart and with all your soul and with all your mind.’ 38 This is the first and greatest commandment. 39 And the second is like it: ‘Love your neighbor as yourself.
Luke 10: 25-37
25 On one occasion an expert in the law stood up to test Jesus. “Teacher,” he asked, “what must I do to inherit eternal life?”
26 “What is written in the Law?” he replied. “How do you read it?”
27 He answered, “‘Love the Lord your God with all your heart and with all your soul and with all your strength and with all your mind’; and, ‘Love your neighbor as yourself.’”
28 “You have answered correctly,” Jesus replied. “Do this and you will live.”
29 But he wanted to justify himself, so he asked Jesus, “And who is my neighbor?”
30 In reply Jesus said: “A man was going down from Jerusalem to Jericho, when he was attacked by robbers. They stripped him of his clothes, beat him and went away, leaving him half dead. 31 A priest happened to be going down the same road, and when he saw the man, he passed by on the other side. 32 So too, a Levite, when he came to the place and saw him, passed by on the other side. 33 But a Samaritan, as he traveled, came where the man was; and when he saw him, he took pity on him. 34 He went to him and bandaged his wounds, pouring on oil and wine. Then he put the man on his own donkey, brought him to an inn and took care of him. 35 The next day he took out two denarii and gave them to the innkeeper. ‘Look after him,’ he said, ‘and when I return, I will reimburse you for any extra expense you may have.’
36 “Which of these three do you think was a neighbor to the man who fell into the hands of robbers?”
37 The expert in the law replied, “The one who had mercy on him.”
Jesus told him, “Go and do likewise.”
Fairness and Equality
Michael Paul Williams' column in today's Richmond Times-Dispatch should be read by all reasonable people.
It is no surprise, though disappointing, that many of the arguments used by people like Robert G. Marshall to justify bigotry against gays were used by people like George Wallace to justify bigotry against Blacks.
The more things change, the more they stay the same.
It is no surprise, though disappointing, that many of the arguments used by people like Robert G. Marshall to justify bigotry against gays were used by people like George Wallace to justify bigotry against Blacks.
The more things change, the more they stay the same.
Sunday, April 29, 2012
Scorched Earth
A friend and I saw the play, Scorched Earth, at the Barksdale Theater (Willow Lawn) last night. It is a powerful and challenging production in many ways, not the least of which is the question of whether a mixed race baby, dead shortly after birth, can appropriately be buried in the cemetery of her white mother's church.
That isn't the only thought provoking moral question posed by this play. Based on author/playwright David Robbins' book of the same title, the audience is challenged to respond to conflicts of truth versus justice, forgiveness versus accountability and more.
Don't expect everything to be tied up in a neat little package with all the questions answered. During the play I said to myself more than once, "I didn't see that coming." Since then I've been asking myself, "what happens next in that town," and "did that character do the right thing?" During a Q&A with Robbins and some of the actors after the performance one audience member called out, "sequel" as these unanswered questions were being discussed.
The acting was superb. There's not a weak link in the cast. The set and lighting contributed greatly to the effectiveness of the performance. Director Steve Perigard helped the actors use Robbins' words to craft a great evening. A few ironic chuckles were generated during the show but this is definitely not a laugh-fest.
Scorched Earth is a joint production of the Barksdale and Theater IV and runs through May 20th. Show times and tickets are available here.
That isn't the only thought provoking moral question posed by this play. Based on author/playwright David Robbins' book of the same title, the audience is challenged to respond to conflicts of truth versus justice, forgiveness versus accountability and more.
Don't expect everything to be tied up in a neat little package with all the questions answered. During the play I said to myself more than once, "I didn't see that coming." Since then I've been asking myself, "what happens next in that town," and "did that character do the right thing?" During a Q&A with Robbins and some of the actors after the performance one audience member called out, "sequel" as these unanswered questions were being discussed.
The acting was superb. There's not a weak link in the cast. The set and lighting contributed greatly to the effectiveness of the performance. Director Steve Perigard helped the actors use Robbins' words to craft a great evening. A few ironic chuckles were generated during the show but this is definitely not a laugh-fest.
Scorched Earth is a joint production of the Barksdale and Theater IV and runs through May 20th. Show times and tickets are available here.
Tuesday, April 17, 2012
Tax Season and Tax Audits
Today marks the "official" end of busy season for most CPA firms and other tax professionals. Now all we have to do is deal with returns our clients agreed needed to be extended. Since those extensions are for six months, there will be another mini-busy season ending on October 15th.
Returns get extended for a number of reasons, most of them related to missing information that should be provided to our clients by partnerships, small business corporations (S-corps) and investment managers. Procrastination being what it is, many of those returns will not be completed until this autumn.
Another source of business for tax practitioners is IRS audits. Tax audits are most often handled by mail and are, reasonably enough, called correspondence audits. The IRS sends a letter to the taxpayer (called a CP2000 or 30-day letter) informing the taxpayer that he, she or they failed to include some income on their tax return of a recent year and assessing taxes, interest and penalty for that omission. The taxpayer has 30 days to respond. If the taxpayer doesn't respond, a 90-day letter is issued. At that point, the taxpayer has 90 days to resolve the issue with the IRS or to file a petition with the United States Tax Court.
Too many people respond by writing a check. If the amount is significant, don't do that. The amount the IRS wants is often more than the taxpayer owes. For example, suppose you bought some stock a few years ago and paid $3,000. In 2010, you sold that stock for $2,000 but forgot to report the sale on your tax return. When the IRS notices, they will send you a bill for back taxes on the full $2,000 as if it were ordinary income -- about $500 for most people plus a year's interest ($15) and penalties ($15 minimum, maybe another $100 for being negligent) for a total of as much as $630. However, instead of owing more taxes, this taxpayer is owed a refund for the missing $1,000 capital loss ($150 to $250 for most people). That's a swing of over $780 to $880. And, that is why, when the IRS says you owe more money, you should seriously consider hiring a tax professional (Certified Public Accountant or Enrolled Agent) to resolve the issue, particularly when you know there are unreported costs associated with that income you forgot to report.
Correspondence audits are sent out year round. More detailed audits tend to occur more often in the summer and fall when either the taxpayer is invited to the IRS office (an office audit) or the IRS visits the taxpayer (usually a business) at the taxpayer's location. In both cases, the taxpayer should engage the services of a tax professional to represent his or her interests.
Again, the IRS has ways of learning about income you may have omitted from your tax return. They don't have a way of determining the deductible costs you incurred creating that income. Do not automatically write a check but, also, do NOT ignore correspondence from the IRS. Deal with it and deal with it by the specified deadline.
Returns get extended for a number of reasons, most of them related to missing information that should be provided to our clients by partnerships, small business corporations (S-corps) and investment managers. Procrastination being what it is, many of those returns will not be completed until this autumn.
Another source of business for tax practitioners is IRS audits. Tax audits are most often handled by mail and are, reasonably enough, called correspondence audits. The IRS sends a letter to the taxpayer (called a CP2000 or 30-day letter) informing the taxpayer that he, she or they failed to include some income on their tax return of a recent year and assessing taxes, interest and penalty for that omission. The taxpayer has 30 days to respond. If the taxpayer doesn't respond, a 90-day letter is issued. At that point, the taxpayer has 90 days to resolve the issue with the IRS or to file a petition with the United States Tax Court.
Too many people respond by writing a check. If the amount is significant, don't do that. The amount the IRS wants is often more than the taxpayer owes. For example, suppose you bought some stock a few years ago and paid $3,000. In 2010, you sold that stock for $2,000 but forgot to report the sale on your tax return. When the IRS notices, they will send you a bill for back taxes on the full $2,000 as if it were ordinary income -- about $500 for most people plus a year's interest ($15) and penalties ($15 minimum, maybe another $100 for being negligent) for a total of as much as $630. However, instead of owing more taxes, this taxpayer is owed a refund for the missing $1,000 capital loss ($150 to $250 for most people). That's a swing of over $780 to $880. And, that is why, when the IRS says you owe more money, you should seriously consider hiring a tax professional (Certified Public Accountant or Enrolled Agent) to resolve the issue, particularly when you know there are unreported costs associated with that income you forgot to report.
Correspondence audits are sent out year round. More detailed audits tend to occur more often in the summer and fall when either the taxpayer is invited to the IRS office (an office audit) or the IRS visits the taxpayer (usually a business) at the taxpayer's location. In both cases, the taxpayer should engage the services of a tax professional to represent his or her interests.
Again, the IRS has ways of learning about income you may have omitted from your tax return. They don't have a way of determining the deductible costs you incurred creating that income. Do not automatically write a check but, also, do NOT ignore correspondence from the IRS. Deal with it and deal with it by the specified deadline.
Thursday, April 5, 2012
Audit Protection Racket
Someone might ask, "Hey, Bill, why don't you get into the audit protection racket?" Because it's a racket, I would reply.
On average, 3% or so of the tax returns filed in a year are audited. Averages are deceiving. If all your income is from W-2s, interest and dividends then your chances of being audited are probably immeasurably small (not counting those notifications by mail that you left out the interest reported on a 1099).
So what about these outfits offering "audit protection?" They claim for a low monthly fee that they will represent you if you're audited by the IRS. For example, one of them offers four plans, the 2nd lowest cost one being what they call their "Premium" plan. If you're audited, you get up to 20 hours of a professional's time to deal with the IRS on your behalf. To get that "protection," you pay $12.95 per month.
Let's do what accountant's do. Let's run the numbers. Let's assume that 100 people buy that "Premium" coverage which means the provider takes in $1295 per month or $15,540 per year. A generous assumption would be that 2 of those returns would be audited during the year. The audits I've handled required 4 or 5 hours of my time but let's assume the average here is 7 hours and the provider's hourly cost including direct overhead items is $300 per hour. That means $4,200 go out. Gross profit on the year from those 100 suc... er .. clients is over $11,000.
Each individual pays about $155 per year for "audit protection" (but see below). If the taxpayer passed on this deal and just hired a CPA or EA if and when he/she were actually audited, the cost would probably be less than $2,000 and often a lot less. You would have to be audited about every 12 years, about four times the average, to be money ahead on this deal.
Besides 20 hours of audit defense time and 60 minutes of telephone time, the "Premium" package also says you get $5,000 of "Audit Protection." What is that? I'll tell you what the seller wants you to think. They want you to think they will pay the first $5,000 of any balance due if you get audited. Don't think that because it is NOT true. If you dig into the membership agreement you learn that $5,000 is the maximum value of the services they will provide you if you're audited.
In general, the IRS has three years to audit a properly filed tax return. If you filed your 2008 tax return on or before the April 15th 2009 due date, the IRS has until April 17th of this year to initiate an audit (unless you failed to report a bunch of income in which case they have until April 15, 2015). For most situations, if your 2008 return was going to be audited you would have found out about it in 2010 or 2011 at the latest.
Here's another gotcha. The membership agreement defines "covered return" as "a tax return for a single tax year in which the member was active and in good standing with us and at the time of such Internal Revenue Service Audit the member was and is currently an active member in good standing." What does that mean if you joined up today? First, it means tax years occurring before you joined aren't covered. You didn't join in 2011 so 2011 and earlier years aren't covered. Second, even though 2012 would apparently be covered you have to maintain your membership until that year is actually audited or you're not covered after all. So, scratch that $155 above. It's really going to cost you about $310 to have 2012 covered and you probably won't be audited anyway.
There you have it. These guys are offering a better deal (for themselves) then selling extended warranties on electronic goods or running a casino.
One more thing, these audit protection outfits have a very poor track record of actually providing the promised services to their clients that are actually audited. You pay your money, you get audited, you inform your audit protection company, they do nothing, the IRS hasn't heard from you or anyone else and concludes you're a scofflaw, you pay the IRS even more than the original assessment, the racketeer goes on to the next victim.
Audit Reports on the IRS - the not perfect and the pretty bad
The Treasury Inspector General for Tax Administration (TIGTA) has issued two press releases dealing with IRS operations. The first, issued on April 3, is headlined, "IRS Computer Security Center Effective, Could Be Better." The problems with Computer Security Incident Response Center (CSIRC) include the "host-based intrusion detection system is not monitoring 34 percent of IRS servers, which puts the IRS network and data at risk." Overall, though, CSIRC is described as "effectively performing most of its responsibilities for preventing, detecting, and responding to computer security incidents." And, "The IRS agreed with the recommendations and corrective actions are planned or in process for five of the six recommendations." The press release is here and the audit report is here.
The 2nd press release, issued today, is not so favorable. "TIGTA Finds IRS Designated Payment Codes Inaccurate and Ineffective." The IRS is supposed to keep track of payments from tax payers in a manner that allows appropriate people within the IRS to later determine what a payment was for. This is important when determining what additional collection actions may (or may not) need to be taken. Designated Payment Codes (DPCs) are supposed to be used to provide that information when the payment is related to an IRS enforcement action. "TIGTA reviewed a statistical sample of 138 subsequent payments that posted to taxpayer balance due accounts. Auditors determined that 106 (77 percent) of the 138 subsequent payments were processed without the required DPC. In addition, 11 (34 percent) of the 32 subsequent payments that had a DPC were not accurate." 138 may not sound like a large sample but if it was randomly selected from even a very large population, then it probably gives a good picture of that population. Part of the problem is the IRS does not have DPCs for many payment types and the procedures for applying DPCs are inconsistant. The press release conclusion states, "TIGTA made five specific recommendations to encourage the IRS's more consistent and accurate use of DPCs. IRS management disagreed with TIGTA's findings and recommendations and said they plan to complete their own review of DPCs. TIGTA noted that the IRS has already completed an internal study and did not use its results due to concern over its reliability. The IRS took no further action except to initiate another study." The press release is here and the audit report is here.
There have been enough horror stories about computer systems being hacked into for people to understand threats implied in the April 3 press release. Not coding payments correctly may not be seen as that big a deal -- until you make a payment and the IRS says you didn't because they couldn't code it properly. Sure, the problem gets worked out eventually but not until you (or your accountant) have spent a lot of time proving you did what you said you did.
Taxpayers can maximize the chances of receiving proper credit for a payment by following the related instructions. Send the payment to the correct address. Include any required documentation. Indicate on the memo line of the check what the payment is for.
For what it's worth, this statement caught my eye. "... the IRS has already completed an internal study and did not use its results due to concern over its reliability. The IRS took no further action except to initiate another study." One definition off irrational behavior is doing the same thing over again and expecting a different outcome. I guess (or hope) the second study is being conducted differently from the first.
The 2nd press release, issued today, is not so favorable. "TIGTA Finds IRS Designated Payment Codes Inaccurate and Ineffective." The IRS is supposed to keep track of payments from tax payers in a manner that allows appropriate people within the IRS to later determine what a payment was for. This is important when determining what additional collection actions may (or may not) need to be taken. Designated Payment Codes (DPCs) are supposed to be used to provide that information when the payment is related to an IRS enforcement action. "TIGTA reviewed a statistical sample of 138 subsequent payments that posted to taxpayer balance due accounts. Auditors determined that 106 (77 percent) of the 138 subsequent payments were processed without the required DPC. In addition, 11 (34 percent) of the 32 subsequent payments that had a DPC were not accurate." 138 may not sound like a large sample but if it was randomly selected from even a very large population, then it probably gives a good picture of that population. Part of the problem is the IRS does not have DPCs for many payment types and the procedures for applying DPCs are inconsistant. The press release conclusion states, "TIGTA made five specific recommendations to encourage the IRS's more consistent and accurate use of DPCs. IRS management disagreed with TIGTA's findings and recommendations and said they plan to complete their own review of DPCs. TIGTA noted that the IRS has already completed an internal study and did not use its results due to concern over its reliability. The IRS took no further action except to initiate another study." The press release is here and the audit report is here.
There have been enough horror stories about computer systems being hacked into for people to understand threats implied in the April 3 press release. Not coding payments correctly may not be seen as that big a deal -- until you make a payment and the IRS says you didn't because they couldn't code it properly. Sure, the problem gets worked out eventually but not until you (or your accountant) have spent a lot of time proving you did what you said you did.
Taxpayers can maximize the chances of receiving proper credit for a payment by following the related instructions. Send the payment to the correct address. Include any required documentation. Indicate on the memo line of the check what the payment is for.
For what it's worth, this statement caught my eye. "... the IRS has already completed an internal study and did not use its results due to concern over its reliability. The IRS took no further action except to initiate another study." One definition off irrational behavior is doing the same thing over again and expecting a different outcome. I guess (or hope) the second study is being conducted differently from the first.
Wednesday, April 4, 2012
TaxMasters
The ads are typical and grossly misleading. "Settle your IRS debts for pennies on the dollar." Yeah, right, 98 pennies on the dollar.
A couple of weeks ago, one of the better known (advertising does work) of these outfits filed for bankruptcy, "just as it was preparing to head to court to defend itself from charges of deceptive practices leveled by the Texas attorney general." Now, the verdict is in. A Texas jury as decided that TaxMasters has to pay $195 million in restitution and civil penalties. It remains to be seen whether anyone will face criminal charges.
In fact, if you've been hit with an IRS assessment for back taxes, interest and penalties then you probably should engage a tax professional to represent you. For administrative appeals within the IRS (the usual first step) an Enrolled Agent (EA) or Certified Public Accountant (CPA) can provide the assistance you need. If you're going to court, then an attorney will be required.
Those IRS assessments are often wrong, at least in part, and a tax pro can help identify those errors. Even if the IRS is correct on the amount of taxes owed, it is still often possible to get penalties removed or reduced if your true story is good enough. In short, do not blindly assume the IRS is correct and send them a check. Get help FIRST.
There are plenty of local CPAs, EAs and tax attorneys who can help you if you have tax problems with the IRS. You do not need to go online to hire some outfit in Texas, Nevada, Tennessee or Kansas.
A couple of weeks ago, one of the better known (advertising does work) of these outfits filed for bankruptcy, "just as it was preparing to head to court to defend itself from charges of deceptive practices leveled by the Texas attorney general." Now, the verdict is in. A Texas jury as decided that TaxMasters has to pay $195 million in restitution and civil penalties. It remains to be seen whether anyone will face criminal charges.
In fact, if you've been hit with an IRS assessment for back taxes, interest and penalties then you probably should engage a tax professional to represent you. For administrative appeals within the IRS (the usual first step) an Enrolled Agent (EA) or Certified Public Accountant (CPA) can provide the assistance you need. If you're going to court, then an attorney will be required.
Those IRS assessments are often wrong, at least in part, and a tax pro can help identify those errors. Even if the IRS is correct on the amount of taxes owed, it is still often possible to get penalties removed or reduced if your true story is good enough. In short, do not blindly assume the IRS is correct and send them a check. Get help FIRST.
There are plenty of local CPAs, EAs and tax attorneys who can help you if you have tax problems with the IRS. You do not need to go online to hire some outfit in Texas, Nevada, Tennessee or Kansas.
Sports Quest
As you probably know by now, Dr. Steve Burton is now the former CEO of SportsQuest in Chesterfield County. The new CEO, Dudley Duncan, was selected by a new board of directors.
So far, the project has been a mixture of successes and failures. A series of soccer tournaments have had major positive impacts on the county economy, particularly restaurants and hotels in the immediate area. For example, a few days after one of the first week-end soccer events, an employee at Panera's on Brad McNeer Parkway reported that Saturday had been the busiest in the history of that location. Noteworthy is that interest has already been expressed by another sports/recreation business (RISE) in acquiring the soccer fields.
Not much else has gone right for SportsQuest. Unpaid bills are in 7 figures, law suits abound, and the state AG's office is in the mix.
My own view is the overall project will be a success. It may continue as a single operation or it may be in pieces but there will be an extensive presence of outdoor (for sure) and indoor (farther into the future) recreation on the current SportsQuest property.
Also in my view, Steve Burton is part of a group of entrepreneurs who can generate great ideas but often have difficulty with the implementation. In this case, I believe he tried to go too far, too fast. Hopefully, Dudley Duncan and the new board of directors will bring a more measured, considered pace as opportunities are identified and exploited.
News stories are here, here, and here.
So far, the project has been a mixture of successes and failures. A series of soccer tournaments have had major positive impacts on the county economy, particularly restaurants and hotels in the immediate area. For example, a few days after one of the first week-end soccer events, an employee at Panera's on Brad McNeer Parkway reported that Saturday had been the busiest in the history of that location. Noteworthy is that interest has already been expressed by another sports/recreation business (RISE) in acquiring the soccer fields.
Not much else has gone right for SportsQuest. Unpaid bills are in 7 figures, law suits abound, and the state AG's office is in the mix.
My own view is the overall project will be a success. It may continue as a single operation or it may be in pieces but there will be an extensive presence of outdoor (for sure) and indoor (farther into the future) recreation on the current SportsQuest property.
Also in my view, Steve Burton is part of a group of entrepreneurs who can generate great ideas but often have difficulty with the implementation. In this case, I believe he tried to go too far, too fast. Hopefully, Dudley Duncan and the new board of directors will bring a more measured, considered pace as opportunities are identified and exploited.
News stories are here, here, and here.
Monday, April 2, 2012
Deadline Approaching
April 17th is a deadline for more people than those of us who have to file a 2011 federal income tax return.
It is also the "drop dead" date for people who have not yet filed their 2008 tax return and are owed a refund. That's because the Internal Revenue Code (a law passed by Congress, not made up by the IRS) says that you have three years from the original due date to file a tax return and get any refund owed to you. The due date for 2008 federal tax returns was April 15, 2009 -- almost three years ago.
Suppose you haven't filed any returns for 2008, 2009 and 2010 and you're due a refund for 2008. The IRS might hold your check for 2008 until you file 2009 and 2010, just in case you owe for those years. They will also hold a refund if you have any other unpaid tax liabilities they know about or for things like back child support. Even then, filing your 2008 return could reduce those debts which is a good thing.
It is also the "drop dead" date for people who have not yet filed their 2008 tax return and are owed a refund. That's because the Internal Revenue Code (a law passed by Congress, not made up by the IRS) says that you have three years from the original due date to file a tax return and get any refund owed to you. The due date for 2008 federal tax returns was April 15, 2009 -- almost three years ago.
Suppose you haven't filed any returns for 2008, 2009 and 2010 and you're due a refund for 2008. The IRS might hold your check for 2008 until you file 2009 and 2010, just in case you owe for those years. They will also hold a refund if you have any other unpaid tax liabilities they know about or for things like back child support. Even then, filing your 2008 return could reduce those debts which is a good thing.
Thursday, March 29, 2012
Traffic Alert - Richmond Area
March 29 (Thursday)
I-95 north/south – From 8 p.m. Thursday through 6 a.m. Friday, I-95 will be reduced to one travel lane in each direction at Laburnum Avenue (mile marker 79) as crews replace the I-95 northbound bridge over Laburnum Avenue. I-95 north traffic will merge onto the southbound bridge. Both I-95 north and south traffic will use the southbound bridge to maneuver around the construction. Also, Boulevard drivers will be restricted from accessing the ramp to I-95 north during the nightly bridge replacements. Expect major delays along I-95. Use I-295, Route 288 and the Downtown Expressway (toll)/I-195 to bypass the construction.
From: http://www.virginiadot.org/projects/richmond/i-95_bridges.asp
I-95 north/south – From 8 p.m. Thursday through 6 a.m. Friday, I-95 will be reduced to one travel lane in each direction at Laburnum Avenue (mile marker 79) as crews replace the I-95 northbound bridge over Laburnum Avenue. I-95 north traffic will merge onto the southbound bridge. Both I-95 north and south traffic will use the southbound bridge to maneuver around the construction. Also, Boulevard drivers will be restricted from accessing the ramp to I-95 north during the nightly bridge replacements. Expect major delays along I-95. Use I-295, Route 288 and the Downtown Expressway (toll)/I-195 to bypass the construction.
From: http://www.virginiadot.org/projects/richmond/i-95_bridges.asp
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