March 2011 | accounting today 5
On Valentine’s Day, the Internal Revenue
Service at last began processing many of the
tax returns that had been delayed due to Congress’ late-in-the-year tax legislation, though
there were still some delays in processing
non-1040 business tax returns. Due to the
high volume of delayed returns, it asked some
private sector e-filers to stagger their submissions, to avoid overwhelming the system.
It was all part of a relatively rough start to
the tax season, which saw several snags for
preparers (see our Tax Season Update on page
1), and also for vendors: Intuit reported that
the delays had negatively affected its second
quarter revenue (though it still reported
growth for the period).
part of concerted effort by the government to
CRUNCHING THE NUMBERS
The IRS has selected its 2011 Taxpayer Ad
vocacy Panel members, naming 32 individuals to join some 70 returning members. For a
full list go to IRS.gov.
The agency also released a number of revenue rulings and notices, including Rev. Rul.
2011-5, which raises the interest rates for the
calendar quarter beginning April 1, 2011,
by one percentage point; Rev. Rul. 2011-6,
which provides various prescribed rates for
federal income tax purposes; Notice 2011-12
on determining the income tax withholding
on wages paid for services performed by nonresident alien employees; and Notice 2011-8,
which makes adjustments to the limitation
on housing expenses for purposes of Section
911 for specific locations.
Notice 2011-18 granted transitional relief
from the penalties imposed by recent information reporting requirements that apply to
stock issuers when an organizational action
affects the basis of the stock (Section 6054B).
The IRS will not impose penalties against issuers for missing the deadline to file a return
or failing to make the return publicly available, provided they do so by Jan. 17, 2012.
Finally, the agency reversed its position on
the deductibility of breast pumps as medical expenses, announcing that expenses for
breast pumps and other supplies that assist
lactation may be deducted as medical expenses or reimbursed under a flexible spending arrangement or similar plan.
A GOOD START
Tax prep chain Liberty Tax
Services reported strong year-
over-year increases through
Number of students in
Southern Connecticut State
20 0 5 10 15 20 25 30 0
YOUR PFP MARKET
Why Americans aren’t saving
DON’T KNOW WHERE TO START 29%
DON’T KNOW WHERE
TO GET HELP 18%
Source: ING Retirement Research Institute
CHANGES AT THE TOP
The Public Company Accounting Oversight
Board named Helen A. Munter as the new
director of its Division of Registration and
Inspections, the board’s largest operating division, which conducts periodic inspections
of hundreds of registered public accounting
firms. She succeeds George Diacont, who retired. Munter joined the board in 2004.
Jail sentence of a
tax preparer for help-
ing clients claim $3.6
million in fraudulent
PICK YOUR SALT CONTENT
February judgement against BDO USA by a Florida circuit court over its
audits of a bankrupt real estate firm
Percentage of Earned Income Tax Credit
payments that the IRS estimates are
issued improperly each year
States with the highest state and
average local sales
States with the lowest state and
average local sales tax
SOUTH DAKOTA 5.22%
After fours years at the helm of McGladrey
& Pullen, Dave Scudder will resign as managing partner effective April 30. The firm, which
operates in an alternative practice structure
with RSM McGladrey, has instituted a selection process for a successor, and Scudder will
assist in the transition at least through June
30. Scudder informed the board of his decision to leave in mid-February. He joined M&P
in 1986, and became a partner in 1995.
Source: The Tax Foundation
The House Ways and Means Committee ap
proved two separate pieces of legislation to
repeal the onerous 1099 reporting provisions
enacted in 2010 as part of the health care reform act, with Republicans and Democrats
sharply divided over how the bill would be
paid. Meanwhile in the Senate, lawmakers
approved a bill that includes a provision that
repeals the expanded 1099 requirements.
LECG, which had previously acquired Smart
& Associates, a Top 100 Firm in the Delaware
Valley, has been squeezed by a cash crunch.
Robert Herz, the former chair of the Finan
cial Accounting Standards Board, who retired
unexpectedly last fall, has found a new job:
senior advisor at WebFilings, a company that
provides technology for Securities and Exchange Commission financial filings.
organizations surveyed said that they are
very or somewhat concerned that some tax
exemptions for nonprofits will be revoked in
the next one or two years.
MORE ON TAXES
The Federal Deposit Insurance Corp. told
Republic Bancorp, the main refund anticipation loan provider for Jackson Hewitt and
Liberty Tax Services, that the bank’s RALs
are “unsafe and unsound” without a debt
indicator from the IRS. The IRS has stopped
providing the indicator, in what some see as
Big Four Firm Deloitte has been called in
to consult on the public schools budget of
Washington, D.C., which is facing a deficit of
roughly $600 million. The firm will undertake
the engagement pro bono, looking for savings
and additional monies.
Lending to small firms by U.S. financial
institutions continued to decline, but began
to stabilize in some categories over the 2009-
2010 period, according to a new study by the
Small Business Administration.
IN OTHER NEWS
Global business advisory firm FTI Consult
ing entered into negotiations with financially
troubled tax and consulting firm LECG to
acquire several of its practice groups. West
Palm Beach, Fla.-based FTI said that it was
not pursing an acquisition of the entire firm.
Nearly three quarters of U.S. nonprofit org
anizations are concerned that tax exemptions
will be revoked in the next year or two, according to a survey by Sage North America.
The poll found that 74 percent of the 602
The Ernst & Young Discover Tax conference
described in “Tomorrow’s News” (February
2011, page 38) is in its fifth year, not its fourth,
as originally stated. Our apologies for the error.