more data, which adds complexity to the re-
turn process,” explained Steve Eliach, prin-
cipal-in-charge of the tax practice at Top 100
Firm Marks Paneth & Shron. “Form 1099
requirements, Form 8949, and the stricter
information requirements for foreign bank
accounts are just some of the examples. Each
one individually may not be that much, but
when you take them all together, the compli-
ance burden seems to be significantly increas-
ing both for taxpayers and practitioners.”
Taxpayers who lack the information to
complete their return are naturally filing later,
while simpler returns that generate needed
refunds are being filed earlier. “Refund re-
turns started coming in earlier last year when
people wanted their refund sooner due to the
poor economy,” said Roger Harris, president
of Padgett Business Services. “This year is a
verification of the same thing.”
The new basis reporting rules are add-
ing to the complexity, he noted. “It’s taking
a little while to figure out how the software
wants the data to be entered, and there’s an
adjustment about getting the data. I don’t
think we have enough experience to know if
it will be consistent from brokerage house to
brokerage house, and this has added to the
preparation time.”
Tough Season
FROM PAGE 1
REFUND DELAYS AND 1099S
For tax preparation franchisor Smart Tax, re-
turns are up over 30 percent from a year ago,
according to chief executive Nick Rizzi: “The
people we typically see have already been in,
because they want their refunds.”
However, the delays in refunds that char-
acterized the start of filing season persist,
he noted. “Refunds are still late, and e-file
switched back from Modernized e-File to the
legacy system for a week,” he said.
“The IRS is stricter in terms of its match-
ing, as well as certain questions being asked
which go to the heart of compliance,” said
Joe Perry, partner-in-charge of tax at Top
100 Firm Marcum. “For example, Schedule
C and the other business forms ask if you
are required to file Form 1099, and if so, did
you? It’s used for matching purposes. If an
individual or business takes a deduction for
expenses, another company should be pick-
ing up that income.”
“While these are reporting requirements,
we have to make sure the clients answer the
questions correctly,” he said. “Where a firm
is doing full service for the client there’s no
problem, but when you get information only
at the end of the year or during filing season,
it can create a problem.”
This is the first year that clients are required
to furnish Form 1099s to their accountants if
the total they paid exceeds $600, explained
Perry. “We sent out information to our busi-
ness clients at the end of last year, and fol-
lowed it up with phone calls, but they are still
taking time to be in compliance.”
“And it’s not just the federal government
that requires additional information,” Perry
pointed out. “For example, New York asks if
you filed a rent tax return for New York City.”
PTINS, FBAR AND FATCA
The PTIN requirement still leaves questions
open as to who needs to have it, said Perry.
“An intern just gathering information
doesn’t need it,” he said. “That’s okay so long
as they don’t make decisions on how an item
is treated on a return. We require all staff persons to apply for a PTIN. At $65 per individual,
it adds to the cost of compliance. But on the
bright side, many practitioners who started
‘This puts
a barrier
between
the preparer
and the
client.’
out in public accounting and did returns on
the side will stop dabbling in preparation.
We’ll have more competent professionals.”
The increased emphasis on foreign bank
accounts has added to the regulatory burden,
as the FATCA and FBAR filing requirements
are added to the mix. (For more on those, see
“FBAR, FATCA put pracs on alert,” page 12.)
“The IRS continues to seek taxpayers who are
sheltering or hiding income abroad. We usu-
ally ask, ‘Is this all the income you have?’ and
that should be broad enough,” said Perry.
There are a number of factors that have
placed a greater burden on tax return pre-
parers than ever before, according to Mike
Solomon, tax partner at Top 100 Firm Eis-
nerAmper. “Form 8949 gives three choices
to track the cost basis of stocks. If there are
differences between how you are reporting
cost on Form 1040 and how it’s reported by
the brokerage house, it gets reconciled on
this form. The additional burden is trickling
down to taxpayers and tax preparers.”
“More states are now mandating e-filing,
and some, such as New York, don’t give the
opportunity to opt out. That’s the only way
they will accept it,” he said.
The Roth conversions from 2010 gave tax-
payers the option to report everything on
their 2010 returns, or half in 2010 and half in
2011, Solomon noted. “Well, 2011 returns are
here. Will the software pick up on it? It’s pos-
sible that it won’t. The government will send
a notice if you should have reported from the
rollover and didn’t, but we as preparers don’t
want to have left it off.”
Solomon agreed that the questions on
business forms relating to Form 1099s are an
additional burden. “Under the Obama health
care legislation, you had to send a Form 1099
to everybody for everything. Even though it
was repealed, they haven’t completely given
up on the idea. So every business tax return
asks if you have issued all of the appropriate
Form 1099s. It puts the burden on preparers
because we’re the ones signing the tax re-
turn. We have to make inquiries. If the client
says, ‘I don’t know but I think so,’ and they
didn’t, it can lead to conversations and pos-
sible investigations.”
“This puts a barrier between the preparer
and the client,” he said. “It’s in our interest to
make sure they answer accurately, but clients
want to answer affirmatively because they
don’t want to raise any questions on their
tax return.”
CHANGES IN SECURITIES
TRANSACTIONS
Part of the 2010 compromise that froze estate
tax rates was an agreement that stepped up
the gift tax exemption from $1 million to $5
million for two years, Solomon noted. “With
proposed changes in the tax law, it’s clear that
this may be cut back, so we have an obligation
to alert our clients about the opportunity. It
expires at the end of 2012. If you have a cli-
ent that finds out in January 2013 that they
missed the opportunity, they could be very
upset and might even have a claim against
the accountant,” he said. “We can be faulted
not only for giving bad advice, but for failing
to give good advice.”
The change in reporting of securities trans-
actions has added to the burden on practitio-
ners, said Alan Dlugash, tax partner at Marks,
Paneth & Shron: “It’s all part of the regulatory
explosion that we’ve seen over the past few
years. Everything is more complex, especially
if there’s foreign involvement. For example,
an inordinate amount of [Mitt] Romney’s 203-
page tax return had nothing to do with tax, it
simply had to report the amount of involve-
ment in foreign investments.”
“It’s not enough anymore to simply be a tax
preparer,” Dlugash observed. “Three things
are making life difficult, particularly for the
older generation. When you look at their
overall economic picture, you see that they’re
retiring too early, they’re living too long, and
interest rates are too low to provide them with
the funds they need to live.” AT
HELP WANTED
Chief Financial Officer
needed
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Bach + 5yrs of Exp/
Masters+2yrs
(Finance, Accounting)
Direct or coordinate an
organization’s financial or
budget activities to fund
operations, maximize
investments, or increase
efficiency. Will use IFRS,
XBRL, ISO27000, SAP
Business One, QuickBooks,
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Apply with 2 copies of
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