Braddon Group

Successful retirement planning is all about strategy. Analyzing sources of income, estimating expenses, choosing investments and managing assets are vital to safeguarding long-term financial comfort later in life. However, one aspect of retirement planning is sometimes overlooked — tax planning.

As a CPA, you’re already helping your tax clients with their retirement planning needs, but are you doing enough? Take a moment to review these tax considerations to make sure you’re exploring all the options with your retiring clients. Then listen to this AICPA podcast for a deeper dive into the topic.

Looking at tax as part of retirement planning

Tax issues are a big part of nearly every major life moment. Retirement is no different. Perhaps what stands out the most, though, is the number of moving parts that contribute to tax issues at this stage in life. These include:

• analyzing the best account types to use when saving for retirement
• determining how much money to save for retirement
• exploring when to start taking Social Security benefits
• staying mindful of taxable income
• reviewing pension plan options
• considering modified adjusted gross income limits for Medicare purposes
• managing a second home or rental property
• picking a time and order in which to draw from retirement accounts

Managing cash flow concerns

Cash flow is a top concern for retirees. Those worried about having sufficient income might choose to place much of their portfolio in higher-yielding bonds and higher-yielding or dividend-paying stock. This increases portfolio risk and reduces tax efficiency.

This increased risked means more of a retiree’s principal may be reduced at a moment when it’s needed most, such as during an emergency. In addition to the risk, a retirement income strategy that depends solely on interest or dividends is less tax efficient compared to a strategy dependent on capital gains.

Knowing your client’s tax situation can lead to stronger planning strategies. Completing a long-term cash flow and tax projection can help identify opportunities for tax maneuvering, and regular monitoring of changes to cash flow can help your retired client stay on track.

Liquidating investment accounts

Liquidating investment accounts can be tricky and requires careful calculations and review. When done correctly, this move can bring a lot of added value to your clients. Like other planning issues, how you proceed will depend on the types of accounts they have, client spending needs and the age of your retiring clients.

A classic approach includes reviewing which after-tax accounts should be liquidated first and then liquidating tax-deferred accounts like IRAs and 401(k) plans. Unfortunately, if a retiree waits to tap into their IRA, they may find themselves in a higher tax bracket when required minimum distributions kick in. This method can also wreak havoc if a retiree needs to access large amounts of money in an emergency.

If your client decides to spend taxable dollars first, consider simultaneously filling lower tax brackets with a Roth IRA conversion. A tax projection will help you identify the opportunities for a Roth IRA conversion and how much makes sense.

Examining taxes associated with investment choices

The tax picture gets more complicated when various investments and types of income come into the mix. Interest, dividends, capital gain distributions and other sources of income all have significant tax considerations. 

When choosing mutual funds, most investors don’t think twice about the tax consequences of these moves. Many funds pay out large capital gain distributions. If clients hold these in taxable accounts, the tax bite could be significant. Make sure your clients are placing the funds in the right places.

Tying it all together

Smart tax planning plays a vital role in a retiree’s long-term financial security. And being ready to address this issue and other planning topics with your clients can contribute to your firm’s continuing success.

Expand your knowledge and demonstrate your expertise through the AICPA Retirement Planning Certificate program, a series of courses covering the retirement planning life-cycle. Earning this certificate gets you one step closer to the Personal Financial Specialist (PFS) credential, setting you apart from other CPA and non-CPA planners. 

Oscar Vives Ortiz, CPA/PFS, is an assistant vice president and wealth strategist providing advice on complex estate and other wealth strategy issues. He shares a high level of technical experience in estate, tax and wealth strategy with his clients.  

     

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Jane has a problem. She has tickets to fly to Europe next week, but her back taxes may be standing in her way.

Jane owes more than $75,000 in taxes, fees and interest to the IRS. She was aware of this substantial debt but had no idea that she could lose her passport because of it. She doesn’t understand what’s going on or what she can do.

Jane isn’t alone. The number of people receiving a Notice CP508C is growing, and more than 362,000 Americans are facing passport revocation due to significant tax debt.

One of your tax clients could be next.

Why is this happening?

More than one third of all Americans have a passport, but many don’t know about the 2015 Fixing America’s Surface Transportation (FAST) Act. It included a provision allowing the IRS to request that the Secretary of State deny, revoke or limit a U.S. passport upon the certification of a seriously delinquent tax debt (SDTD). A tax debt reaches the level of an SDTD when:

• The amount of a taxpayer’s tax, interest and penalties hit a $50,000 threshold (indexed for inflation, the current threshold is $51,000).
• The IRS filed a Notice of Federal Tax Lien.
• The period to challenge the lien expired, or the IRS issued a levy.

Upon receiving certification of an SDTD, the U.S. State Department generally won’t renew the taxpayer’s passport or issue a new passport. In other cases, it may revoke or place limitations on the taxpayer’s current passport.

The certification process is a complicated administrative procedure, but the effect is pretty straightforward: a grounded taxpayer. As intricate as the process is for the IRS, getting a debt decertified could be just as tricky.

What can Jane and other taxpayers do?

When Jane receives a Notice CP508C, she may think she only has two choices: pay the bill in full or make an alternate payment arrangement. The truth is, there are many options available.

Last year, the IRS released a statement outlining ways taxpayers can avoid getting the State Department involved in their back taxes. These options include:

• Paying the tax debt in full
• Paying the tax debt under an approved installment agreement, an offer in compromise or under the terms of a settlement agreement with the Department of Justice
• Having requested or have a pending Collection Due Process (CDP) appeal with a levy
• Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief

In some cases, extenuating circumstances such as bankruptcy, identity theft or hardship will prevent the IRS from notifying the State Department of the SDTD.

At first glance, someone might think an easy answer to the problem would be paying enough of the tax bill to bring the total under the $51,000 threshold. However, that won’t work. Paying it down won’t reverse the notification of certification once the debt has been certified.  

There’s no administrative appeal process for the certification of Jane’s account. She can file suit in the U.S. Tax Court or District Court if she thinks the certification is inaccurate.

What can CPAs do?

Practitioners with clients like Jane should be proactive when attempting to resolve unpaid tax liability issues. Ask your clients with outstanding tax debts how they would like to address the problem. Remember:

• A pending installment agreement request will stop a CP508C letter from being issued. (Find a sample request here. )
• File a Form 12153, Request for a Collection Due Process or Equivalent Hearing, in response to Notice 3172 or 1058 and attempt to resolve the issue through a CDP hearing. This quick reference chart can help you lead your clients through the maze of IRS collection enforcement activity and help them determine the best course of action.
• Attempt to resolve cases at the lowest possible level and request installment agreements as soon as practically possible.
• Make sure your client files all previously unfiled tax returns or submits an estimated tax payment for the current year (if applicable). Have the appropriate collection information statement (e.g., Form 433-A or Form 433-F) completed and ready to go.

The process of decertification does work. If clients find out they’re subject to passport revocation for failure to pay tax debts, many avenues of assistance are available to get them back on track before they find themselves homebound.

By the way, Jane’s story has a happy ending. She paid her bill in full at which point her CPA contacted her local Taxpayer Advocate Service (TAS) office. Jane’s CPA and her local TAS advocate helped expedite the decertification process, allowing her to jet off to Europe as planned.

Larry Wolfe, CPA, is the owner of Larry J. Wolfe Ltd., in Skokie, Illinois, and serves as vice chair of the AICPA Tax Practice & Procedure Committee.

Harold D. Katz, CPA, is the owner of Katz LLC, in Chicago, Illinois.

     

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Everyone has a friend or relative that is difficult to purchase a gift for. I’m sure you’re thinking of one after reading that sentence! That’s why gift cards are so popular –the person gets to pick out something they know they’ll like. It’s really a win-win situation. However, in recent years, scammers caught wind of the lucrative gift card market and have come up with schemes to target consumers.

AICPA Insights reached out to Howard M. Silverstone, CPA/CFF, a forensic accountant and member of AICPA’s Fraud Task force to learn how Americans can protect themselves from gift card fraud this holiday season.

AICPA Insights: I only recently heard about gift card fraud a few weeks ago. How long has this scam been around?

Howard Silverstone: The gift card scam is fairly new. Gift cards have been around for a while, but as online shopping has really taken off it seems the gift card market has grown a great deal. Outside of the retailers offering their own gift cards, it seems like every pharmacy chain has racks and racks of them on the shelves. But it’s important to note that gift card scams are not really different than any other kind of fraud – it’s more of an innovation on a number of old scams than a new invented fraud.

AI: How does the typical gift card fraud scam work?

HS: The majority of gift cards come with a specific code and pin on the back and until they are scanned at the register and the customer pays for them, they are inactive. Using the code and pin number, it’s then possible to go online and check your balance and make purchases. What the crooks are doing is going into the stores, taking the card off the rack and scratching the strip off the back that conceals the number and pin. They’ll then write that information down and replace the strip. The strips are surprisingly easy to obtain online, which is essential to this fraud. Then the scammer will periodically enter the account and pin number and once they see it has been activated, they’ll make purchases against it as soon as they can. Unsuspecting shoppers think they’re giving someone a $100 gift card, but by the time the recipient goes to make a purchase nearly the entire balance has been drained.

AI: What can people do to avoid being victimized by this scheme?

HS: First of all, when you’re purchasing the card, check the back and see if anything feels off. The replacement strip may not be applied as cleanly as the original one. Secondly, if you’re purchasing a gift card off the rack, never buy the one in the front. It’s a better idea to grab one in the middle or back. Most of these fraudsters are only doing one or two each time they visit a store and they want to get in and out before anyone notices them – so they’re likely to just grab the first card in the rack and replace it once they have the number.

Another strategy is to only buy gift cards that are behind the checkout counter. However, this isn’t foolproof because, while unlikely, it’s possible that the cashier could be colluding with someone else pulling off the scam. As a deterrent, a growing number of companies are putting gift cards in sealed packages. The cashier then has to go through an activation process with the money you want to put on it. It’s different than a pre-loaded card and none of the identifying information is available until the card company gets notification that you have paid for it.

And for those receiving gift cards this holiday season, when you activate the card online you may have an option to create a unique password. If you’re able to, you should definitely do this.

AI: You mentioned earlier that criminals targeting gift card owners combined it with other, existing scams. What are some examples of that?

HS: One that comes to mind is business email compromise. Someone in a financial or HR position will get an email from the CEO that says they want to give out some cards to customers or friends of the business. They’ll ask the employee to run out and buy a bunch of gift cards and scratch off the backs and then email back the card number and PIN, so they can pass them along to the people, so they don’t need to have the actual card in the mail. However, that email is not actually from the CEO. With requests like these, urgency is a major red flag. It always needs to be done “right now”.

If you ever get an email like this, look at the email address of the sender very closely, make sure it’s 100% accurate. And ask yourself if this makes sense and is in line with what the company has done in the past. Don’t worry about questioning the ‘authority’ of a senior leader – call the person who purportedly emailed you, to confirm with them over the phone. They’ll appreciate you doing your due diligence.

Fraudsters will often reach out directly to people by phone or email and tell them they owe federal or local taxes and they need you to pay with a gift card. And the person goes along with it and they lose their entire payment.

There is also a variation of the ‘grandchild’ scheme, were someone impersonating a grandchild will call and say they’re in a jam – maybe they got arrested and need to make bail. And they need you to give them a few hundred dollars on a gift card, so they can get out of it – and “please don’t tell mom and dad”, they can’t find out.  Of course, it is important to know that the IRS does not take gift cards as payment and your local police station or courthouse does not take them for bail payments.

AI: Any other tips for our readers?

Beware of anyone offering discounted gift cards online – you’ll see them posted on various auction sites. People will see the discount and hope they can get a $50 gift card for $20 dollars and come out ahead. However, they are often counterfeit or stolen and there is usually no money on them.

Unfortunately, it’s been a bad year for natural disasters in the US with high profile hurricanes and wildfires displacing many Americans. And scammers have seized the opportunity to reach out to people directly and ask them for gift card donations. In almost all cases, these are frauds. Credible charities that accept donations via gift cards will have that information online.  You should only donate to a charity that is known and can be verified.

You might have someone posing as a retail store calling a customer who just purchased a gift card and ask them to confirm the information so that they can ensure it’s for the right amount. When the person unwittingly provides that information, the criminal then uses it to make purchases online. No one from a store is ever going to call and ask for this type of information.

As with many crimes, people can take common sense steps to protect themselves. Exercise caution when purchasing gift cards this holiday season and if you receive one, register it, check the balance right away, change the PIN and don’t wait too long to use it.

The AICPA’s FVS section publishes  Eye on Fraud quarterly to help CPAs keep their clients abreast of, and safe from, new schemes.

James Schiavone, Sr. Manager – Public Relations, Association of International Certified Professional Accountants

     

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‘Twas the night before tax season, when all through the states,

The nighttime felt heavy, and folks were up late.

The children were nestled all snug in their beds,

While Dad stared at forms with immeasurable dread.

And Mom in her PJs, the cat in her lap,

Had just settled in for the tiniest of naps.

 

When out of the blue the quiet was shattered.

They ran from their office to see what was the matter?

Rushed to the window to see what they’d find,

They tore back the curtains and opened the blinds.

 

The moon glistened bright in the cold winter air,

An aura of calm spread out everywhere.

When who to their wondering eyes should appear?

The hero they hoped for who now stood quite near.

 

Stepping up to their door, then into the hall,

Armed with pertinent knowledge of tax reform law.

More quickly than horses her help she supplied,

And with a quick smile she offered to guide:

 

“On frustrating federal or state income taxes,

New rates and credits and changing tax brackets.

NOLs, passthroughs, shared responsibility payments,

To deductions, exclusions and tax breaks for claimants.”

 

And off to the office she sped with a smile,

Taking no time to pause when employing her guile.

Reviewing receipts, credits, deductions,

Then looking through forms and all their instructions.

 

And then in a moment, they heard through the wall,

“I think I have finished and gotten it all!”

And outside the office she suddenly appeared.

The smile that she gave them was something to cheer.

 

“Our taxes are finished?” The couple asked, riled.

“Done, double-checked and of course I e-filed.

A CPA can do more than just taxes,” she claimed,

Without missing a beat, these services she named:

 

“From tax compliance, estate, trust and gift planning,

Audits, valuations and not-for-profit granting.

Risk management, cyber and IT consulting,

Forensics, reporting and outcomes resulting.”

 

And with that she left them, fading from sight,

But just before vanishing into the night,

They heard her exclaim while she drove off and away:

“Next year don’t worry. Just call your CPA.”

 

From all of us at the AICPA, we wish you a happy holiday season and look forward to an exciting 2019!  

     

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Picture it: A knockerupper and a powdermonkey walk into a packed bar. To their surprise, there’s only one barstool left. The knockerupper looks over at the powdermonkey and says, ‘Are you gunning for that seat?’ to which the powdermonkey responds, ‘Don’t look so alarmed.’

Okay. Admittedly, the punchline would probably make more sense if knockeruppers and powdermonkeys were still relevant professions today. But that’s kind of my point. Because this joke illustrates an imperative, timeless truth:

Lifelong learning is no joke.

If we expect to remain not only relevant but also indispensable to those we serve, we must keep curious, keep keep learning and keep adapting. After all, technologies and other outside forces are vastly altering consumer expectations and the ways we work – and they’re not waiting idly by for us to catch up.

But does the thought of carving out learning time from your already-over-booked calendar cause you anxiety? That may be because you have a conventional concept of learning. Let me guess: You’re thinking classrooms that smell of chalk, webcast Q&As, squinting at a slide deck from the back row of a conference lecture hall. 

Make no mistake. These learning environments are essential to your ongoing professional education and development, but, in reality, they only account for about 10% of your entire annual learning curriculum. With a little shift in perspective, you may discover you’re already partially fulfilling the remaining 90% you need to stay ahead.

70% of your learning opportunities should be experiential

Remember that stretch assignment you were given? You know the one. Where you ended up accomplishing things you never thought you could do? That was experiential learning.

And maybe taught yourself how to create infographics. Now, you’re the go-to when your organization or firm needs a visualization to share with clients. Also experiential.

Or remember that time you were on the train. Or waiting for the elevator? Or you were at your desk, waiting for your coffee to kick in and you began scanning your inbox for your weekly digest? Wherever or however you’ve linked to this article, you’re already chipping away at the learning you need to outpace the pace of disruption.

That’s right. Articles such as these. Or self-development eBooks. Podcasts such as the Go beyond disruption or Small Firm Philosophy. Getting daily news briefings from your smart assistant. Watching Facebook live interviews that keep you updated on professional advocacy efforts. Many things you’ve likely baked into your daily routines already apply as experiential. Just make sure you’re putting what you learn to good use.

20% of learning opportunities should be social

The AICPA recently launched an online mentoring program. It encourages members from across the profession with varying experiences both to mentor and be mentored. Promotions for the program astutely read: What will you learn from each other? I say astutely because invariably a mentorship relationship is a two-way street, with mentors often learning as much if not more than their mentees. That’s social learning at its best.

Then, there’s all those times you’ve given a presentation. You learned the ins and outs of blockchain for supply chain, and you shared your new expertise at a lunch ‘n’ learn. You heard about a cost-saving technology called robotic process automation, and you pitched implementing it to a partner.

You guessed it. These are examples of social learning, too.

10% of learning opportunities should be formal

You know this all too well. That time you attended AICPA ENGAGE. All those times you feverishly clicked participation markers during webcasts. And all the hard work you put into completing all of the AICPA’s cybersecurity certifications. Formal learning experiences are essential albeit time-consuming, but you persisted and persevered. Congrats!

Putting it all together

In Muriel Sparks’s 1961 novel, The Prime of Miss Jean Brodie, the titular teacher Miss Brodie points out that education is a word that comes from the Latin. The root, ex, means out, and duco means I lead. In other words, education literally means a leading out of what’s already there. If you’re like me – and I hope to some extent you are – there’s a genuine will and desire to learn. Because, let’s face it: In the 4^th industrial revolution, continuing learning and development isn’t a luxury – it’s a necessity. That’s one of the AIPCPA’s many functions. We’re here to help you formalize a learning plan that makes you competitive and irreplaceable.

Download this document. It’s designed to help you plan, visualize and seize the learning opportunities all around you.

Complete it. Put it somewhere easily visible. And start learning. Because, in the year 2080, you don’t want to be the punchline of a joke no one gets.

Brock Faucette, Corporate Communications Manager, Association of International Certified Professional Accountants

     

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This year is coming to an end, and there’s one thing we can all agree on: 2018 was a doozy for tax practitioners. Between tackling a challenging busy season, reading up on the Wayfair ruling and navigating the constant stream of tax reform guidance, there’s been a lot to keep up with. But while you were making heads or tails of the changes to tax, your clients had their own list of challenges keeping them up at night.

Whether they got married or divorced, retired or sent a child off to college, their financial realities shifted and not just because of tax reform.

That’s where you come in. You know there are moments in life when the choices made have significant and sometimes complicated tax implications, and you know how to navigate these changes. The challenge? Getting your clients to see how these events affect their taxes.

To help, the AICPA released four new resources in the Tax Practitioner’s Marketing Toolkit that address the tax implications of major life milestones. Review each of these topics with your clients and be on the lookout for ways you can provide a holistic approach to their financial lives.

Marriage or Divorce

When people think of marriage, they may have an image of two young love birds starting their life together. In reality, marriage is a lot more complicated than a fairy tale, and each marriage has its own set of tax considerations.

Marriages between two previously married adults or couples marrying later in life face many tax challenges. This is especially true for blended families that may need expert guidance on the nuances of certain tax credits. Couples with investments, property, back child support payments, back taxes or who stand to claim a significant inheritance need to consider the unique tax implications of marriage.

No matter the cause, divorce is a sensitive issue that raises many tax concerns. For instance, tax reform changed how alimony payments are treated. Those who choose to sell a home both spouses own could be subject to capital gains tax.

Walk your clients through these issues and more with these marriage tax tips.

Children

Who doesn’t love picking out tiny baby booties and onesies? Having a baby is an exciting time, but it also comes with a whole host of tax implications. First and foremost, a new child affects the filing status of the person or couple welcoming their bundle of joy. For example, a married individual used to filing separately may find that he or she has to file jointly to claim certain credits and deductions. Many parents can claim tax credits to offset the amount of tax they owe after having a child, but each credit comes with specific qualification requirements. Child care can get expensive, but there are ways to reduce the overall cost with tax-friendly planning.

Take some time to celebrate your clients’ new addition. Then use these tax tips to get the family started in the right direction.

Education

A good education is a steppingstone for a bright future, but it’s also a huge financial undertaking. Smart tax planning can give any client a leg up.

Parents can help fund their child’s education through Sec. 529 plans or prepaid tuition plans, and some income used for education expenses can qualify for an exclusion. Other education expenses could be eligible for a credit or deduction, like the student loan interest deduction.

Some students have special considerations that muddle their tax situation. Those going to school on scholarships should pay close attention to what the money is being used for, or they may find it’s considered taxable income.

The rules around education are intricate, and many have been altered by tax reform legislation. Sit down with your clients and go over these education tax tips.

Retirement

Retirement doesn’t just happen. It takes years of careful planning, and a big part of this is related to tax. As your clients consider budgeting for retirement, it’s important they remember that even though the work stops, taxes don’t. Whether your clients choose a Roth or Traditional IRA or augment their savings with stocks and other traditional investments, they need to be aware of how these will affect their taxes now and later.

In retirement, it’s vital to stretch savings as far as they will go while staying aware of how unforeseen circumstances like casualty losses or increasing healthcare costs can negatively affect finances. Those selling their home or gifting to loved ones will need to pay close attention to the tax consequences of these moves.

These retirement tax tips clarify the ins and outs of some of the tax issues your retiring clients may face and help any client planning for retirement to get moving.

Despite anything else that may have happened in your clients’ lives this year, one significant — and recurring — financial event didn’t change: their annual tax return. No matter what else they’ve done in 2018, this is going to be on their to do list come January. Take some time out to evaluate their tax return and recent life changes to help them strategize for the future.

Allison Carter Fanney, Communications Manager — Tax, Association of International Certified Professional Accountants

     

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What happens when a small business fails to comply with important regulations? In the classic movie It’s a Wonderful Life, a local building and loan association is in danger of failing its bank audit because of a major—but innocent—mistake by one of its officers. Are your clients in the same kind of danger as Bailey Building & Loan?

They could certainly face unnecessary disruptions if they underestimate the impact of the significant new Financial Accounting Standards Board (FASB) revenue recognition standard and aren’t ready to tackle implementation as the rules become effective. (FASB Topic 606 is effective for nonpublic entities for annual reporting periods beginning after December 31, 2018.) Here are three lessons the movie can teach practitioners and clients before it’s too late.

Don’t count on Uncle Billy! In the movie, main character George Bailey finds himself in hot water when he incorrectly assumes his Uncle Billy will make a crucial deposit to the organization’s account. CPAs find that many clients also make incorrect assumptions about implementing FASB Topic 606. They may misunderstand the scope of the standard and the urgency in preparing for implementation, says CPA Michael Westervelt, a principal and BizOps Quality Leader at CliftonLarsonAllen, and that’s a problem. Since many smaller organizations don’t issue interim statements, they may get to the end of 2019 and realize the numbers they’ve relied on all year have to be recast. CPA David Semendinger, a partner and Quality Control Group Leader at Aronson LLC, points to the issues that will occur if third parties receive incorrect information. He warns clients, “you don’t want to give your interim financial statements to banks, owners or private equity groups throughout year, then come back to them in 2020 and tell them you’ve actually violated covenants.”

CPAs are going to have to be like Clarence. George Bailey gets help from a guardian angel named Clarence, who steps in to show him a different view of his world that changes his mindset. CPAs must also give clients a different perspective by alerting them to the standard’s impact. Aronson took many steps including creating a slide presentation that walks clients through the standard. Since the rules on performance obligations are particularly challenging, the firm has also volunteered to review one or two contracts for clients to help them understand how the standard applies. Semendinger advises that practitioners should make it personal when talking to clients, use examples that are relevant to their business and be patient and persistent.

Semendinger’s firm also advises banks, which are often unfamiliar with the standard. But once the standard and its impact on covenants is carefully explained, banks feel compelled to speak with clients about standard implementation.

Your guardian angel can’t do it all for you. CPAs should also consider and communicate the potential limits of their own role in helping the client. When creating a system for the new standard, the CPA doing an audit or a review can be part of the discussion, but can’t design the system. That would be an independence violation, notes Westervelt, who’s also the chair of the AICPA Technical Issues Committee. For that assistance, the CPA would have to recommend that the client work with a third party. Organizations that lack a properly designed system may not be able to get their financial statements audited or reviewed on time, Semendinger points out, which could also have other implications such as a delay tax returns for accrual basis taxpayers. There will be a spiraling impact if they don’t start early.

Start the conversation now

Westervelt says the standard’s impact on private companies will vary depending on their industry, how they earn revenue and other considerations. In all cases, though, “CPAs need to have a conversation with clients on how prepared they are to implement the standard and whether they have the necessary controls and system in place.” He points out that it can be a positive opportunity to reconsider the organization’s systems and adopt new approaches that will offer more timely and useful financial information.

The AICPA’s revenue recognition webpage features helpful information and valuable resources including a learning and implementation plan and a financial reporting brief discussing tax implications of the new standard. The AICPA’s Center for Plain English Accounting also provides high-quality revenue recognition information and training to its members. And for even more insight, review the FASB’s transition resource group’s revenue recognition memos and consider attending their free webcast geared toward private companies on December 18.

Kristy Illuzzi, Senior Manager- Firm Services and Global Alliances, Association of International Certified Professional Accountants

     

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Washington, D.C., got its first taste of winter just two days after the AICPA National Tax Conference this year. In some parts of the capital, it was just a dusting of snow. For those just north of the city, it was a blanket. While CPAs bundled up, drank hot cocoa and anticipated the wonder the season always seems to bring, they were reminded of the cold months ahead where the days are shorter, but the workdays are much, much longer.

The first sign of winter is also the first sign of busy season. It’ll be here before you know it, and with tax reform implementation in full swing, you’re going to need more than a wool coat and an ice scraper to get you warmed up and out on the road in the morning.

The AICPA provides resources that can make busy season prep a little easier, so you can get on your way — no defrosting needed.

Tax Reform Resource Center

Tax reform has been the top topic of conversation for more than a year, and it’s getting more prominent by the day. Having the latest information ensures you have something to add to the discussion. The Tax Reform Resource Center has news, videos, insights, webcasts, events, podcasts, tools, FAQs — pretty much all manner of tax reform resources — aimed at keeping you in the know. Some of the assets are open to the public (like these presentations for individuals and businesses), but you’ll need an AICPA or section membership login for the rest.

Annual Tax Compliance Kit

Let’s face it — if you don’t get your clients’ tax returns right, you’re walking into a pretty rough rest of the year. As you know, there’s a lot at play when getting everything you need to feel confident in a return’s accuracy. The Annual Tax Compliance Kit can help by making your tax return workflow run smoother. This kit contains engagement letters, organizers, checklists and practice guides for key practice areas, including individuals, partnerships, corporations, estates, trusts and exempt organizations. The Annual Tax Compliance Kit is only available to Tax Section members, so if you haven’t joined yet, pre-tax season is the perfect time to come onboard.

Tax Practitioner’s Marketing Toolkit

Connecting with your clients is the first step in getting them prepared for busy season. The second step is giving them the information they need to make informed decisions about their taxes with you. Open to all members and updated for tax reform, the Tax Practitioner’s Marketing Toolkit is full of tax practice guides, tax tips, ID theft tools, year-end resources and tax law reference guides that help you and your clients work together toward their best tax outcome.

Impact of Tax Reform on Planning Toolkit

Tax laws are always changing, but this sweeping tax legislation adds a new layer of complexity to your clients’ planning needs. While things are a little more complicated this busy season, your clients will need more year-round help too. Take this opportunity to showcase your abilities and weave tax planning into your clients’ broader planning goals with the Impact of Tax Reform on Planning Toolkit. You can find webcasts, videos, podcasts, charts and client communications that’ll help point you in the right direction. Download Volume One of the Adviser’s Guide to Financial and Estate Planning for clear guidance on advising clients in estate, tax, retirement, investment and risk management matters. Then head over to the Planning & Tax Advisory Services website to learn how to integrate these services into your practice.

Busy season is just around the corner, so keep these resources close at hand and check back in with us for more in the coming (and hopefully warmer) months.

Allison Carter Fanney, Communications Manager — Tax, Association of International Certified Professional Accountants

     

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You’re staying at a hotel in a city you’ve never visited before. After you check in and unpack your bags, you realize you’ve forgotten your pajamas and it’s too late to shop. You walk down to the lobby and mention your predicament to the front desk clerk. Sympathetically, she offers a solution. She tells you to have a seat and serves you a cup of hot tea and a perfectly warm and melty chocolate chip cookie. After just a few minutes, another staff member approaches you with a package of blue cotton pajamas. She explains they’re offered to you complementary for your stay.

Increasingly, consumers are valuing their overall customer experience much more than any tangible product or service they may receive. It’s what keeps them satisfied and coming back for more. You, too, have an opportunity to create exceptional and memorable experiences for your clients. What are you doing to keep them coming back for more? Here are three things to consider as you strive to go above and beyond for your clients:

1. What’s your current client experience like?

It’s important to take the time to examine how you’re doing things and whether you can improve. Consider creating a satisfaction survey (here’s a good template you can use) and asking your clients what they experience at your firm. You’ll want to capture responses from as many clients as you can for a true depiction of the current experience. Maybe offer a small gift card to the local coffee shop to those who respond as a thank you for their time and insight. In your survey, don’t be afraid to ask clients for suggestions on ways you and your staff can improve the overall experience. Knowing what your clients think about your services and firm will help you identify and prioritize your goals, so you can offer solutions and create exceptional experiences that best meet their needs.

2. Dig deeper to understand what matters most to your clients.

The results of your client satisfaction survey may surprise you. Go a step further and ask your clients to meet one-on-one. Get away from the office and meet over lunch or coffee (with their favorite cookie or pastry, of course). Go into the meeting with the intention of gaining a solid understanding of what matters most to them. Remember, technical skills alone don’t provide the outstanding customer experience. Exceptionalism comes from carefully listening to your clients—like a therapist.

3. Deliver the experiences your clients want.

Once you’ve got a good pulse on what your clients expect, you’ll uncover a roadmap that makes it possible for you to deliver exceptional experiences and go beyond expectations. It could be as simple as improving upon response time to client calls or emails. Does your firm have a policy on responding to clients within a certain number of hours? Maybe it’s time to remind staff of why being responsive is so important. Another issue may be that clients feel they wait too long in your office to meet with you. Perhaps you can address this with status notifications via text the day of client meetings. Flowers, edible deliveries, hand-written notes or cards are nice touches to help celebrate your clients’ special events, like opening a new location, winning an award in their industry or community, getting a big contract or celebrating personal events like birthdays or retirements. Make sure you always foster a commitment to continuous improvement, so you don’t become too complacent.

When clients experience exceptional service, they share it with their friends, neighbors and colleagues. And word spreads quickly. Make sure you’re delivering the best possible client experiences and your reputation will speak for itself. In the end, you’ll see return not only in revenue, but in your client satisfaction and loyalty.

You may not find a recipe for gooey chocolate chip cookies (although, here’s my favorite recipe), but you will find a recipe for success with these resources for small firms:

• Small and Powerful webpage: Find tips on providing value-added services to small business clients, strategic planning, staffing and more.
• Identify and Prioritize tool: Get to know your clients by listening to them and asking them the right questions to really understand their needs.
• Small Firm Philosophy podcast series: Hear how small firm leaders across the country are successfully creating memorable experiences for both their clients and staff.
• Business model framework: Help your clients or your organization define, deliver and capture value.

Additionally, in the wake of tax reform, there’s an opportunity for you to become an even greater trusted adviser to your clients without having to offer them cozy pajamas. With these tools, you’ll be guided through the latest changes so you can best advise your clients during the upcoming tax season.

Lisa Simpson, CPA, CGMA, Associate Director – Firm Services, Association of International Certified Professional Accountants 

     

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Everyone gets pretty nostalgic on their fortieth birthday. But what if you are the Auditing Standards Board? How would you celebrate? We decided to take a light-hearted look at the trends that have come and gone over the last four decades. Join us for this ride back in time.

 Communications. In 1978, auditors didn’t have smartphones to communicate with clients. They used CB radios. Before long, the shorter car phone antenna became the status symbol of choice. Away from the car? Just page me (on my beeper). Motorola introduced a game changer in 1990: the bag phone. Soon, tech savvy CPAs were carrying a bag phone in one hand and a PalmPilot phone in the other. Fortunately, someone saw one of these CPAs in an airport and invented the Blackberry.

 Fashion. Plaid was the rage in the late 70s. Stylish auditors looked for ways to slip some into strict firm dress codes. Though dresses were the predominant ladies’ office attire, progressive women might be seen in a blazer and tartan plaid pants. Men could buy a four-piece vested suit and sport a plaid vest and pants on Fridays. After work: bell bottoms. Soon, young auditors traded their polyester for nylon parachute pants. Skirts weren’t a problem in cold weather if you had leg warmers. No pockets? Just wear your fanny pack.

 Style. In the late 70s, big hair ruled women’s hairstyles. Men wore long sideburns and mustaches. In came the 80s with power bangs and side ponytails – scrunchy required. Men wore mullets or long “glam rock” hair (reportedly not the path to make partner).

Office tech. Most client communications went via U.S. Mail in 1978. Office staff kept a supply of carbon paper on hand to duplicate important letters. Imagine how hard it was to CC an entire board or committee! Additional copies could be run on a Xerox machine that weighed 650 pounds and required hours of operator training. Communication made a giant leap when the fax machine became common in the mid-1980s. Reports generally had to be printed on dot matrix printers. As a result, auditors were overjoyed when reports could be loaded on floppy disks.

Music and Entertainment. Who needs records when you can play an 8-track tape both at home and in your car? But cassette tapes held more songs and could be rewound and fast forwarded. In 1978, tired auditors could relax after work playing Atari with their kids. On a Saturday night, they might hit a disco. By 1982, disco had given way to breakdancing. Then in 1983, Michael Jackson moonwalked on television. Ten years later, the Macarena hit the club scene (at least one current ASB member is rumored to have it down perfectly).

Cars. When the price of gas shot over $1.00 a gallon in 1980, cost-conscious auditors began to look at gas-saving Japanese imports like the Datsun 210 and Honda Civic. But when the Yugo was introduced in 1985 for just $3,990, some CPAs were justifiably skeptical. After all, Yugos had been towed to scrap yards, the auto scene remained calm until the introduction of hybrids.

Toys. During holiday shopping in 1978, some members of the newly formed ASB may have been on the lookout for the computer-controlled Simon game. But Simon didn’t hold a candle to the Cabbage Patch doll craze of the 1980s. Although Beanie Babies were the crypto currency of the late 1990s and early 2000s, no current ASB member “admits” to having ever held one as an investment. Tamagotchi pets are reportedly making a comeback, but we need additional “clarity” on that.

Health and fitness. Fitness gadgets didn’t seem to be a big deal in the 70s and early 80s. Suzanne Somers introduced auditors (and everyone else) to the Thighmaster in the 90s. Then everyone learned all you needed was the Atkins diet.

Over the last 40 years, we’ve seen a number of trends come and go. During this time, the ASB has been hard at work making improvements to auditing standards. Since its early days, the board has kept an eye on technological advancements and made updates accordingly. These include:

SAS No. 3- The Effects of EDP on the Auditor’s Study and Evaluation of Internal Control (1974)

SAS No. 48- The Effects of Computer Processing on the Audit of Financial Statements (1984)

SAS No. 94- The Effects of Information Technology on the Auditor’s Consideration of Internal Control in a Financial Statement Audit (2001)

The board’s current project to revise AU-C section 500, Audit Evidence, to address the use of emerging technologies

Other highlights include the introduction of the risk assessment suite of standards (2006), updates to auditing standards to make them easier to read, understand, and apply (2011), and the board’s current project to revise standards on auditor reporting. You can hear about the ASB’s current activities by listening to our podcast.

Ahava Goldman, CPA, Associate Director – Audit & Attest Standards, Association of International Certified Professional Accountants

     

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