Certified Public Accountant

27 Sep 2013

CPAs Can Help Clients Stave Off IRS Scrutiny

Preventing A Challenge To (Un)Reasonable Compensation- CPAs Can Help Clients Stave Off IRS Scrutiny With A Little Foresight

As the IRS increases scrutiny of executive compensation, CPAs need to proactively advise their clients on how to withstand these inquiries. As a result of IRS training initiatives, three types of entities draw the most attention and therefore need good advice from CPAs.

(1) closely-held C corporations are examined to determine whether they have overpaid their shareholder-employees. These corporations are allowed to deduct only “reasonable” compensation paid to shareholder-employees. So, examiners are looking for a disguised dividend, which is corporate profit being treated as compensation. Since a dividend is not deductible, but compensation is, the IRS may treat the portion of the compensation that it considers excessive as a dividend. The result is that the corporation loses its deduction for that amount and is assessed tax, interest, and penalties on the resulting increase in income.

(2) S corporations are audited to determine whether they have underpaid their shareholder-employees. These shareholders may have set their own pay levels unreasonably low and simultaneously increased their profit distributions. Since compensation is subject to payroll taxes, but distributions are not, some tax savings can Read More

Written by Harold Goedde | Posted in Corporate • Federal • IRS • United States

28 Jun 2013

How Do You Verify A Certified Public Accountant Has A License? Verify A CPA License The Easy Way

After personally discovering what a challenge it was to navigate many State Board of Accountancy sites to verify a Certified Public Accountant (CPA) License, I decided to provide a better solution to access and verify a CPA License. What is listed below is the result of many hours of research locating the exact page (URL) on each of the State Board of Accountancy sites to verify any CPA License. The ability to access this information instantly gives consumers of tax services an answer to the most often asked question “How do you verify if a Certified Public Account has a CPA License?” Simply follow this link to verify anyone’s CPA License.

Written by Kat Jennings | Posted in North America • State And Local Tax (SALT)

10 Apr 2013

Dealing With Generation Impatient

You have all read about, and by now experienced first-hand, the differences both good and bad, among the generations working inside your CPA firm.

Researchers are now calling some of the 20- and 30-somethings, Generation Impatient.

It’s the, “If I don’t succeed here quickly, I’ll just quit and move on” mindset. The fact is this mindset simply doesn’t work in public accounting. You learn by experience, by never-ending learning and it takes time.

If you are a new hire in public accounting, be bold and seek counsel from the partners in the firm, individually. Have them tell you their success story. They have spent years enhancing their skills and their career and they are doing very, very well.

Consider de-rushing your career.

Written by Advertorial | Posted in TaxConnections

03 Apr 2013

What Is An Enrolled Agent (EA) And Why Is This Designation Superior To Certified Public Accountant (CPA)

The Enrolled Agent (EA) is arguably the longest standing professional tax designation. Although at times overshadowed by other tax professionals EA’s are the only federally licensed tax practitioners who specialize in taxation.

The EA was established in 1884 when Congress acted to regulate persons who represented citizens in their dealings with the U.S. Treasury Department. Only Enrolled Agents, Attorneys and CPA’s have unlimited rights to represent taxpayers. Enrolled Agents focus specifically on the US Tax Code.

To become a candidate for the EA designation one must pass the Special Enrollment Exam (SEE), a three-part examination covering Individuals, Businesses, and Representation, Practices and Procedures. If successful an EA candidate is then subjected to a rigorous background check conducted by the IRS. Once approved as an EA each person must fulfill annual continuing education requirements.

Empowered by the U.S. Department of the Treasury, Treasury Circular 230 provides the rules of practice for Enrolled Agents as well as certified public accountants, and tax attorneys; with oversight provided by the Office of Professional Responsibility (OPR).

Due in large part to the stringent testing required to become an enrolled agent and the requirements to maintain the license, there are only about 46,000 practicing enrolled agents.

Basically Enrolled Agents are federally authorized with licenses issued by the US Treasury enabling practice in all states in the United States. Alternatively CPA’s are state licensed and as such can only practice in the states where they are licensed.

Ultimately though the biggest difference is that the most astute CPA’s rely on the expertise of Enrolled Agents when seeking clarity on the US Tax Code.

Written by John Dundon | Posted in TaxConnections