Practice Management

Regional CPA and business advisory firms WithumSmith+Brown, and Mendlowitz Weitsen have merged their practices, effective Jan. 1.

Joining firms such as KPMG and Grant Thornton and tax prep firm Liberty Tax Service, members of the accounting community continue their efforts to offer relief to victims of the tsunami that has devastated Southeast Asia.

The total number of partnerships increased 5.2 percent to 2,242,169 for tax year 2002, while partnership net income decreased by 2.1 percent to $270.7 billion, according to the just-released Fall Statistics of Income Bulletin. For the first time, limited liability companies were the most common partnership entity type, totaling 946,130 partnerships, about 42 percent of all partnerships. The Fall 2004 SOI Bulletin also contains articles on individual tax returns for 2002, as well as articles on nonprofit charitable organizations, private foundations and the foreign tax credit. Taxpayers filed 130.1 million individual income tax returns for tax year 2002, a slight decrease from the 130.3 million returns filed for tax year 2001, according to the bulletin. The adjusted gross income reported on these returns totaled just over $6.0 trillion, a 2.2 percent drop from the previous year. This was the second consecutive year that AGI fell. The principal cause of the decline between 2001 and 2002 was a large decline in net capital gain on returns with income above $200,000. AGI on returns with income below $200,000 increased both years.

National firm Crowe Chizek has completed its previously announced merger with Chicago-based CPA firm PTW. Going forward, PTW and its 50 staffers will now operate under the Crowe brand. Crowe merged PTW under its Public Sector Services umbrella and, as a result, the union created the largest single practice group in Illinois offering government-related consulting, attestation and financial services. Crowe's existing offices in Oak Brook and Chicago, and PTW's offices in Oak Brook, Chicago and Springfield, Ill., will remain. Headquartered here, Crowe ranked No. 12 on Accounting Today's 2004 Top 100 Firms list, with annual revenues of $247.3 million.

Just in time for consideration by the President's new bipartisan panel on tax reform, National Taxpayer Advocate Nina E. Olson has released a report to Congress that identifies the complexity of the Internal Revenue Code as the most serious problem facing taxpayers and the IRS alike. "Without a doubt, the largest source of compliance burdens for taxpayers and the IRS alike is the overwhelming complexity of the tax code, and without a doubt, the only meaningful way to reduce these compliance burdens is to simplify the tax code enormously," Olson wrote. The report cited the alternative minimum tax , the earned income tax credit, and the large number of provisions designed to encourage taxpayers to save for education and for retirement as key illustrations of the problems of complexity wrought by the 1.4 million-plus word tax code. Once again, Olson noted the problems associated with the alternative minimum tax. "The need for AMT relief looms like the proverbial elephant in the room," she said, "and for that reason we once again, for the third year, recommend its repeal." The report also recommended that Congress simplify certain tax burdens on small businesses, streamline and simplify tax incentives for education savings and spending, streamline and simplify tax incentives for retirement savings, and provide guidance to the IRS to accept a broader array of offers in compromise submitted under a new "equitable consideration" standard.

Konigsberg Wolf, a CPA, tax and management consulting firm headquartered here, said that it has merged in Steven Merdinger and Peter Gadaleta as partners to the concern. Merdinger and Gadaleta formerly were partners in the New York-based firm of Merdinger, Fruchter Rosen & Co., where Merdinger was founding partner. The addition of Merdinger and Gadlata brings Konigsberg's partner total to 13, with a total staff of 50.

Regional powerhouse Horne LLP, a 21-partner firm based here, has bolstered its staff and expanded its Tennessee presence with the merger of Jackson, Tenn.-based Crain & Co. into its fold.

The Internal Revenue Service has updated for three states the tables that taxpayers can use to determine whether they'll benefit from deducting sales tax rather than state and local income taxes.

Washington - Senate Finance Committee chair Chuck Grassley, R-Iowa, and ranking member Max Baucus, D-Mont., are calling for an independent investigation by the Government Accountability Office of the Offer in Compromise Program.In a letter to Treasury Secretary John Snow, the senators had questioned the Internal Revenue Service and Treasury implementation and administration of the OIC program. Based on the IRS response, the senators said that they have called for an investigation.

IRS INTEREST RATES UNCHANGED FOR THE FIRST QUARTER OF 2005: Interest rates for calculating the amount owed on refunds and deficiencies will remain unchanged for the calendar quarter beginning Jan. 1, 2005, the Internal Revenue Service said.The rates will remain at 5 percent for overpayments (4 percent for corporations); 5 percent for underpayments; 7 percent for large corporate underpayments; and 2.5 percent for the portion of a corporate overpayment exceeding $10,000. The rates are computed from the federal short-term rate based on daily compounding determined during October 2004.