Despite a late start, a host of tax-law changes, and a complicated new preparer registration process, the 2011 tax season came to a relatively smooth conclusion on April 18. The Internal Revenue Service reported that the number of e-filed returns had topped 100 million for the first time, and that it expected to receive about 10 million extension requests, roughly the same as last year.
While an inspector general's report gave the IRS mixed marks at mid-season - it caught more fraudulent returns, but was still having problems spotting erroneous credit claims, and had improved accuracy at its Taxpayer Assistance Centers, but at the expense of long wait times - taxpayers gave CPAs and other professional preparers generally high marks (see page 44).
The chairs of the Financial Accounting Standards Board and the International Accounting Standards Board announced that they would be pushing back a number of priority convergence projects into 2012. The 2011 deadline was not a deadline, they said, only a target (see story on page 10).
On a happy note, Congress finally got around to repealing some high-profile 1099 reporting requirements. The much-decried requirements were enacted as part of last year's health care reform, and would have mandated businesses to report any purchases of goods or services of more than $600 a year from another vendor to the IRS. Some other 1099 requirements, however, remain in effect (see Tax Strategy, page 20).
On a less happy note, Congress also held a hearing on the accounting profession's role in the financial crisis. For the most part, everyone agreed that auditors did not create the crisis, but they could have done more to prevent it in their role as gatekeepers to the capital markets.
NO REST FOR THE WEARY
Looking forward, the IRS began soliciting recommendations for its 2011-2012 Guidance Priority List, which it uses to identify and prioritize the guidance it will issue over the next year (see page 15 for details).
The service also announced plans to expand and make permanent a six-year-old pilot program for ensuring that large corporations are complying with their tax obligations. The Compliance Assurance Program allows businesses to work with an IRS team to identify and resolve potential tax issues before a tax return is filed. A new pre-CAP program will give interested businesses a clear roadmap to gaining entry to the CAP, and a new maintenance program is being introduced for businesses that have been in the CAP, have fewer complex issues, and have established a track record of working with the IRS. The CAP pilot began in 2005 with 17 taxpayers, and now has 140 participants. Only taxpayers with assets of $10 million or more are eligible to participate.
The CAP plans stood in contrast to a report from an independent watchdog that a 2009 IRS initiative to crack down on high-income taxpayers with assets abroad had only managed to audit 13 returns in a year-and-a-half. According to internal memos, the IRS's Global High Wealth Industry Group, which has 78 agents, had met only 19 percent of its audit objectives over the first half of fiscal 2011.
Barry Salzberg, the chief executive of the U.S. firm of Deloitte, will succeed James Quigley as CEO of the global firm, Deloitte Touche Tohmatsu, on June 1. Salzberg will be succeeded as Deloitte LLP CEO by Joseph Echevarria, who is currently the U.S. managing partner and chief operating officer. The new chairman will be Punit Renjen, who is succeeding Sharon Allen.
The American Institute of CPAs announced a new certificate program to allow accounting professionals to demonstrate proficiency in IFRS (see page 23).
The Securities and Exchange Commission sanctioned five India-based affiliates of PwC that had served as auditors of Satyam Computer Services Ltd. for conducting deficient audits and enabling a massive accounting fraud to go undetected for several years. The affiliates agreed to settle the SEC's charges and pay a $6 million penalty, the largest ever by a foreign-based accounting firm. In addition, the PwC India affiliates agreed to refrain from accepting any new U.S.-based clients for a period of six months.
Richard Breeden stepped down as chairman of H&R Block on April 18. A former SEC chair, Breeden had led the board of the tax prep giant since winning a proxy contest in late 2007. Though Block experienced some knocks in his tenure, including going through a number of chief executives and a disastrous foray into mortgages, it looks to have had a fairly successful tax season this year.
Pascal Houillon took over as presidentand chief executive of Sage North America a little earlier than planned, when former CEO Sue Swenson stepped down on March 31. Under a succession plan announced in December, Houillon, who previously headed Sage France and has been meeting U.S. partners and customers since January, had been expected to take the helm in mid-2011.
CPA-focused consulting firm and hosting service Xcentric purchased technology consultancy InfoTech Partners North America, bringing on board prominent consultant Roman Kepczyk.
Accounting Today is now acceptingsubmissions for its annual list of the Top CPA Firms by Assets Under Management. Details and a submission page can be found on our Web site, AccountingToday.com.
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