THE SEASON BEGINS
Tax season started just a few days after we went to press, with only slightly ominous overtones, including warnings from both the commissioner of the Internal Revenue Service and the National Taxpayer Advocate about service levels and possible delays.
In the week before January 20, Commissioner John Koskinen sent out a memo to staff noting that taxpayers who file on paper could expect up to a week's delay in getting their refunds, and that, due to budget cuts, the IRS would likely face a longer hiring freeze, as well as the possibility of a two-day furlough later in the year. (It also emerged that the service was closing the remainder of its overseas taxpayer assistance centers.)
And as part of one of her annual reports to Congress, National Taxpayer Advocate Nina Olson noted that successive budget cuts had led to a "devastating erosion of taxpayer service." The report expressed concern that taxpayers this year are likely to receive the worst levels of taxpayer service since 2001, when the IRS implemented its current performance measures.
This all may partly explain a January report from the Treasury Inspector General for Tax Administration that found that the amount of Earned Income Tax Credit payments made in error had increased from $10.5 billion in 2003 to $14.5 billion in 2013.
And it wasn't as if the IRS, along with the Treasury Department and the Department of Health & Human Services, already had their hands full preparing for the onslaught of questions they anticipate about the Affordable Care Act. Having already updated or created a number of tax and reporting forms, they were also planning to roll out a number of resources, including online tools to help individuals connect with local tax prep services and determine if they're eligible for an exemption from the mandate.
On the positive side, the average fee for preparing a tax return, including an itemized Form 1040 with Schedule A and a state tax return, will increase a few dollars to $273 this year, a 4.6 percent increase over the average fee of $261 last year, according to the National Society of Accountants' annual survey. The average cost to prepare a Form 1040 and state return this season without itemized deductions is expected to be $159, also a 4.6 percent increase over the average fee last year, which was $152. Most accounting firms offer prospective clients a free consultation, the NSA pointed out, which can be worth well over $100 based on the hourly fees of most tax preparers.
Not even the coldest winter could chill the profession's ardor for mergers, with a whole host announced from the end of last year, including several involving Top 100 Firms.
The Financial Accounting Standards Board released an Accounting Standards Update to improve the way private companies account for intangible assets in a business combination.
The Public Company Accounting Oversight Board updated its standard-setting agenda after undergoing criticism that it is not moving faster on releasing new standards. The new agenda was posted to the board's Web site in early January and notes that the PCAOB staff anticipates recommending that the board propose a standard and related amendments on auditing accounting estimates, including fair value measurements and related disclosures, for public comment in the fourth quarter of 2015. The staff had released a public consultation paper last August seeking input on the matter. On other important matters, such as the auditor's evaluation of a company's ability to continue as a going concern, and how auditors should deal with specialists hired by companies to help with areas such as fair value measurements in financial statements, the staff anticipates that the PCAOB will issue a consultation paper in the first quarter of this year. The board is still planning to turn its attention eventually to some long-delayed standards, such as for audit confirmations.
The Securities and Exchange Commission launched a pilot program aimed at simplifying investor analysis and comparisons of public company financial statement data using the Extensible Business Reporting Language, or XBRL.
The IRS introduced an International Data Exchange Service that financial institutions and tax authorities in other countries will use to securely send their information reports on financial accounts held by U.S. persons to the IRS under FATCA or pursuant to the terms of an intergovernmental agreement, as applicable.
BEYOND TAX AND AUDIT
Boomer Consulting announced that it had merged with Flowtivity, and that Flowtivity founder Dustin Hostetler will join Boomer Consulting.
Accounting and professional services marketing pioneer Bruce W. Marcus died in early December at the age of 89. The author and co-author of numerous seminal books on accounting marketing, including Client at the Core and Professional Services Marketing 3.0, as well as a long-time consultant and educator, Marcus began his career at Peat Marwick Mitchell in 1951, becoming the first-ever communications director at a Big Eight firm, and later founded the highly influential Marcus Letter. In addition to consulting with a long roster of clients among the Big Four and large law and consulting firms, his advice was also sought by major investment and commercial banks.
David Moynihan, a past president of the NewYork State Society of CPAs and audit partner at Top 100 Firm the Bonadio Group, died in early January after nearly a year-long battle with cancer. Moynihan was president of the society from 2009 to 2010, and also represented the society as the state drafted the rules for New York's first peer review oversight program.
Tax fraud took down a congressman, with New York Representative Michael Grimm resigning his House seat after pleading guilty to filing a false tax return. He faces up to three years in prison.
