Tax Strategies

Accountants and journalists have a lot in common—a lot of people don't like us. There was a period during the accounting scandals when accountants and reporters were right next to each other down, far down the list of most admired professions, and we hadn't moved up. Another thing we have in common is that our businesses have been built looking backwards. Accountants record historical transactions. Journalists record things that have happened. Accountants have been told they must become more forwarded looking. Journalists must do the same. In fact, accountants have an easier time. They have audits and taxation, a regulatory environment that provides the potential for a steady stream of business. No one is required to read a print publication or visit a publishing house's Internet site. I am not predicting the end of print. Every time I visit Borders or Barnes & Noble, I witness crowds devouring books and magazines. Print isn't going away. But journalists must change because the Internet removes the need to have so many of us providing historical information. That is particularly true in technology journalism. Most people aren't concerned about what happened in the past. Who wants to read year-old software reviews? We all want to know what we are going to be able to buy within the next year. What's the latest gadget? And that's the long-term view. The real solution for journalism is difficult because it requires an investment in people, not easy to do when margins are under pressure. But unless we are all going into business selling rejiggered data that is gathered by a bunch of electronic grunts, the main thing we have to sell is the knowledge we have that can be used to help our readers make decisions to keep their businesses alive and breathing. There is no gain in body counting. I've never believed too much in the concept of disintermediation. That's the process by which the Internet supposedly removes the need to have intermediaries who interpret things. On the contrary, we need more intermediaries. If you have ever walked into a store with a large audio-video section, you have probably found yourself bewildered by choices. It's the sales person's job to limit choices—what's your price range, how serious are you about music and what types? Without a salesperson's help, there is a good chance you won't make a buying decision. The vast amount of data available is like that confusing sales room. Without someone to limit the choices, it's hard to make a decision. This is the market in which journalists should have an opportunity to prosper. Like accountants, we must know what our market is. There's not much to be gained from covering accounting scandals and Sarbanes-Oxley, except stroking your own ego, if your best chance of serving readers is talking about write-up software and how they can do a better job hiring. We must interpret, not record. As I like to say, "Disintermediate, never. Intermediate now!" Or risk disintegrating as a profession.

The U.S. Tax Court will continue its consideration of a requirement that would push the Internal Revenue Service commissioner to publicly file answers to all small tax cases.Chief Judge John Colvin first announced the proposed change in September, noting that small tax cases comprise about half of the court’s docket. He said that petitioners in those cases are increasingly being represented by low-income taxpayer clinics, and suggested that those parties, as well as the court itself, might benefit from improved pretrial communication between all the parties involved in settling some of those cases.

ADP Employer Services, a division of Automatic Data Processing Inc., announced that it has completed its acquisition of Taxware LP from First Data Corp.

State tax policy has only a modest effect on entrepreneurship rates, according to a report released by the Small Business Administration’s Office of Advocacy.A new analysis by professors at the University of Tennessee and Creighton University takes into account tax rates, as well as the type of taxes in a state’s portfolio, to reach the conclusion. “State Tax Policy and Entrepreneurial Activity” looks at detailed tax policy information from 50 states, spanning from 1989 through 2001.

After years of sounding the fiscal imbalance bell, Comptroller General David Walker, the head of the Government Accountability Office, has committed a to-do list to paper for the 110th Congress.In a letter dated Nov. 17, Walker outlines a number of areas his federal watchdog agency, says the newly-elected politicians should consider in getting a “jump-start” on legislative planning.

From its origins as a response to client inquiries on how transactions would affect their tax returns, tax planning has morphed into a year-round enterprise for practitioners, as well as a solid builder of client loyalty.Yet it's still a relatively well-kept secret, according to Jorge Olivarietta, senior product manager at Lacerte. "When a client comes in for tax prep, it's not just about inputting the information and creating a return," he said. "An accountant's job is to take the inputs, and make sure that what the customer is planning on doing is the right action. At the end of the day, you want to come as close to zero liability as possible."

It's not uncommon to read stories about companies that stretch the rules to avoid paying taxes. But currently there's a tax that many companies are already paying, though at present they have no legal obligation to do so.The Streamlined Sales Tax Program, the tax designed to recoup perceived lost state tax revenues due to online and other out-of-state sales, is chugging along, even though federal legislation to institute it on a permanent basis appears to be standing still.

With the Democrats winning control of the U.S. House of Representatives and Senate, the tax legislative outlook has shifted to new priorities and concerns, according to Mel Schwarz, a partner in Grant Thornton’s National Tax Office.

Tax and financial products provider Thomson Tax & Accounting has bolstered its Fast-Tax print services to include Schedule K-1s for trusts and estates.

Business tax reform needs a bipartisan, national consensus, but is absolutely necessary for the country to remain competitive in a global economy, according to Senate Finance Committee chair Chuck Grassley, R-Iowa."I think the consensus is there that the business tax system is in desperate need of reform," he told a recent hearing on the business tax system. "But we need to start building consensus on how to do it."