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- Written by: Joshua Fluegel
Cloud Accounting Roundtable
Cloud accounting software has freed CPAs from many of the constrictions of 20 years ago. A CPA can now work from multiple locations and get more in-depth input from clients in a way that is convenient for them. This is all the more reason why such software should be selected carefully. CPA Magazine invited industry thought leaders to a roundtable discussion to get their views on recent developments in cloud accounting software, what mistakes and/or opportunities CPAs should be aware and tax professionals should look out for when selecting cloud accounting software?
KURT KUNSELMAN CEO of AccountingSuite
What is a recent development and/or useful feature in cloud accounting software?
Adding collaboration tools such as chat with your accountant or chatting with other users within the cloud service with the ability to create tasks. Cloud accounting is about collaboration. The more tools that are added, such as chat with others in your account, the more efficient we all become and it redefines the purpose of cloud accounting “software” - which is really a service. Chat capabilities that also allow for creating tasks will become industry standard and will also redefine daily workflows within tax, client accounting services and overall company operations. This not only creates the efficiencies with accountants and other users, but, keep in mind, it includes third-party users that are part of your account such as contractors and third-party fulfillment partners.
What is something tax professionals should look out for when selecting cloud accounting software?
The ability to export a clean and useful file that groups all information from a cash basis chart of accounts into the correct categories for the schedule that is needed for Sole Prop, C Corp, S Corp, B Corp, and Non Profits. In addition, the tax professional should look for a solution that has built in controls for best practices and allows their clients to scale their business. The old saying “garbage in/garbage out” applies to tax professionals as well. They need to be assured that the cloud accounting software is just not letting clients create bad data. As our technology solutions become more sophisticated, we can automate best processes and prevent users from entering data where it’s not supposed to be in the first place. We are not there yet, but soon in the future we should be as we move to hands-free accounting.
DR. CHANDRA BHANSALI Co-founder and CEO of AccountantsWorld
What is a recent development and/or useful feature in cloud accounting software?
Automation is key in cloud-based accounting software. The ability to automatically update accounting data with payments made and received is an incredibly useful feature for both accountants and their clients alike. Automation reduces the effort and time it takes to follow-up with clients to receive and aggregate information. It enhances accuracy of data by using the ability to identify similar transactions and to route them to the right account automatically. Therefore, it cuts down a significant amount of time and cost in preparing the books. Such features enable accountants to now serve more clients within their existing resources. Obviously, it increases revenue and profitability.
What is something tax professionals should look out for when selecting cloud accounting software?
Most accountants agree the more their clients are involved in data entry, the more mistakes they’ll be left cleaning up. Cloud-based accounting software that allows accountants to provide limited access to their clients when necessary is the ideal choice. This collaborative cloud-computing model will help reduce the need to comb through multiple platforms to aggregate data, increasing a firm’s efficiency, productivity and profitability.
CECE MORKEN Executive Vice President and General Manager, ProConnect Group at Intuit
What is a recent development and/or useful feature in cloud accounting software?
There are two very useful features that will save accountants a significant amount of time and reduce the number of tools they need to use. The first is the integration with tax. During tax season, accounting professionals spend about five hours per client cleaning up their books to prepare them for a tax return. The time-saving integration simplifies workflow by creating a seamless, end-to-end experience that translates a client’s books into a tax return. The second useful feature is practice management. A cloud-based solution designed to be the one place for accountants to effortlessly and seamlessly manage workflow, client communications and daily operations. The feature will leverage data and user behavior patterns to automate overhead and identify work that needs to get done, eliminating the need for accountants to discover and enter tasks manually.
What is something tax professionals should look out for when selecting cloud accounting software?
Tax professionals, like all accounting professionals, should do their homework before choosing a cloud accounting software. Firms should choose a solution that makes working and collaborating easier for their clients and their staff. An integrated solution across bookkeeping, accounting, and tax reduces data entry errors, saves time across the workflow, and makes communication easier and more secure. By connecting your client files directly to your cloud accounting solution, you also can view your client files in real-time, which saves time during year-end clean up and gives you the ability to proactively make a difference with your clients.
TERESA MACKINTOSH CEO of Trintech
What is a recent development and/or useful feature in cloud accounting software?
One of the latest advancements in cloud accounting software space is Risk Intelligent Robotic Process Automation. Risk Intelligent Robotic Process Automation allows your organization to live and thrive in a risk-based world. One where the robots know the tolerances that are allowed according to your organization’s policies and automatically runs activities, only notifying a person when there is an issue to be resolved. With Risk Intelligent RPA, an effective controls framework underpins the whole process and, by unifying all key control components together, it creates a detailed audit trail for compliance initiatives. To drive further efficiencies, Risk Intelligent RPA can be utilized to lower costs and reduce errors and enables your highly qualified employees to focus their time on developing valuable strategic insights for your business. This technology not only provides additional value to the business by increasing efficiency and effectiveness, but it also encourages the type of high-value work most likely to attract and retain high-quality people.
What is something tax professionals should look out for when selecting cloud accounting software?
As the office of finance continues to be faced with increasing regulation, ensuring the integrity of your period-end numbers is more of a challenge than ever before. When selecting a cloud-based accounting software, we recommend investing in a solution with an effective compliance framework that supports all of your Record to Report processes from the time a transaction occurs all the way through regulatory and financial reporting. Now, with compliance as a foundational principal of the entire financial close cycle, you can be confident that your reports are both accurate and compliant with all applicable regulations.
SATYAN PENMETSA Chief Technology Officer of Wolters Kluwer Tax & Accounting
What is a recent development and/or useful feature in cloud accounting software?
Cloud accounting software offers a number of useful features that benefit users with greater mobility, flexibility and convenience. Anywhere, anytime access to information so that firms can increase client response times, and having a central database to make it faster and easier to access files and fulfill client requests – are advantages that an on-premise solution cannot provide. Cloud-based solutions typically lend themselves to service offerings that customers can subscribe to as their business or clients demand. And today, clients are demanding more responsive service, including the ability to access self-serve features whenever they want. With cloud accounting software, clients with busy schedules have the advantage of not needing to meet in person to handle paperwork or sign forms. Accounting staff can work from home or create non-traditional work hours since employees can stay connected to the office at all times of day and from all locations where they have internet access.
What is something tax professionals should look out for when selecting cloud accounting software?
When selecting cloud accounting software, professionals should make sure to find the right partner to work with to make a successful move to the cloud. The partner should be able to support them should they choose to take pieces of their workflow and move it to the cloud – enabling them to make the process changes needed for cloud adoption in phases – or migrate completely. Additionally, it’s important for professionals to outline their current and future goals for moving to the cloud. They should consider a cloud accounting software provider that will not only serve their needs, but partner with them along the way to ensure their goals are met from initial implementation to future growth.
KERI GOHMAN President of Xero Americas
What is a recent development and/or useful feature in cloud accounting software?
Machine learning and automation are key developments in cloud technology that allow accountants to focus more on the advisory services instead of data entry. The innovative machine learning automation systems will transform the accounting practices of small businesses and their accounting partners, saving valuable time and money. Accounting software is getting smarter, automatically performing analysis which previously required human intervention. Consider tasks like bank reconciliation: systems can learn how to completely automate this job, freeing up your time to provide a deeper level of service to help your small business customers thrive. As machine learning and AI have an increasing role in the profession, it will make accountants more proficient, more productive, capable of taking on and handling more clients, while also delivering more value through insight, rather than through long hours of tallying up figures. Machine learning cannot match human insights; rather, it complements brain power to benefit all involved.
What is something tax professionals should look out for when selecting cloud accounting software?
With the evolution of cloud technology, the way people prepare for tax season has changed, making the process easier and more streamlined. Clients and accountants alike have increasing control of their data and can use it to make better business decisions and meet tax obligations with ease. When a tax professional is selecting cloud accounting software, aim for mobility, affordability, simplicity of use and connectivity to other applications. Cloud technology can automate things that a business would typically have to do manually, such as reconcile their books, manage cash flow and integrate with other services and applications - make sure the software you select does this seamlessly.
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- Written by: T. Steel Rose, CPA
President Trump announced what has been called “the biggest tax cut” in U.S. history on April 26. The one-page plan provides 12 bullet points to simplify the tax code and reduce taxes. Six points in the one-pager worth remembering are:
1) Reducing the number of individual tax rates to three: 10%, 25% and 35% from seven: 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.
2) Doubling the standard individual tax deduction to $12,700 for single filers and $25,400 for joint filers.
3) Repealing the alternative minimum tax.
4) Eliminating the estate tax.
5) Repealing the 3.8% Obamacare tax on net investment income on incomes generally above $200,000 and return the top tax rate on capital gains and dividends to 20%.
6) Reducing the tax rate to 15% from 35% for businesses, presumably for corporations S corporations and partnerships.
The plan will depend on stakeholders and Congress developing details that will provide “massive tax relief, create jobs, and make America grow again,” according to the one-pager.
The remaining six points are less specific and range from, “providing tax relief to help families with child and dependent care expenses,” to, “eliminating most of the tax breaks that mainly benefit high-income individuals.” According to a statement by Gary Cohn, President Trump’s chief economic advisor and director of the National Economic Council, “home ownership, charitable giving, and retirement savings will be protected – but other tax benefits will be eliminated.”
The “Business Reform” section includes points imposing a one-time repatriation tax that would permit U.S. companies to bring back trillions of dollars held overseas at a previously proposed 10% rate. Two points require the most clarification and relate to eliminating tax breaks for special interests and a territorial tax system to level the playing field for American companies.
The details may consume the rest of 2017 but it appears business tax cuts are coming and those cuts will not be limited to regular corporations. Therefore, relinquishing subchapter S elections or converting partnerships or limited liability companies to regular corporations is premature especially since the plan is not expected to be retroactive for 2017.
Over the last 40 years the words, “tax simplification,” has meant employment insurance for CPAs. Although the rhetoric from Gary Cohn does represent a broadside to impact the simplified tax prep industry, Cohn noted in his statement, “In 1935, we had a one-page tax form consisting of 34 lines and two pages of instructions. Today, the basic 1040 form has 79 lines and 211 pages of instructions. Instead of a single tax form, the IRS now has 199 tax forms on the individual side of the tax code alone. Taxpayers spend nearly 7 billion hours complying with the tax code each year, and nearly 90% of taxpayers need help filing their taxes.”
Cohn’s statement continues, “We are going to double the standard deduction so that a married couple won’t pay any taxes on the first $24,000 of income they earn. So in essence, we are creating a 0% tax rate for the first $24,000 that a couple earns.
“The larger standard deduction also leads to simplification because far fewer taxpayers will need to itemize, which means their tax form can go back to that one simple page.”
The one-pager began with a section titled “Goals For Tax Reform.” Bullet points describing the goals included: Simplify our burdensome tax code; Provide tax relief for American families—especially middle –income families; and Lower the business tax rate from one of the highest in the world to one of the lowest.
Reiterating the main goal, Cohn stated, “Job creation and economic growth is the top priority for this Administration, and nothing drives economic growth like capital investment.”
The one-pager concludes with a section titled “Process,” describing the plan wherein the Trump Administration will continue working with the House and Senate to develop details of the plan than can pass both chambers.
Let the Congressional lawmaking games begin. Write comment (0 Comments)- Details
- Written by: Kathleen M. Lach
The IRS is rolling out a new test program for streamlined installment agreements which runs through September of 2017. It will then make a determination whether it will become permanent.
A “streamlined” installment agreement program was originally put in place by the IRS for taxpayers with outstanding tax liabilities of less than $25,000. Under this program, a taxpayer would qualify for a payment plan to address unpaid taxes without providing detailed financial information to the IRS, and without being subject to its determination on how much disposable income he had each month to pay toward the debt. Taxpayers were automatically granted the agreement to pay the tax with payment terms extending a maximum of 60 months. In 2012, that program was expanded to include taxpayers with liabilities of less than $50,000, and the terms were extended to a maximum payment period extending up to 72 months, again without having to provide detailed financial information, and without being subject to the IRS’ determination on how much a taxpayer could afford to pay each month based on his financials.
Whether due to diminished resources at the agency, or the need to improve collection efforts, the terms of the streamlined program are again expanding. Under the new parameters, individual taxpayers with an assessed balance of tax, penalty and interest between $50,000 and $100,000 may take advantage of accelerated processing of their installment agreement request. The taxpayer’s proposed monthly payment must be greater than his total assessed balance divided by 84, or the amount necessary to fully satisfy the liability by the Collection Statute Expiration Date. Both the threshold for qualification under this program, and the time to pay, have been significantly expanded.
During this test period, this expanded criteria for streamlined processing will only be available for installment agreement requests submitted to Small Business/Self Employed (SB/SE) Campus Collection Operations (including the Automated Collection System), and will not be available for requests submitted to Wage & Income Accounts Management, SB/SE Field Collection or through the Online Payment Agreement application.
The following chart summarizes the current program, and changes within the test program for individual taxpayers who have filed all required returns and have an assessed balance of tax, penalties and interest of $50,000 or less. The test criteria also apply to defunct businesses with tax debts up to $25,000, and defunct sole-proprietorships with tax debts up to $50,000. For in-business taxpayers, test criteria apply to income tax debts only, up to $25,000.
| CURRENT Streamlined CRITERIA | TEST CRITERIA |
| Payment Terms Up to 72 months – or – the number of months necessary to satisfy the liability in full by the Collection Statute Expiration Date, whichever is less |
Payment Terms None. This criteria is unchanged. |
| Collection Information Statement Verification of ability to pay required in event of an earlier default for assessed balances of $25,001 to $50,000. |
Collection Information Statement Not required. |
| Payment Method Direct debit payments or payroll. Deduction required for assessed balances of $25,001 to $50,000. |
Payment Method Direct debit payments or payroll. Deduction is preferred, but not required. |
| Notice of Federal Tax Lien Determination not required for assessed balances up to $25,000. Determination is not required for assessed balances of $25,001 - $50,000 with mandatory use of direct debit or payroll deduction agreement. Note: If taxpayer does not agree to direct debit or payroll deduction, then they do not qualify for Streamlined IA over $25,000. |
Notice of Federal Tax Lien No change in criteria for assessed balances up to $25,000. Determination is not required for assessed balances of $25,001 - $50,000 with the use of direct debit or payroll deduction agreement. Note: If taxpayer does not agree to direct debit or payroll deduction, then they do qualify for Streamlined IA over $25,000, but a Notice of Federal Tax Lien determination will be made. |
The chart below shows the changes for individual taxpayers who have assessed balances between $50,001 and $100,000. The test criteria also apply to all out of business sole-proprietorship tax debts between $50,001 and $100,000.
| CURRENT CRITERIA | TEST CRITERIA CHANGES |
| None - Streamlined processing criteria currently does not apply to assessed balances of tax between $50,001 and $100,000. |
Payment Terms Collection Information Statement Payment Method Notice of Federal Tax Lien |
A taxpayer may request a payment arrangement by filing Form 9465, Installment Agreement Request, with the IRS. Streamlined arrangements may also be made by visiting a walk-in center, or by phone. The fees for entering into such an agreement have increased for 2017:
| Type of Installment Agreement | New Fee | Prior Fee |
| Regular installment agreement | $225 | $120 |
| Regular direct debit installment agreement | $107 | $52 |
| Online payment agreement | $149 | N/A |
| Direct debit online payment agreement | $31 | N/A |
| Restructured or reinstated installment agreement | $89 | $50 |
| Low-income rate | $43 | N/A |
A taxpayer may qualify for a reduced fee of $50 if his income is below a certain level. A determination on the reduced fee is made using Form 13844, Application for Reduced User Fee for Installment Agreements.
It is also important to remind your clients that interest and late payment penalties on any tax not paid by its due date continue to accrue even if the request to pay in installments is granted. Further, if payments are late, or a new liability is assessed on a later return, the agreement will be in default, and the IRS may take enforcement actions, such as filing a Notice of Federal Tax Lien or an IRS levy action, to collect the entire amount owed.
Charts taken from www.irs.gov
Kathleen M. Lach is a Partner in the Tax and Litigation Departments of Arnstein & Lehr LLP. She represents clients before a variety of different tax authorities, including the Internal Revenue Service, the Illinois Department of Revenue, and the Illinois Department of Employment Security.
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Why are you renewing your Microsoft Office software when there are three valid competitors out there that are free? Apple’s word processor (Pages), spreadsheet program (Numbers), and presentation software (Keynote) are now free to download for both macOS and iOS. Although Apple’s productivity apps are not exactly awesome, its hard to argue with free software.
Google Docs is a free web-based word processor, spreadsheet, and presentation application. The online app allows users to easily share documents and collaboratively work on them in real-time without asking you to pay for it. There is also the open-source LibreOffice suite also serves as a free Microsoft Office replacement.
Next up, free tax software, at least for consumers. Not just the Free File Alliance software for consumers making under $64,000 but also Credit Karma and FreeTaxUSA who offer an ever broader array of forms to the end user at no charge, with no income limitations.
While professional tax prep may not be free yet, it seems like an odd decision in the year 2017 to not be using software that is.
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- Written by: CPA Magazine
Celebrities threatening to leave America if Donald Trump was elected president included Barbara Streisand, Miley Cyrus, Amy Schumer, Samuel Jackson, Rosie O’Donnell and Whoopi Goldberg.
According to Salon magazine, O’Donnell and Goldberg also threatened to move abroad if George W. Bush got elected, along with Matt Damon, Tim Robbins and Susan Sarandon. Spoiler Alert: Trump and Bush got elected, and all those people are still here. All could have benefitted from wise tax counsel before making such bold, unfulfilled statements.
First of all, moving to the country of choice, Canada, is not easy. You have to have a lot of money, a sponsor and a Canadian job (or job offer) to even be considered. Secondly, U.S. persons must continue to report their worldwide income and pay taxes. Thirdly, they can choose to join Eduardo Saverin, co-founder of Facebook, and rock star Tina Turner as the only high-profile U.S. citizens to renounce citizenship.
Renouncing U.S. Citizenship Requires:
• A fee of $2350 paid to the State Department.
• A possible exit tax similar to capital gains for those with assets exceeding $2 million.
• A 30% withholding tax on certain forms of subsequent U.S. source income including dividends and deferred compensation.
• Be prohibited from purchasing firearms under the Gun Control Act of 1968.
• Reciting an oath where you, “absolutely and entirely renounce your United States nationality, together with all rights and privileges and all duties of allegiance and fidelity to the United States of America.”
That last one was what changed Elizabeth Taylor’s mind in 1968.
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