It is bewildering to witness the “goings-on” in Washington DC these days…partisan bickering, gridlock, inability to meet critical deadlines…the list goes on and on. It is definitely a time for a change. Sweeping change? Not highly likely, nor possible. But how about a slight change that is happening gradually as we speak. CPA’s are gaining a presence in Congress. After last November’s election, the CPA profession can claim to have twelve members roaming the halls of Congress. In the November 2012 election, our profession added two members to the House of Representatives, Tom Rice (R-South Carolina) and Patrick Murphy (D-Florida). They join eight Representatives who were re-elected to serve additional terms in their districts in Texas, Kansas, Mississippi, Minnesota, California and Ohio. In addition, there are two CPA’s serving terms in the Senate, Mike Enzi (R-Wyoming) and Ron Johnson (R-Wisconsin).

CPA’s are known for their ability to advocate for their clients, address difficult situations with solutions and compromise where needed with poise and dignity. These sound like traits that could be useful in Washington DC these days. Let us hope that our CPA Congressmen can brings those characteristics to the halls of Congress and infiltrate the toxic atmosphere that seems to reside on the Hill over the past few years.

Newly-elected Democratic Rep. Patrick Murphy displayed an act of bi-partisanship recently when preparing to attend the President’s State of the Union address in February. He chose to sit with his newly-elected Republican colleague and fellow CPA Rep Tom Rice during the President’s speech. Having run on a pledge of bi-partisanship, he felt it important to stay true to his word and reach out to his friends across the aisle for the occasion. Additionally, many of his first votes have been in support of Republican bills that have advanced important budgetary and fiscal measures while also supporting common-sense Democratic amendments to take a balanced, bi-partisan approach to deficit reduction that would protect seniors, veterans, troops, and middle class families from devastating cuts.

Let us all hope that CPA’s can help make a difference in Washington DC.

The American Institute of CPA’s has long recognized the problem of the late receipt of Form K-1’s for many taxpayers and their return preparers. On February 28, 2013, legislation was introduced in the 113th Congress that was suggested by the AICPA to address this.

As drafted the original tax return due dates would change as follows:

• Form 1065 would be due on March 15
• Form 1120S would be due on March 31
• Forms 1040, 1041, and 1120 would be due on April 15
• Foreign Trusts with a U.S. Owner Form 3520-A and FBAR Form TD F 90-22.1 would be due April 15

Additionally, the extended due dates would change as follows:

• Forms 1065, 1120S, 1120 and 1040 would still retain a 6 month extension
• Form 1041 would be extended 5.5 months to September 30
• Form TD F 90-22.1 and Form 3520-A would be extended 6 months to October 15 (and for the TD F90-22.1, the Secretary of Treasury could waive penalties for first time failure to file an FBAR extension request)
• Exempt Organizations Forms 990 (series), 4720, 5227, and 8870 would be allowed a 6 month extension to November 15
• Employee Benefit Plans Form 5500 would be allowed a 3.5 months extension to November 15
• Form 3520 would be allowed to be extended separately from the owner’s tax return

These changes would be effective for the 2014 tax years and the 2015 tax filing season.

More information on this topic at:  AICPA.org

Now that we are in the thick of tax season, I have to say…I’m tired. No, not of work. I’m physically and mentally tired, mainly because I don’t get enough sleep during the night. Longer work days and longer work weeks have made my available sleep time appear to diminish. (Oh, and let’s not get started about daylight saving time; I’ve been cursing it all week. I do like sun in the evenings, though.) In order to combat diminishing sleep time, I think we need naps during the work day.

How does that sound? Twenty minutes or so during the day in a quiet, dark room. You wake up feeling refreshed and productivity increases. That is a winning combination. It seems like a cost effective and easy solution to get better and more work out of everyone. The trick is to convince those in charge that naps really are a good thing. Oh, yeah, and have a room (or a pod) where you can nap.

This whole idea isn’t a joke, either. I constantly hear and read stories about Americans being perpetually tired. In the USA Today article linked above, health experts are quoted as saying “worker fatigue is an epidemic that is weighing on workers’ health and productivity.” It only makes sense that a constant lack of sleep would take its toll and a recent study is showing that sleeping insufficient hours can lead to eating more and weight gain. Take the study for what it’s worth, but getting more sleep at night sounds like the right thing to do.

Where does that leave my argument now? I just said that getting more sleep at night is the right thing to do after previously arguing for naps during the work day. I would have to say, ultimately, becoming better rested and finding more time to sleep is up to me (the individual). While I surely wouldn’t mind a chance to nap once in a while, I really should focus on getting to bed earlier and at a consistent time. We should all shut down those electronic devices earlier (TV included) and turn off the lights. So, for now, I’ll work harder at taking care of myself, but to all those in charge reading this: naps during the work day equal increased productivity.

For the first time in history I have become slightly envious of North Dakota. Why would I be envious of a state that is so cold you have to plug in your car battery during winter nights? I’m envious because of their hot economy where unemployment is only 3.2%, not in the double digits as in Nevada. Their low unemployment rate mainly stems from hydraulic fracking which has allowed North Dakota to become the second largest oil producer in the United States, passing Alaska in 2012. This is a technology that could allow the United States to stop importing oil in ten or twenty years.

Hopefully Nevada can benefit from this new oil extraction technology, and recent news suggests it could profit. Noble Energy has recently budgeted $130 million to explore for oil and gas on lease holdings by Elko. They believe that there could be over a billion barrels of oil that could economically be drilled in today’s environment with hydraulic fracking. They estimate that production could be as high as 50,000 barrels per day, far in excess of the current 1,000 barrels being produced. This would create jobs for the drillers, pipeline constructors, and for all the supporting industries. In addition, this would bring in new taxes for the State and Counties from the net proceeds of minerals and business taxes.

I’m all for this potential diversification in Nevada’s economy. Sure there are potential risks with fracking like contaminating the groundwater, but if North Dakota can produce successfully over 700,000 barrels of oil per day I see no reason why Nevada can’t, assuming Noble’s tests are positive. And while I’m supporting a contentious environmental project that could be a boon to Nevada I’d like to throw my support behind another, Yucca Mountain. As a former Nye County resident, I can attest to how economically positive nuclear waste storage would be not to mention that it could blossom into more supporting industries. Nevada could be the hub for the whole nuclear industry and maybe we could show that recycling nuclear waste, as the French do, is not as dangerous as a concept as the government would like you to believe.

Are you planning on saving a portion of your tax refund this year? You should know about an option the IRS offers to make it easier for you to save. This can be done by including IRS Form 8888, Allocation of Refund, when you file your tax return. Using this form, you can split your refund between three options; direct deposit into a bank account, Series l Savings Bonds, or payment by check.

Many people take advantage of the ability to directly deposit their tax refund right into their checking account. But what they don’t know is they have the option to direct deposit funds in up to three different accounts. These bank accounts can be a checking account, savings account, Individual Retirement account (IRA), Health Savings Account (HSA), Archer MSA, Coverdell Education Savings Account (ESA), or TreasuryDirect online account. All of these provide many options to help you save.

The only time you can get a Series l Savings Bond in paper form is by getting it with your tax refund. On January 1, 2012, financial institutions stopped issuing U.S Series l Savings Bonds in paper form, meaning you cannot walk into a bank to purchase one. You have to purchase them electronically through a TreasuryDirect account. By using the tax refund option, you can get up to $5,000 worth of Series l savings bonds in paper form. These must be issued in multiples of $50 and can be allocated between three different savings bond registrations, meaning you can give these savings bonds as gifts or get them for yourself.

The Allocation of Refund form can help greatly with saving because you can choose how you want to receive your refund. For example, you can deposit part your refund in a savings account, get $150 of savings bonds, and have the additional amount sent to you by check. Everyone knows it’s hard to save your refund when you get that check, but by using this tool you can put aside a portion of your refund before you even have the chance to spend it.

The first known use of a blog was in 1999.  Blog is short for Weblog.  The Merriam-Webster defines a blog as “a Web site that contains an online personal journal with reflections, comments, and often hyperlinks provided by the writer; also: the contents of such a site”.

Internet users have jumped from 360 million in 2000 to over 2 billion in 2012 according to the Internet World Stats.    Over 1 billion of the 2 billion internet users were in Asia and 270 million in North America.

So is the reason for blogging to potentially reach 2 billion internet users?

Blogs can take a personal or professional approach.  Topics can include almost anything including politics, pets, comics, etc. or it can offer informative information.  Businesses can use blogs as a communication platform to interact with their clients and prospective or potential clients.

So, how about it? Facebook, Foursquare, Twitter. Do you use any of them? Do you post pictures and check-in when you visit places? While your intent may be to keep your friends and family in the loop (even when we don’t want to know), other parties may be interested too. Raytheon, a Massachusetts-based defense contractor, has been developing software that pieces together a “snapshot” of a person’s life using data obtained from social networking sites. Information about this software known as Riot, or Rapid Information Overlay Technology, was recently uncovered and reported by The Guardian (including a video of the software in use) and has sparked commentary and concern from different places.

At first glance, the software doesn’t sound that interesting. It’s picking up freely available information that we voluntarily shared. If we don’t want people knowing where we are, we should stop posting where we are. Sounds simple enough. (You may or may not know, however, that pictures are now often embedded with your latitude and longitude along with other information in its Exif data.) So then, is not using social media really the answer? As The Guardian’s article points out, the Riot software “demonstrates how the same social networks that helped propel the Arab Spring revolutions can be transformed into a ‘Google for spies’ and tapped as a means of monitoring or control.” Social networks aren’t necessarily just frivolous time wasters and places to repost pictures of cats. They can help people organize and connect in order to produce meaningful results. Not using social networks may not be the right answer.

While many of the comments made on The Guardian’s website about the article dismissed the reporting and called it sensational, I believe they are missing the point. Data mining from public websites is legal in most countries, but this data collection does not have any oversight or regulation. The Electronic Privacy Information Center’s Ginger McCall emphasizes this to The Guardian: “Social networking sites are often not transparent about what information is shared and how it is shared. Users may be posting information that they believe will be viewed only by their friends, but instead, it is being viewed by government officials or pulled in by data collection services like the Riot search.” Data collection is inevitable, but it would be nice to have more transparency about who’s collecting it and when our data is “open” to everyone. For now, though, maybe give some pause to your next social media post or check-in and remember that “everyone” may be able to see it.

I consider myself one of the lucky ones that had the opportunity to participate in the first TEDx held in Reno at the University of Nevada. I didn’t know what a TEDx event was, but happened to run across it on a LinkedIn message from Bret Simmons, University of Nevada College of Business associate professor and TEDxUniversityofNevada event organizer. I jumped on it and bought a ticket. It sold out within 24 hours.

Ideas worth spreading

17 speakers were selected from 70 proposals. These great stories are depicting what is happening in our community. And imagine, if these were only 17 out of the 70,  how many more are out there. Most, if not all of these speakers have a local connection, either as UNR graduates or current members of our community.

The speakers were divided into four areas:

Session #1 – Health and Hope:

Shawna Korgan, wife of author and motivational speaker Grant Kogan; Matt Bernardis, COO of First Warning Systems, Inc., a software and medical device company addressing early breast cancer detection; Michael Morkin, M.D.,  an ER physician at Renown Hospital who was on duty the day of the Reno Air Races crash; and Leilani Schweitzer, using her own experience with medical errors to become a patient liaison at Stanford Hospital.

Session #2 – Education:

Pedro Martinez, Lauren Ford and Deyanira Baca; superintendent for Washoe County School District, principal at Hug High School and a senior at Hug High School determined to succeed despite her difficult circumstances; Deanna LeBlanc, 2012 Nevada Teacher of the Year; Veronika Scavacini, an eighth grader with a mission to continue delivering LifeStraws to Kenya; Logan LaPlante, a 13 year old taking a different path he calls “hackschooling”; and Grant Davis, a singer/songwriter and survivor of the impact of his sister’s drug addiction on the family unit.

 Session #3 – Business and Entrepreneurship:

Ryan Dolan, General Manager of Dolan Automotive Group; James Kosta, CEO of 3G Studios; Laura Zander, Co-owner of Jimmy Beans Wool and Mark Estee, chef/owner of Campo Reno.

 Session #4: Bold Ideas Worth Spreading:

Brian Williams, youth motivational speaker challenging schools to compete in acts of “Kindness”; Robb Smith, a social entrepreneur and Grant Korgan, recovering from a spinal cord injury to trek to the South Pole.

Creating Community Conversations

So as a community let’s focus on the positive things that bring us together. What we can do individually and collectively to improve the Reno Tahoe area. Let’s keep the conversation going. I’ve tried sharing the stories from my TEDx experience but it’s tough to convey the depth of enthusiasm and emotion of those on stage. You might not want to miss the next Reno-area TEDx event that will take place on April 26th. Details: www.tedxreno.com

The IRS reported that National Taxpayer Advocate Nina E. Olson recently issued her annual report to Congress. In it she stated that tax reform was the overriding priority in tax administration. “The existing tax code makes compliance difficult, requiring taxpayers to devote excessive time to preparing and filing their returns”, Olson stated.

Since 2001, Congress has made nearly 5,000 changes to the tax code, an average of more than one a day, and the number of words in the code has approached nearly five million. To reduce the burden on taxpayers and improve the public’s confidence in the integrity of the system, the report urges Congress to simplify the tax code. If Congress were to eliminate all tax expenditures, i.e. income exclusions, exemptions, deductions and credits, the indications are that individual income tax rates could be cut by 44 percent.

The report suggests that a tax break should be retained only if a compelling argument can be made that the benefits of that break outweigh the complexity burden it creates. Does the incentive provided make sense? If so, can it be administered without imposing unreasonable burdens on either taxpayers or the IRS?

 The report recommends that Congress take several steps, including:

• Hold meetings with constituents to discuss the complexity of the tax code and the trade-offs between tax rates and tax breaks that will be required.
• Use a “zero-based budgeting” approach adding benefits back only if the members of Congress conclude that, on balance, the public policy benefits of such action outweigh the complexity it imposes.

To accomplish such a dramatic change in congressional thinking seems insurmountable, but the report does offer serious food for thought.

On Tuesday, January 15, 2013 the IRS announced that going forward, there is a simplified option for taxpayers who take the home office deduction. While the credit is capped at $1,500 a year (this may be adjusted in future years), taxpayers choosing this method will not have to deal with complex calculations of allocated expenses, depreciation and carryovers from prior years. What’s that you say? Your amazing CPA does all of these calculations for you so what does it matter? Well most importantly, the safe harbor method is an alternative to the substantiation (i.e. recordkeeping) of actual expenses. That means you don’t have to keep every utility, internet and any other home bill as substantiation for the deduction and in case of an IRS audit.

There are some important factors to consider, however. The allowable square footage used in the calculation cannot exceed 300 square feet. Also, home expenses like utilities, homeowner’s insurance, etc are not deductible under this method. Depreciation is also not allowed. Mortgage interest and real estate taxes would still be fully deductible on Schedule A (rather than apportioning it between the deduction and Schedule A) if you itemize.

The election to use the safe harbor method can be made each year, meaning you can use the safe harbor method in one year and use actual in the next. So if for some reason the filing cabinet with all of your paid bills walks out the door, you could take the safe harbor method that year and still get a deduction. Taxpayers may want to look at what their home office deduction has been in the past and see if this simpler method would be worth it on an annual basis.