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Last week approximately 400 CPA’s (including yours truly) descended on Capitol Hill to discuss issues of interest to the profession and our clients. 
The Capitol Hill visits were in conjunction with the Spring Meeting of the AICPA Council which is held every other year in Washington DC in order for Council members to make these important visits to each state’s legislators. Our delegation from Nevada met with each of our elected members of Congress or their staff liaisons in order to discuss the following important issues:
• “What’s at Stake?” – The CPA Profession on Federal Fiscal Responsibility: This updated video resource available for CPA’s, Policymakers and the Public reviews the federal government’s latest financial report and discusses the profession’s role in promoting the importance of the nation’s fiscal responsibility.
• H.R. 1129: The Mobile Workforce State Income Tax Simplification Act of 2013: This bill creates a uniform national standard that will limit state or local taxation of the compensation of an employee who performs duties in more than one state or locality to: (1) the state or locality of the employee’s residence and (2) the state or locality in which the employee is physically present performing duties for more than 30 days.
• S. 420 and H.R. 901: Tax Return Due Date Simplification and Modernization Act of 2013: These bills propose a shuffling of the original and extended due dates of corporate, partnership and other returns to improve the flow of information needed by taxpayers to timely file their personal returns. The bills propose new original due dates as follows:
There are proposed revisions to various extended due dates as well which for the most part remain in the familiar September/October time frame. For more information on these dates see the full text of the bills at www.govtrack.us.
• H.R 797: Municipal Advisor Oversight Improvement Act of 2013: This bill would clarify the definition of a municipal advisor and make it clear that providing customary and usual accounting services by CPA’s is not the same as providing municipal advisory services which now requires SEC registration under the Dodd-Frank Act.
• Our Nevada CPA delegation also discussed various other issues related to the general topic of tax reform which is of great interest to Congress in light of recent and not so recent events. For more information read the AICPA’s Principals of Good Tax Policy.
Our visits always prove to be enlightening for all of those involved be they the elected member of Congress, the staff liaison or the CPA’s participating in the meetings. We must never lose sight of the fact that we all have a voice in our democracy whether it be a visit to Capitol Hill, a phone call or email or the simple casting of a vote.
It’s that time of year again: The weather is warming, the skies are blue, let’s grab some grub at Reno Food Truck Fridays to feed that hunger in you. My horrible rhyming aside, this bimonthly, gastronomic event is back in town. Setting up shop every first and third Friday of the month, Reno Food Truck Fridays (RFTF) is a great way to get outside, indulge in a variety of gourmet food, and listen to local music. The next RFTF is Friday, May 17, but if you can’t make it then the event goes through October, so there are plenty more Fridays ahead.
RFTF takes place downtown at CitiCenter Plaza, 40 E. 4th Street (the corner of 4th and Center), which is the former RTC bus terminal. It runs from 5-9 p.m., so you can head there right after work or rest up a bit before heading downtown. You could even make a whole evening of it and catch a Reno Aces game.
This year’s lineup of food trucks includes: GourMelt Grilled Cheese, Kenji’s, Sauce Wagon, Red Truck Tahoe, Traffic Jam, Mellow Yellow Food, Lazy Sundae, Battle Born, Waffle Wagon, St. Lawrence Pizza Co., Island Ice, Mount MoGrit, and Taster’s Paradise (check out Reno Tahoe Food Trucks for some of the menus from the aforementioned trucks). 
There is also the Tumblebus and a beer garden courtesy of Great Basin Brewing Co. (according to Standley White of About.com). New this year will be The Biggest Little Fashion Truck which will be selling designer clothes and accessories. Now you can shop and eat at the same time in downtown Reno.
So, if you’re looking for something different and a chance to support local businesses, head downtown to Reno Food Truck Fridays. Here’s the upcoming schedule:
Make sure to check RFTF’s Facebook page for any changes or special announcements.
They just don’t make them like they used to. Have you ever said or thought these words?
Products were not designed to last. Purchase of replacement products contribute to the profits of the manufacturers. Software programs, for instance, are constantly changing and must be replaced if you want support. The software still works but is no longer supported because the manufacturers want you to buy the new one.
We are replacing perfectly good usable electronics such as the cell phone for the latest and greatest. You’re considered out of style if you don’t. 
Fairly new furniture is replaced because it no longer matches our decor. Cars get replaced because the newer models have more bells and whistles. All kinds of stuff gets thrown away including kitchen equipment, dishwashers, stoves, hot water heaters and refrigerators. One of the reasons we buy new kitchen equipment, dishwashers, stoves, etc. is because they have stopped working and it’s cheaper to replace them rather than repairing them. This “out with the old, in with the new” thinking is good for the manufacturers but not so good for the environment. Is this how we spend our hard earned “disposable income”?
Plastic bottles, plastic bags or anything plastic take a long time to decompose, which is why we should recycle them. We should use less plastic products in addition to recycling them. 
Think of the plastic stirrers and the coffee cup lids thrown away every day at your favorite coffee shop. And don’t forget the plastic containers used for your treat to go with your coffee or tea. We should bring our own reusable shopping bags when we go to the store. At least 45 cities and counties in California have bag reduction ordinances. A minimum 10 cent charge for each bag is required in the city and county of San Francisco. In San Francisco, disposable bags used have been reduced by 70-90 percent since the checkout bag charge became effective on October 1, 2012.
Think before you dispose.
Would you normally wake up and want to go to work? Most people would probably answer NO to this question, especially during tax season.
Tax season is a stressful time for employees of CPA firms. Does it make a difference if there is a good company culture to help alleviate some of the stress? 
The workplace should not be something an employee dreads. While work may be difficult, the culture should not. On the contrary, a positive and fulfilling work culture should be designed to alleviate stress not increase it.
How do you create a positive and fulfilling company culture? The most important and first step in the process, starts by hiring people who fit your company’s goals and vision. Tony Hsieh, CEO of Zappos, one of the strongest advocates of company culture, states “when you hire people, they represent your company even outside of work, and if you have a positive opinion about this person most likely you’ll view their company in a positive light.”
It’s key to be flexible to change. These days employees are looking for more flexibility in the workplace than ever before. More companies are recognizing how important the work+life issue is for everyone, not just women and parents. Studies have shown that flexible schedules decreased employee “burn out” and have helped retain valuable employees that may otherwise leave.
Most importantly, build a culture where everyone is part of a team. This is a big one! 
If you feel valued and part of a team, you contribute to the overall success of the company. You may have a specific job function; however, you are joined with other members of the company to accomplish the overall goals of the company.
When you’re part of a company that has achieved a good culture, you may just wake up and answer that question, YES I do want to go to work!
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 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:
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.
The IRS has just announced plans that the 2013 tax season will begin on January 30, 2013 (a Wednesday if you’re wondering). 
This misses the previously set date of January 22, 2013, but given that Congress passed the American Taxpayer Relief Act (ATRA) in 2013 when it should have passed it in 2012, a late start of only eight days is impressive. If we could just get Congress to get things done so quickly.
Starting on January 30, the IRS says more than 120 million households should be able to begin filing returns. Those households include people who are “affected by the late Alternative Minimum Tax (AMT) patch as well as the three major ‘extender’ provisions for people claiming the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.” For the rest of tax filers unable to file starting January 30, look to late February or into March to be able to submit a return. This group of tax filers includes people who claim the residential energy credits (Form 5695), depreciation and amortization (Form 4562), or general business credits (Form 3800). 
The IRS has posted a list of the forms that won’t be accepted until a later date at IRS.gov. It often happens that those in this tax filing group don’t file until later in the season anyway or they just go ahead and file an extension, so the delay in being able to file may not cause much of a delay at all.
The IRS does remind all of us that it will not process paper returns before the January 30th opening date, so there’s no rush to get that return finished and in the mail in the next couple of weeks. Also, paper filing is not the most efficient way to file. If you want your tax refund sooner you should e-file with the direct deposit option checked.
If you have any questions, please feel free to contact us here at Barnard Vogler & Co.
When I advised my clients to complete their transactions in 2012, it was apparent that the effects of the actions our elected officials were going to take to avoid the “fiscal cliff” could only have a negative effect on taxes. 
At the twelfth hour, Mitch McConnell, Republican Senate Minority Leader bypassed Nevada’s own Harry Reid and reached out to Vice President Joe Biden with whom he had worked with when Biden was in the Senate. They worked out a compromise that was passed in the Senate and the House on January 1.
How does this affect you?
The tax rate for taxpayers with income over $450,000 married and $400,000 single increased from 35% to 39.6%. The tax rate on capital gains and dividends increase from 15% to 20% also applies to this threshold. When combined with the 3.8% healthcare tax, that tax rate on capital gains and dividends becomes 23.8%.
Some of you may be breathing a sigh of relief that the tax rate increase will apply only to those taxpayers. However, the 3.8% healthcare tax on investment income will hit those of you with taxable over $250,000 married and $200,000 single (see my blog in November 2012 regarding the healthcare tax of 3.8%). Also, itemized deductions are phased out at $300,000 for joint filers and $250,000 for singles, effectively raising their taxes.
Interestingly, the bill does not say whether the $400K/$450,000 threshold refers to adjusted gross income (AGI) or taxable income. AGI doesn’t include subtractions for itemized deductions, while taxable income does. With so many phase-outs of itemized deductions for taxpayers in the higher brackets, this may not be of much consequence to most of these affected taxpayers.
The payroll tax holiday reducing payroll taxes and self-employment taxes by 2% is over. 
The tax rate increases from 4.2% to 6.2%. That means for an individual earning the maximum 2013 cap of $113,700 or more, the increase would be $2,274, or nearly $200 per month.
The alternative minimum tax (AMT) still effectively eliminates many tax breaks for the higher income tax brackets. AMT was created in 1969 to ensure that wealthy taxpayers pay at least some minimum amount of federal income tax, regardless of deductions, credits or exemptions. In essence, it is a flat tax with two brackets, 26 percent and 28 percent. Under the new deal, Congress has finally created a permanent inflation “patch” that would allow millions to escape AMT. Without the patch, the AMT would have hit 31 million taxpayers this year, reaching deeply into the middle class.
What the bill did not include:
The bill only addressed the revenue side of the budget question and deferred action on the spending side for two months. Additionally, the agreement does not address any increase in the nation’s debt ceiling.
A strong economy depends upon predictable behavior and decision-making by the government. The competitive environment is unpredictable enough without our government making it more unpredictable. This has been lost on our elected officials much to the consternation of almost everyone: businessmen, employees, bankers, homeowners, and investors. Get ready for the budget and spending standoff two months from now.
Many large companies are determining how they will handle the changes coming in January 2014 with the Affordable Care Act. For a company who employs 50 or more full-time employees that is already offering health care benefits, one option that I am reading about over and over is:
Employers would terminate their current health insurance plan; pay the penalty for each employee, (approx $2,000); and force employees to shop in the state and federal exchanges. While this may seem cheaper, companies need to consider that they will lose their tax deduction for providing health insurance benefits not to mention the consequences on employee morale and recruiting efforts.
Another option that has emerged is to continue to offer health insurance but through a Corporate Exchange instead. According to the Wall Street Journal, both Sears Roebuck and Darden Restaurants (which operates Olive Garden, Red Lobster and other dining establishments) announced in October they had signed on to Aon Hewitt’s Corporate Exchange. Sears has approximately 90,000 employees while Darden has about 45,000 that will be participating in the exchange. Through the Corporate Exchange, not only can an employee pick different insurance coverage, but they can pick different insurance providers. These options are similar to the ones that will be available under the public exchanges, but large companies with more than 100 employees are not eligible to participate in the public exchanges at least until 2017.
Under this option, there is no penalty as the group health plan is still fully compliant with the Affordable Care Act. The employer then decides how much of a subsidy to provide employees to purchase coverage. Ideally, this subsidy provided to employees would be evaluated annually to keep up with the potential increase in cost of coverage. The employee then takes their subsidy and can evaluate various provider options and levels within the exchange and pick the best plan for them. The more exchange participants, the greater the economies of scale. 
This type of exchange will supposedly keep costs for the employers lower because insurers are forced to compete with one another to attract members in the exchange to their plan. Besides the potential cost savings for the employer, employees are happier under exchanges because they can pick the type and level of insurance that they want. A single person in their 20’s can choose a relatively less expensive plan while someone in their 50’s can opt for more coverage.
This is a novel concept that if it works as Aon plans, will sure to be replicated and remain a viable option for employers.
