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With autumn upon us in the Pacific Northwest, the accounting community is busy closing the third quarter’s books, updating forecasts and fine-tuning fiscal 2018 budgets. While on the home front, kids are settling into their school routines, homeowners are completing those forgotten outdoor projects and everyone will soon be searching for the perfect pumpkin to carve. With demands of your time and energy coming from all angles, do you know if your accounting team has appropriately allocated resources to tackle the new revenue recognition standard, one of the most comprehensive standard overhauls in recent years? Hopefully yes, but for those nonpublic entities hesitant to take the first steps, the time is NOW.

Topic 606 – Understanding the Standard

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). This standard, which was the by-product of the FASB and International Accounting Standards Board’s (IASB) joint effort to converge US and International accounting standards, replaced nearly all pre-existing revenue recognition guidance currently employed under US generally accepted accounting principles (US GAAP). The result was a framework on how an entity should account for its revenue producing transactions.

Public entities are required to implement this standard during the first interim period within for reporting periods beginning after December 15, 2017; which would be the first quarter of fiscal 2018 for a calendar year-end public entity. Nonpublic entities are allowed an additional year as implementation is to take place during annual reporting periods beginning after December 15, 2018, or fiscal 2019 for a calendar year entity.

In conjunction with this implementation, entities will adopt one of two methods for applying the standard within its financial statements. The first approach, known as the retrospective method, will require application of the standard to each period reported in the financial statements. This will require a full restatement of any comparative figures from prior years presented in the financial statements and disclosures. The second approach, known as the modified retrospective method, will allow for a cumulative effect adjustment to be recorded at the adoption date (i.e. January 1, 2019 for a calendar year-end nonpublic entity). While this may seem like a more simplistic adoption method, please note that entities utilizing the modified retrospective method will still be required to disclose the effect of applying the new standard to allow readers the ability to evaluate comparable results.

With the issuance of Topic 606, the FASB introduced the ‘Five Step’ model for entities to follow in order to recognize revenue from contracts with customers. Those five steps are outlined as follows:

  • Step 1 – Identify the Contract
  • Step 2 – Identify the Performance Obligation(s)
  • Step 3 – Determine the Transaction Price
  • Step 4 – Allocate the Transaction Price to Each Performance Obligation
  • Step 5 – Recognize Revenue as Each Performance Obligation is Satisfied

As evaluating the intricacies of this standard goes beyond the scope of this article, the “ASC Topic 606 – Revenue from Contracts with Customers” Practice Aid prepared by BDO’s National Assurance Practice provides a useful summary of the five step model for public and nonpublic entities and introduces key terms and concepts adopted within this standard.

Assessment and Implementation of the Standard

Before discussing the steps entities should take today to begin the assessment process, it should be noted that nonpublic entities have the welcoming advantage of learning from the work done by those public entities nearing their formal effective date. In June 2017, KPMG completed a survey[1] of 245 entities, 76% public and 24% nonpublic, which identified certain findings that nonpublic entities should be mindful of:

  • “…nearly a quarter of private company respondents have not begun their assessment (compared to 8 percent of public companies who had not begun as of Summer 2016).”
  • “The process has a tendency to be more complex, time-consuming and costly than anticipated…”
  • “Only 6 percent of respondents believed they were faced with minimum impact requiring “little to no action” on their part.”
  • “Internal communications need to be improved; 33 percent said C-level executives had little or no involvement in the process.”
  • “Nearly 71 percent of public companies have either elected the cumulative effect transition method or are leaning towards it.”

With these findings in mind, it is in a nonpublic entities best interest to begin the assessment process today. As outlined in the “Example ASC 606 Adoption Timetable” prepared by BDO, this assessment can be broken down into five stages. While each stage should be tailored to the complexity of an entity’s revenue transactions, this tool provides a comprehensive list of steps to be considered as part of the adoption of this standard.

Stage 1: Understanding, Scoping, and Planning

It should be noted that Stage 1 is the most important step in the implementation process as it provides the guidelines for all future work performed in stages 2 through 5. An entity’s accounting team should take time to read and comprehend the standard. It should then identify who internally or externally can provide the knowledge and expertise needed to interpret and apply the standard to the entities revenue streams.

Stage 2: Technical Analysis and Assessment

Once the revenue streams and transaction types have been identified, the entity will need to allocate resources to evaluate the impact of the standard. This will include evaluating industry specific guidance, determining a transition method to be applied at adoption, identifying systems and internal control considerations, and, hopefully sooner than later, involving external auditors to review the scoping and implementation action plan.

Stage 3: Testing and Implementation

With an implementation action plan approved both internally by the entity’s management team and externally by auditors and/or other services providers (i.e. banks, lending institutions, leasing companies, insurance companies, etc.) involved in the process, an entity will move into the testing and implementation stage. As outlined in the timetable, this stage includes a number of heavy-lifting steps whereby resources will need to ensure tracking of revenue transactions is being captured in a useful manner that can produce financial information under both current GAAP and Topic 606. For nonpublic entities, it will be important to consider the adoption method to be utilized as it will impact the financial information that will need to be produced. It will also be crucial to have external auditors begin their testing of the completeness and accuracy of this financial information to ensure all parties agree with the data being produced.

Stage 4: Financial Reporting and Disclosure

With useful financial information available, an entity is now in the home stretch. In stage 4 the entity will begin to identify the impact the adoption has on its financial statement disclosures. This is an important point to note, as many nonpublic entities may rely on their external auditors to prepare the financial statements and disclosures. Without the assistance of the entity, it would be very difficult for an external auditor to produce the footnote disclosures required under the new standard. These expanded disclosures include, but are not limited to, the evaluation of the adoption impact on financial statement figures, disaggregation of revenue, disclosure of performance obligations, and other qualitative factors. Proactive evaluation of the disclosures with external auditors will make the process more efficient and cost effective.

Stage 5: Post Adoption

Regardless of the impact of the adoption of the standard, an entity should ensure it establishes appropriate controls to maintain accounting policies, evaluate new revenue contracts and ensure personnel stay on top of this standard. After making an investment of time, energy and money, it is in an entity’s best interest to maintain a high standard of financial reporting.

And You’re Off…

While it is always easy to find a more pressing project, nonpublic entities should start to develop their implementation plan today for this important standard. With the resources made available in this article, those in financial reporting positions should feel empowered to begin the process of identifying resources, both internal and external, that are available to assist. Taking time today to comprehend the standard, evaluate its impact, and proactively communicate with external auditors will vastly improve the efficiency and cost-effectiveness of implementing this standard.

If you have any questions surrounding the adoption of this standard, please contact your (Perkins & Co) advisor.

Author: Drew Stevenson, Audit Senior Manager

Through its alliance with BDO, Perkins & Co has access to the Practice Aids seen in this article. Further resources are publicly available by BDO through their Revenue Recognition Resource Center.

[1] KPMG’s 2017 Accounting Change Survey, The Deadline is Approaching for Accounting Change

pdxskylinegraphic
Topic: An Economic Outlook for the Construction Industry in 2018

Join us at Ruth’s Chris Steakhouse on Wednesday, November 1, 2017, from 4:00pm – 6:00pm. Special keynote speaker Dr. Tom Potiowsky will examine the question, “What lies ahead for the construction industry?” by discussing upcoming prospects, and the current economic outlook for 2018 for the major sectors of this industry.

Register now

Vancouver Waterfront Development Project
Topic: The Evolution of Vancouver’s Waterfront Development

Join us at the Hilton Vancouver Washington on Thursday, October 26, 2017, from 3:30pm – 6:30pm to hear a distinguished panel from both the public and private sectors discuss the vision that is unfolding.

Register now

how to write a killer resume blog image

There are many things I love about my job: meeting new people; being a warm and friendly voice in a world of grumpy recruiters and impersonal recruitment processes; playing matchmaker (it’s fun when you match the right person to the right job!); serving as coach/big sister/pseudo-mom to college students who are going through fall recruiting.

Then there are the things I don’t love so much – like reviewing resumes. LinkedIn is rife with accusations of applicant tracking system (ATS) nightmares and tricks to get through the application black hole. This might be true for large companies, but in the 10 years I’ve been recruiting, I’ve read resumes and cover letters myself. My eyes scan hundreds of resumes each year.

Unfortunately, hundreds of these resumes are mostly mediocre. Rather than lamenting the state of affairs, I’d like to counter headache-inducing resumes with practical advice on writing interview-snagging resumes.

Many professionals have eloquently written about the modern approach to resume writing. Natalie Severt’s blog post “How to Make a Resume: A Step-by-Step Guide” at Uptowork is one of my favorites. Her advice makes me want to scream, “Amen! Ditto! You tell ‘em, girl!” There’s no need for me to rehash what she’s already written. Please read and heed her advice.

Please also consider my additional thoughts on writing that killer resume:

Your resume is a marketing document

Remember this always. Your resume is NOT:

  • a legal or historical document
  • a biography
  • a list of job descriptions
  • a retelling of every duty you’ve had in your life

Your resume is an advertisement

You’re advertising you to employers. Let that sink in a little. In just one or two pages, you must communicate to the reader how you can bring value to their organization.

Get to the point (you can talk more later)

You have just a few seconds to capture the reader’s attention and inspire him or her to keep reading. Your goal is to get a follow up phone call with a request for more information. That’s all. Once you’re in touch, you can have meaningful conversations and share your full story. But you may never get that chance if your resume isn’t written with a marketer’s mindset.

Here are my top tips for creating a resume that grabs a reader’s attention:

  1. Be specific. Tailor your resume to the job for which you are applying. Scan the job ad to learn what the employer wants – and be sure your resume addresses those needs.
  1. Add some personality. Include a summary/branding statement at the top of your resume. Make it professional and give the reader some insight into who you are. Write it in first person. TALK TO ME (the recruiter). If you have room to fill on your resume, add hobbies and interests, but be careful: avoid things that could be controversial.
  1. Make the resume easy to read. Remember that recruiters usually quickly review many resumes at a time (fall recruiting candidates: I easily read over 200 resumes in a weekend). My eyeballs are over 40 years old, folks. I need some help. Here’s what I’m looking for:
  • Size 11 or 12 font (10 works, but it’s pushing it)
  • Simple font – no italics, no underlining
  • White space (it’s your friend)
  • No physical/mailing address – it’s unnecessary and it takes up space
  • Jobs listed in reverse chronological order (most recent job first)
  • Dates of employment in month/year format (e.g., October 2014 – October 2016)
  • One page if you’re a student or it’s early in your career; two pages if you have more experience; and if you bleed into three pages, you are dead to me
  1. Proofread, proofread, proofread. Read your resume out loud to yourself—it’s amazing how many more errors you’ll catch when your mouth and ears are engaged. Ask several other people proofread it, too. Don’t enlist just your friends; ask people who routinely look at resumes and other professional writing for feedback.
  1. Save your resume as a PDF. Double-check the final document before you submit it. A PDF is supposed to protect your formatting, but it can mess with line spacing, etc.
  1. For accounting student applicants only: Put your education section near the top of your resume. Include your GPA and CPA eligibility date. Is your cumulative GPA borderline and accounting GPA high? List both.
  1. Keep in mind that resume standards are subjective. You’re marketing yourself, remember? Know your audience. If you’re applying to a traditional employer, you might want to throw out my earlier advice about using the first person voice and stick to the traditional third-person voice, for example. How will you know which voice to use? Peruse the company’s social media and web presence for indications of their style. Adjust your resume accordingly.

I hope these thoughts are helpful. Remember to link over to Natalie Severt’s advice. Consider checking out Resume Genius (not an endorsement of their services, but I liked most of their general advice). Keep my tips in mind. If you follow our advice, you will end up with a killer resume that starts a conversation with employers. Good luck out there in the crazy job hunting jungle!

Author: Areena McLaughlin, Talent Acquisition Manager

Golfing is fun; accounting is boring, or so young Trent Baeckl believed. Now a CPA and tax senior manager, Trent reflects on his ten years with the firm and the path that brought him to Perkins & Co.

When Trent’s college professor suggested accounting as a career path, he thought ‘No way!’ Though he’d always had a good head for figures, he also had a great golf game and planned to be a professional golfer and instructor. However, being a golf instructor while living in Michigan meant working 70 plus hours in nice weather and being rather bored during the long, cold winters. What’s fun about that?

So, instead of a career on the green, after graduating college Trent found himself working in a three-person accounting department of a small local company. To his own surprise, he really enjoyed the work. So much so that he went back to school to study accounting. Not only did accounting fascinate him, but the schedule suited him perfectly. Though he was slammed during spring and fall with tax deadlines, summer was mellow and allowed time for golf and tennis (another favorite hobby of his). After working two busy seasons in a small accounting firm, Trent was certain he’d found the right profession. He also knew he was ready to leave Michigan to pursue work at a bigger firm.

Finding His Niche

Trent set his sights on Portland and interviewed at a handful of firms in the area. He was especially interested in Perkins because of its client profile. Trent wanted to focus on tax work, not audit, but he wanted complex tax work, more than just a seasonal rush of 1040s. Once at Perkins Trent was assigned to the real estate niche, and right away he felt he was in his element.

A cool and reserved guy, Trent gets visibly excited talking about multi-partner LLCs and tax planning for the real estate industry. Real estate development is notoriously complicated. The landscape is always changing, and there are a multitude of beneficial tax provisions to consider and often many parties involved.  The nature of multi-partner LLCs means a single engagement can produce upwards of 30 different tax returns. “The key,” says Trent, “to keeping a project on track that involves so many different entities and tax returns is communication.”

Accounting as a Team Sport

Trent is not the first leader of our real estate niche to extoll the importance of communication. Kimberly Woodside, a co-leader of our real estate practice group, shared similar sentiments when she was interviewed her for her anniversary post earlier this year. Among all the real estate niche leaders, clearly communication is highly valued; managers meet every week; planning for tax season starts in the fall, and everyone knows what everyone else is doing—when and where each domino needs to fall. “The stereotype of an accountant being boring, solitary, just one socially awkward person formulating spreadsheet equations and banging out numbers on a 10-key is totally wrong,” says Trent. “Accounting is collaborative. It’s a team sport.”

Working on a team with really smart people is what Trent enjoys most about Perkins & Co. He never feels like he’s on an island. There are always other people to discuss issues and problem solve with. In particular, Trent looks to Tim Kalberg, shareholder and a co-leader of our real estate niche, as a mentor. “Tim,” Trent says, “has an incredible gift of recall. He sees parallels between cases and can remember exactly which section of the tax code or specific client return to turn to for reference. His memory is encyclopedic and he is a great teacher. Tim has been instrumental in shaping the real estate niche at Perkins and everyone on the team benefits from his expertise.”

We all benefit from Trent’s expertise too. Whether he’s in the office or on the golf course we’re happy to have him on our team. Congratulations on 10 years with Perkins!

Author: Taylor Valdes, Administrative Assistant

Welcome-to-Oregon-Sign

On July 6th, 2017 the Oregon legislature passed the $5.3 billion transportation package (Oregon House Bill 2017) which is expected to be signed into law by Gov. Kate Brown. The bill, in part, raises revenue through a 0.5% excise (privilege) tax on dealers for the “privilege of engaging in the business of selling” new cars in Oregon.

Download our latest bulletin for further information.

If you have any questions or concerns about the bill, please contact your advisor.

Author: Blake Seabaugh, CPA, Tax Manager

Portland, Ore. – June 29, 2017Perkins & Co, the largest locally owned accounting firm in Oregon, announces the appointment of shareholder and current Director of Assurance, Jared Holum, to the position of president effective July 1, 2017.

Holum, 49, has been at Perkins since 2003, joining the firm as a manager in the audit department. Prior to that time, he spent ten years working for Pricewaterhouse Coopers and held positions as CFO and controller with communications and technology organizations in Portland.

Women in Business Event Invite
Topic: Celebrating Women in Business

Join us at Windy Hills Winery on Tuesday, August 1, 2017, from 4:00pm – 6:00pm and make a toast to the female professionals who serve Southwest Washington.

RSVP now

Looking-Back-as-I-start-to-look-forward-Blog-Header

Looking Back as I Start to Look Forward

(Part 3 of 3)

This is the last in a series of three posts I’ve written in anticipation of my retirement at the end of this June. One of the most common responses I receive when informing clients and associates about my pending retirement is, “What are you going to do?” In this series I outlined key factors that anyone approaching retirement should consider, and I intend to embrace those concepts as I enter a new chapter in my life. I’m not worried about having enough to do, and I’m looking forward to doing new meaningful things. But for now I want to take a little time to look back. With all of the planning I have barely reflected on my career, but now seems like a good time to do so.

From the Beginning

My career is not one that I planned on. When I graduated from the University of Oregon in 1977 I never imagined that I might become an owner in a firm as successful as Perkins & Co. After starting my career with a small local accounting firm I was lucky enough to connect with a college classmate that worked for a new firm that needed additional staff. That connection led to a lunch in 1978 which included Gary Reynolds, Perkins & Co’s longtime president, and resulted in my joining one of Perkins’ predecessor firms. To have worked with a person for as long as Gary and I have is a remarkable thing.

I was first introduced to the accounting profession during a math class in my senior year of high school when the teacher brought in a CPA as a guest speaker. To this day I can’t tell you a single word that man said. In spite of that, it left an impression on me, and it was on my list of areas to study in college. It originally was behind Physics/Engineering and broadcast communications as priorities. The evolution is a longer story, but the short version is that I eventually took an introduction to accounting class, got an A, and never looked back.

My Time at Perkins & Co

Back in 1986, when Perkins & Co was founded, one key principle was to have the firm continue beyond its founding owners. In a of couple years we will accomplish just that. I’m very proud of the next generation of firm leaders and have great confidence that they will take the foundation and vision that has been developed and carry it onward. I look forward to watching them from the sidelines.

So, here I am at the end of a 40-year stint in public accounting. My son would tell you that I have spent more than 40 years’ worth of time at this job, and I suppose he’s right based on total hours worked. This was rarely a 40-hour-a-week job, but I knew what I was signing up for.

Thinking back on when I started in public accounting it’s hard not to appreciate the breadth of change that has happened in business and the CPA profession. The year I started as a staff accountant the rules of the American Institute of Certified Public Accountants (AICPA) prohibiting direct solicitation of clients were changed under pressure from the Federal Trade Commission. IBM first started selling its stand-alone personal computer in 1981. Almost simultaneously with the merger of the two local firms that formed Perkins & Co in 1986 was the passage of the Tax Reform Act of 1986. It was sometime in the 1990s before everyone had a computer assigned to them. All this combined with a plethora of new professional standards, rules, and regulations caused many of us to change from being generalists to focusing on either tax or audit to stay relevant. The rate of change today is not lessening.

Growing with the Firm

As the firm grew it became clear that we needed to up our game on college recruiting, and I enjoyed being active in the firm’s recruiting activities. I’m particularly proud of the students that have been here for many years and are developing into great professionals. I often say that organizations have personalities and tend to hire employees with similar traits. As I finished my final busy season this year and celebrated with our staff I was reminded about what a nice group of people we’ve attracted here.

Also during my tenure, it has been heartwarming to watch Perkins & Co be named one of “Oregon’s Most Admired” professional services firms by the Portland Business Journal for nine years running. It epitomizes more than just consistently doing good work: it’s also about adding value to your community. The level of engagement by our shareholders and staff in local and national organizations is inspiring. Over the course of my career I have been fortunate to serve several organizations of which I’ve been particularly proud including FISH Emergency Services, Legacy Emanuel Hospital Foundation, Classroom Law Project and Ronald McDonald House of Oregon and Southwest Washington. Participation in these great organizations has made me a better person.

The Closing of One Chapter

As my days at Perkins wind down there are some parts of this job I won’t miss including long days, daily time entry and monthly deadlines. Those are overshadowed by the things I will miss. It’s easy to be able to come to work each day and be surrounded by admirable people who give their all each day to create great outcomes for clients and each other. The firm has a tremendous set of goals to move the organization forward, and I’m keen to watch Perkins accomplish them.

I’ve already received nuggets of advice from friends that have crossed the retirement threshold. One said that “retirement is the last vacation you’ll ever take” while another counseled that the two most important letters in retirement are “N” and “O”.

The Next Chapter

So now to the question at hand, what am I going to do? Based on current research and my family history there’s no reason to believe I won’t live into my 90s. In order for those to be happy years I intend to work hard at taking care of myself. I enjoy cycling and hiking, so I’m not worried about having to adapt new behaviors. But exercise alone isn’t enough. I am a big fan of lifelong learning, and I’m trying to increase the number of books I read every year with a goal of getting to two books a month. Plus I’d like to become a better photographer. Beyond that, my plan is for this first year to be a gap year. I’m going to fill that time exploring what my retirement will be like. During that time my wife and I have some big trips planned plus visits to our children and grandchildren, none of whom live nearby. I don’t worry about having enough to do, but I am open to how I will have to adapt to a non-work schedule.

So I’m off to a new phase of life and I look forward to learning how to engage at a different pace that creates opportunities to discover a lot of new places, subjects and experiences. For me, retirement is a beginning, not an ending. It’s a time to consider a future that includes new ways to stay connected to the people that are important in my life and by keeping a positive attitude toward what’s ahead. I just finished reading a translation of Cicero’s “How to Grow Old” written around 44 BC, and it’s a great reflection on how to approach the last half of life. One of my favorite quotes is “There is no greater satisfaction to be had in life than a leisurely old age devoted to knowledge and learning.” Ageing is a natural part of life and we only get to travel this road once. I’m looking forward to the knowledge and learning adventures that lay ahead. Wish me luck!

About the author:

Grant Jones began his career in public accounting in 1977 and has been a shareholder at Perkins & Co since 1989. In fact, he’s the only remaining non-owner employee of the original Perkins & Co, which formed in 1986. He’s a leader in the firm’s Employee Benefit Plan Audits and Nonprofit practice groups and actively assists clients in managing operational, strategic, and ownership issues. He specializes in working with closely-held businesses in a variety of industries, and his areas of expertise include accounting and auditing, financial management, and general business consulting.

If you missed the first two post(s) in the “Have You Thought About Your Retirement Strategy?” series, be sure to check them out in the links below. Thank you for reading!

This past April the IRS issued Revenue Procedure 2017-33 which provided additional guidance on several beneficial provisions of the Protecting Americans from Tax Hikes (PATH) Act of 2015. The most significant of these provisions relate to the ability to accelerate depreciation on certain real property assets as discussed below.

Prior to the PATH Act, the rules relating to Section 179 expensing were set to revert back to the pre-2004 annual expensing limitation of $25,000 as of January 1, 2015. The PATH Act not only permanently increased the annual expensing limitation to $500,000 but also permanently extended the election which allows taxpayers to include qualified leasehold improvement property as eligible property under Section 179(f). Rev. Proc. 2017-33 provided an additional benefit to these qualified leasehold improvements by removing the lower limitation of $250,000 of annual expensing on these costs.

Rev. Proc. 2017-33 provided additional guidance regarding certain heating or air conditioning units that are eligible for expensing under Section 179(d). The PATH Act, as originally passed, removed these costs from eligibility for expensing, but Rev. Proc. 2017-33 clarified which heating or air conditioning costs may be eligible. In addition, it clarified which portable units would qualify as Section 1245 property. Also, components of a central heating or air conditioning system may qualify if placed in service after December 31, 2015 and the property qualifies as eligible property under Section 179(f).

The PATH Act also introduced the concept of qualified improvement property (QIP) under Section 168(k)(2), which included improvements to the interior of nonresidential real property placed in service after the building was originally placed in service. The concept expands on the definition of qualified leasehold improvements (QLHI) by removing the requirements that the improvements must be made pursuant to a lease and that the building has been placed in service more than three years. Meeting the QLHI requirements qualifies the improvements for a favorable 15 year depreciable life compared to 39 years for QIP, but both improvements are eligible for bonus depreciation. Rev. Proc. 2017-33 clarifies that for purposes of QIP the improvement needs to be placed in service after the building was first placed in service. Therefore an improvement that is completed after the building was initially placed in service (even as little as one day!) is QIP eligible for bonus depreciation.

Additional highlights of Rev. Proc. 2017-33 include:

  • One year extension of placed-in-service dates for certain eligible property to claim bonus depreciation under Section 168(k)
  • Inclusion of certain plants bearing fruit and nuts before those plants are placed in service as eligible for bonus depreciation
  • Permanent ability to revoke the election to take Section 179 expense without IRS consent

And while all eyes are focused on potential tax reform in Washington D.C. this year, these provisions could have a significant impact on some taxpayers, so consult your (Perkins & Co) tax advisor today to see if there are any planning opportunities available as a result of this update.

Author: Trent Baeckl, CPA, Tax Senior Manager

Last year we addressed the question, “Do I Need an Identity Protection PIN to File My Return?”, as the IRS received an increase in fraudulently filed tax returns. Thieves used stolen identities to claim false refunds, and to combat this, the IRS issued Identity Protection PINs (IP PINs) to certain taxpayers who were at risk for identity theft.

The six-digit IP PIN is included on the taxpayer’s federal tax return to authenticate that they are the rightful filer of the return. The IRS has increased the usage of IP PINs to improve their efforts against identity-related theft. So, most taxpayers affected by past identity-related theft issues should have received an IP PIN for the tax year 2015.

However, on January 5th, the IRS announced that the IP PIN correspondence dated January 4th, 2016 incorrectly stated the tax year to which the PIN applied. The IRS announcement advised taxpayers that IP PINs issued on CP01A Notices are intended for use on the 2015 tax return as opposed to the tax year listed on the notice—2014. Here’s the IRS’s explanation regarding the Notice CP01A error.

Taxpayers who file their 2015 federal tax returns without the IP PIN will encounter IRS processing delays of their returns as the IRS will need to take additional steps to verify their identity.

For additional questions on using the IP PIN, see the IRS’s IP PIN page or call Identity Protection Specialized Unit at 1-800-908-4490.

Author: Meredith Miller, Tax Senior

This blog post is a summary and is not intended as tax or legal advice. You should consult with your tax advisor to obtain specific advice with respect to your fact pattern. 

January again! The busiest time of year for many accountants and bookkeepers. There’s the general ledger to reconcile and close out, financial statements to produce, 1099 forms and payroll filings to complete, and personal property tax returns to file. But wait! There’s another task to consider…the income tax return.

Fortunately, the CPA prepares the income tax return for you, but they need your help. There are several strategies you can employ to make your working relationship a successful and productive one.

First Steps

For starters, double-check your accounting software to ensure you’ve posted your CPA’s journal entries for last year (2012). Your CPA may have included these entries in the same packet with the 2012 tax return. If the person who signed the 2012 tax return didn’t pass on any journal entries, check in with your CPA to find out if there were any. If so, be sure to post them to your general ledger as of December 31, 2012 (for calendar year entities).

If the business experienced changes in ownership, or any other type of significant transaction during the past year, gather the relevant legal documents (buy-sell agreements, promissory notes, etc.) and forward copies to you CPA. These documents will provide specific information about the transaction that will help your CPA report it properly on the tax return.

The “PBC List”

Many CPAs send out a document that includes a list of the information they typically need each year to prepare your company’s income tax return.  These documents are commonly called Prepared by Client Lists, or “PBC Lists”. If you have questions about some of the items on the PBC List, don’t hesitate to contact your CPA and ask them what they’re expecting. If some of the items on the PBC List won’t be available for a while, ask your CPA if they’d like you to send the information you’ve gathered so far. You can forward outstanding items once they become available.

Standard items accountants almost always need

If you don’t have a PBC list, feel free to request one. Even without a PBC list you can accomplish a lot by addressing these common items:

  1. 1) Ensure that your books are complete for the tax year: complete the December reconciliations for all cash, credit card and loan accounts; make sure all reimbursable expenses have been submitted by employees and recorded in the company’s books; review the year-end balance sheet and profit & loss statement for erroneous amounts or unusual items.
  2. 2) Once you’re comfortable with the balance sheet and profit & loss statements, export a copy of the company’s trial balance from your general ledger software. We recommend that the file be exported in excel.  Many CPAs prefer to receive the trial balance in this format for ease of import into their firm’s trial balance software. Or, if your business uses Quickbooks, create a “portable file” which backs up the data in a condensed format that can make transferring the file to your CPA simpler.
  3. 3) Collect copies of the company’s year-end bank statements and bank reconciliations for each checking and savings account.
  4. 4) Gather copies of the company’s year-end bank line or credit, bank loan and credit card statements. Since some loan and credit card statement periods cross over month ends, be sure to collect the statements with coverage periods that include the last day of the business’s tax year.
  5. 5) If the business has fixed assets, prepare a list of asset additions that includes a description of each asset, its in-service date and cost. If any assets were retired or sold during the year, prepare a list of each disposed asset that includes the same elements as the asset additions list and also includes the amount of proceeds received from sale of the asset, if any. You could also request a copy of the fixed asset list from your accountant; use that listing to identify disposed assets and the related sales proceeds.
  6. 6) If the business has a retirement plan, contact your plan administrator and ask what information they’ll need from you in order to calculate the required amount of the employer contribution to the plan in accordance with management’s intent and plan requirements.
  7. 7) Prepare a schedule of officers’ compensation showing each officer’s Medicare wages. If the business has a calendar year-end, you can take the amount from box 5 of the W-2 (or simply provide copies of the officers’ W-2s).
  8. 8) If the entity is an S corporation or a partnership, prepare a schedule listing the medical and dental insurance premiums paid on behalf of each owner.
  9. 9) Review any account where you have recorded meals and entertainment expenses. Be sure that these accounts don’t include the expense of any company parties, or meals served on-site to permit employees to meet or work beyond their normal workday.  (Those types of expenses may not be subject to the same tax limitations as business lunches at restaurants, or golf or sporting events with a client.) If you have any questions about the tax treatment of any items in your meals or entertainment accounts, ask first – it will save time in tax preparation, and may save tax dollars, too.
  10. 10) Sign the tax engagement letter, or locate the letter and have the business owner sign it. This agreement describes the terms of the arrangement between the business entity and the accounting firm for the preparation of the return. These letters are often mailed in January, so check with your employer to find out whether they have already signed and returned the letter; if they haven’t returned it yet, you can remind them to do so.

Why do they keep asking me questions?

After you’ve provided this information and whatever else was requested on the PBC List, your CPA will probably contact you with some follow-up questions and requests. This is normal! Your CPA wants to understand your business thoroughly, and help you take advantage of all allowable deductions and tax accounting methods. (Also, we like to talk to you!)

Happily, once you’ve submitted everything to your accountant, you’re likely nearly done – until next year!

Have a question about our post? Don’t be shy! We welcome you to contact us at any time.

Author: Chalayane Woodke, CPA 

This blog post is a summary and is not intended as tax or legal advice. You should consult with your tax advisor to obtain specific advice with respect to your fact pattern. Based on the most recent “best practice” standards for tax advisors issued by the Treasury Department, commonly referred to as Circular 230, we wish to advise you that this blog post has not been prepared to be used, and cannot be used, to provide assurance that penalties which may be assessed by the IRS or other taxing authority (including specifically section 6662 understatement penalties) will not be upheld.