ALABAMA CPA MAGAZINE I FEBRUARY / MARCH 2013
Governmental Relations/Tax Issue
The Alabama CPA MAGAZINE Alabama Society of Certified Public Accountants P.O. Box 242987 Montgomery, Alabama 36124-2987 1-800-227-1711 334-834-7650 www.ascpa.org Officers Steven A. Shelton, Chair Renee B. Hubbard, Chair-Elect Don McCleod, Vice-Chair Dr. Lowell S. Broom, Secretary-Treasurer John P. Shank, Past Chair Board of Directors Tuan P. Blank Roger F. Bryant James R. L. Carroll James Adam Causey Allison D. Edge Allison H. Guice Mark E. Hieronymus R. Rush Letson III Bradford A. Lynch Amanda N. Paul Gerald G. Pentecost, Jr. Lewis T. Shreve Ronald W. Stokes Chasity L. Sweatmon Douglas C. Moseley, Young CPA Nicole Cunningham, Young CPA AICPA Council Members William H. Carr E. Lamar Reeves Steven A. Shelton Jimmy L. Williamson Past Chair, AICPA The Alabama CPA Magazine is published by Alabama Society of Certified Public Accountants as a membership service to Society members. Views and opinions appearing in this publication are not necessarily endorsed by the ASCPA. The deadline for submitting materials for publication is the first of the month preceding issue date.
Jeannine P. Birmingham, CPA, CAE, CGMA President and CEO
Message from the Chair... This month’s magazine is designated as our governmental relations issue. As I have told most of you when I visited with you around the state, I have not been involved in politics at all for most of my life. It just always seemed a little unscrupulous to me. And is there any wonder that it seemed that way, with all the things we hear about our governments and our government officials? The federal government has not had a budget for at least three years. We avoid fiscal cliffs with last minute band-aids. We are running annual deficits of over 1 trillion dollars on gross revenue of only 2.4 trillion dollars. We keep going further and further in debt. There is a debt ceiling in place but, instead of its slowing the debt increases down, we just raise the ceiling every time we approach it. It is scary to think how many states, counties and cities are insolvent. I want to blame the politicians. After all aren’t they the ones that got us in the mess and aren’t they the ones that are keeping us in it? However, after much soulsearching, I have decided it is as much my fault as anyone else’s. What have I done to try to help solve the problem? Nothing – other than complaining. I can no longer afford the luxury of doing nothing, and neither can you. We must get involved. Before you jump to any conclusions, no, I am not considering running for a political office. What I have decided to do is to reach my elected officials and let them know what I, and many others like me, am thinking. I encourage you to do the same. Our leverage is what will happen at the polls if they do not start making positive changes. The decisions that must be made to put our nation’s finances in order require tough choices. The only way our leaders will be willing to act is if the public is fully engaged and educated on the facts regarding the true state of affairs. You can do your part by educating yourself, and others, using the various tools and resources available on the internet. Now, before I make an enemy of every politician in the country, let me say there are many concerned, thoughtful, caring, sincere officials trying to solve our governments’ problems. We should applaud and thank them; they truly need our support. Unfortunately, there are many who seem to focus on the next election and lobbying solely for their own constituents, no matter what the cost. It is past time for you and me to get involved. As a starting point, look at Carl Jamison’s article on page 3 about why he became involved with the Business Council of Alabama. And then read Marty Abroms’s report on the Alabama CPA PAC Board of Trustees meeting last week on page 5. He outlines several ways in which ASCPA members can have a direct impact. Go to meetings in your local area and let your elected representatives know where you stand and what you expect of them. Be part of the solution yourself, or at least provide valuable feedback to those who can effect a solution. As always, I am available for your questions and concerns, email@example.com.
Diane L. Christy, Editor Alabama State Capitol
The Alabama CPA MAGAZINE
Carl Jamison Takes Advocacy Seriously
he Business Council of Alabama’s new chair is Carl Jamison, managing partner of JamisonMoneyFarmer in Tuscaloosa. He answered some questions about the value of advocacy.
QW hy is it important for CPAs to advocate for the profession? AM any professions, such as insurance professionals, bankers and attorneys give unique perspectives and expertise to business. CPAs can tie all of those perspectives to their own area of expertise in a way that benefits all. QH ow have you been proactive in the past? A It started with my membership in The Exchange Club, a club my grandfather was active in beginning in the 1920’s. From there, I’ve been active in First Tee, the Alabama Golf Association, President of Indian Hills Country Club, the Chamber of Commerce, The University of Alabama’s President’s Cabinet, DCH Hospital’s Foundation Board of Directors, past Chairman of the Tuscaloosa County Industrial Development Authority, past Chairman of ProgressPAC and now, Chairman of the Business Council of Alabama. QW hy did you decide to get involved with the BCA? AB eing involved in ProgressPAC gives you the opportunity, on a local level, to interview candidates, and make recommendations to the [BCA] Board on which candidates to support. Having the opportunity to recommend candidates who are pro-business was all the reason I needed. While serving as the chair of our local [Regional Advisory Committee], I called Mr. Canary, the President and CEO of the BCA, and told him if there was ever an opening from our area on the state board of the BCA, I would like to serve. My involvement locally with the ProgressPAC and RAC led to my election to the BCA Board; now I am serving as chairman. QW hat are your goals as BCA chair in 2013? AW ell, in the first part of the year, the legislative agenda is always our foremost priority. Once the session is over, we will be focusing on our education initiatives to support better education throughout our state. Without an educated workforce, it’s dif-
The Alabama CPA MAGAZINE
ficult to compete globally; and in order to move forward in today’s world, you must be prepared to compete globally. QW hat are the top issues for CPAs right now? A Of course the American Taxpayer Relief Act of 2012 – the ‘Fiscal Cliff Bill’ and how that will affect our clients, is definitely a top issue. Then there are the fiscal and financial pressures of four years of a bad economy to deal with along with several others, such as healthcare reforms, etc. QH ow can individual members of the Alabama Society be effective in advocating for the profession? AD o an exceptional job at what you do, be ethical, do the right thing, and give great service to your clients. This promotes our profession more than anything, in my opinion. Q How can support of the Alabama CPA PAC aid in that process? AA nytime you can get people involved in the process of electing good candidates, it helps. Some can give time, but almost all can give financial support. I imagine most don’t, but in my opinion, they should. QW hat advice do you have for younger professionals in terms of advocacy? AG et out in your community. Get yourself known. Volunteer with a cause that means something to you. QT here are a record number of CPAs who will be serving as members of the U.S. House and Senate this year. What impact will their presence have on the complex financial issues facing Congress? AT hey will bring a business perspective to their co-legislators and help them to make more objective decisions in fiscal matters.
Annual Tax Hotlines Include Huntsville in 2013
2012 LegiSLAtorS’ tAx guide
Alabama Society of Certified Public Accountants
Legislators’ Tax Guide is Now Available!
The ASCPA’s largest outreach to the general public is scheduled for four Alabama cities in February.
For many callers, this is the first time they’ve talked to a CPA and they take full advantage of that opportunity. The time will fly – the phones ring non-stop, peaking as the phone number crawls across the TV screens at home. The questions are challenging and sometimes heartbreaking. There will be about a hundred years’ worth of tax expertise on hand to help with the tough questions, so don’t think you’re alone. It is actually a lot of fun – why else would many practitioners come back year after year. It’s like Jeopardy for tax geeks! The Alabama Society will provide a light supper and all you need to bring is your current tax guide. This is a true community service – uplifting and humbling at the same time. Communications Coordinator Lacey Williams is assembling the volunteer lists for each city. Contact her at firstname.lastname@example.org, 334.386.5753 to sign up.
he 2012 Legislators’ Tax Guide was distributed to members of the Alabama House of Representatives and Alabama Senate in the week preceding the opening of the 2013 Legislative Session on February 5. It is an invaluable tool for legislators and their CPAs, containing the legislative calendar and guidelines for allowable deductions. If you have a member of the Alabama legislature as a client and want to request a copy, please send an email to VP Communications Diane Christy, email@example.com, 334.286.5752. As always, we owe a debt of gratitude to ASCPA Life Member Kee Ruland of Mobile for his help in updating the Tax Guide each year.
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Birmingham | Mobile | Huntsville | Nashville The Alabama CPA MAGAZINE
A Report from the Alabama CPA PAC Board of Trustees
s CPAs, unless you work in government, I think there is a natural tendency to shy away from politics and legislative matters and stick to what we do best – accounting, budgets, analytical analysis and helping business owners address business and personal financial issues. I learned the hard way that, when it comes to Alabama, you can choose to get Marty Abroms proactive with politics and legislative and regulatory matters or you can choose to be a victim of them. So, for the good of my clients, the ASCPA and the CPA profession as a whole, I chose to be involved. So have my fellow ASCPA Alabama CPA PAC board members – Chuck Adams, Gary Anglin, Roger Bryant, Jo Chateau, Jim Ellis, Darren Hipps, David Kassouf, David Scott, and Jim Story. We have an exciting year planned out for 2013! We met on January 16 in Birmingham. To kick off the meeting, we invited Mark Colson of the Business Council of Alabama to give our Board an overview of issues on the BCA’s agenda. Because of their experience and larger staff, Jeannine and our board of trustees will continue to use BCA’s resources to keep you informed. There are two open seats on the Alabama CPA PAC board of trustees, one for Montgomery and one for Auburn. We welcome your contacting us if you’re interested in serving the Society in this way. [Contact information for Jeannine Birmingham and Marty Abroms is at the end of this article.] Key items on the agenda were: • Adoption of an updated logo for Alabama CPA PAC. • Officially change the name to Alabama CPA PAC • Endorsement of Jim Barton for senate district 35 seat. • Discussion of fundraising options and tactics for the 2014 elections. The Alabama CPA MAGAZINE
Chair Marty Abroms, CPA A L A B A M A
CPA PAC The board of trustees has set a goal of raising $5 per dues-paying member in fiscal 2013, resulting in approximately $25,000 for the PAC. As Carl Jamison said in his article on page 3, some of you may be able to give your time to be active in your local area and assist us in knowing which candidates to support. But ALL of you can help by contributing to the Alabama CPA PAC. We use PAC funds to help elect candidates who are interested in working with us.
With a contribution, you can take pride in knowing that you did all you could to make sure that you have a voice at the Statehouse. PAC contribution information will be sent out in the spring. Don’t forget about participating in our legislative key person program on the state or federal level, too. If you are the CPA for a state legislator, for a U.S. representative or senator, or have a personal relationship with one of them, sign up to be their key person. It simply means that you provide the most direct channel to that person when issues of critical importance to the profession arise. Contact Jeannine Birmingham, firstname.lastname@example.org or 334.386.5750 for for more information about the key person program. I welcome your feedback, too: Marty Abroms, email@example.com, Abroms and Associates, 256.767.0740.
ALABAMA BUSINESS VALUATIONS
L L C
500 SOUTHLAND DRIVE BIRMINGHAM, AL 35228, SUITE 120 (205) 547-2996
Leadership Academy Update
he word is out on the street and it’s overwhelmingly positive: the Alabama Society of CPAs’ Leadership Academy offers unparalleled quality and value. Class II held its third session on January 18 and the pace (and volume) of each meeting continue to build. Scott Bradbary and Joe Fehrman of The Rainmaker Companies keep the energy high and the learning intense. Applications for Class III were solicited during the fall and were offered to the Young CPA Network of the Mississippi Society at the suggestion of Vera Reed of Horne, LLP. “We have offices in Alabama, Mississippi
and Tennessee and I didn’t want any of our up and coming professionals to miss out on this opportunity. After Jason Saulters of our Mobile office graduated from Class I we were committed to getting more young staff involved. This is a tremendous resource for us.” Working through executive director of the Mississippi Society Jack Coppenbarger, two members from the Young CPA Network will attend and an additional Mississippi CPA will come through Horne. That brings the total number of participants to 35 and also includes two from Connecticut, two from Ohio and two from Tennessee. These
out-of-state participants come to us via Robin Brothers at The Rainmaker Companies. Having Rainmaker on board to provide the curriculum and session leaders was a smart decision for Class I. But now it’s evident that the relationship has progressed beyond client-vendor. Troy Waugh, Rainmaker CEO, expressed it this way. “We are delighted to continue working with the ASCPA on Class III of their Leadership Academy. The value of providing firms with a program to groom their brightest talent is tremendous. The ASCPA has recognized what firms need for growth and now offer this resource to develop future leaders. This specialized training encourages younger professionals to take the next step in making a difference in their organizations. They acquire the skills needed to lead in today’s fast-changing workplace, and to offer succession options for a shrinking pool of seasoned partners.” Class II will graduate on May 2 and Class III will begin on May 3. Both days coincide with the annual Leadership Retreat of the ASCPA Board of Directors. Firm or organization decision-makers who are interested in learning more about the Leadership Academy are invited to sit in on a session. Contact Diane Christy, firstname.lastname@example.org, 334.386.5752 for details.
The Alabama CPA MAGAZINE
Chapter ROUNDUP Mike Reibling, Mobile Chapter President
balls; somebody even brought some champagne. We all had a great time.”
ike Reibling has a lot of energy. And you can tell this about him just by the way his words jump off the page. He’s a builder, a sports fan and a man with goals that stretch into the future. He’s had accounting and financial management jobs with hospitals and newspapers; been in public accounting and now he’s a sole proprietor. His niche is business valuation, litigation support and expert testiMike Reibling mony, which he sees as part of the same creative force he expends on his building projects. Reibling went to high school in Boone County (Florence), Kentucky. He discovered accounting as a high school senior and decided to major in it after being recruited to play baseball at Florida State University. He played all four years on scholarship and was graduated from the School of Business in 1970. “It was both a great time to be on a college campus and also a strange one. I was playing a lot of baseball and also enrolled in ROTC (Reserve Officers Training Corps). Towards the end of my ROTC career, we’d be drilling on the field with our M-1s and there would be folks yelling at us and protesting the Viet Nam war.” Reibling’s chosen army specialty was the medical service corps. He was stationed at Fort Sam Houston and his unit was ready to head overseas when the Army decided there were too many second lieutenants (his rank at the time) in the same job code. He elected to transfer to the National Guard to complete the balance of his military obligation. “I was part of a Guard unit out of St. Petersburg and found a job at a vocational hospital in Tallahas-
Why get involved with the Mobile Chapter?
see. I had a nice office, but there wasn’t very much for me to do. I went to a hospital in Sarasota as a staff accountant for a couple of years, became a CPA and then into public accounting.” Reibling moved again, this time to Atlanta, where he worked for Allstate as part of a travelling audit team. He met his wife Rene’ during that time and headed to Texas for a job with an up-and-coming insurance company. He ended up with the Ft. Worth Star-Telegram as a financial executive before joining the Mobile PressRegister in 1987 as controller. He returned to public accounting in 1991 at Lawrence and Lawrence and became a partner there in 1998. He worked primarily in litigation support, acquiring both his ABV and CVA designations along the way. He’s been active within the National Association of Certified Valuation Analysts, serving as state president in 2009, 2011 and again in 2013. “Honestly, building a case is just the same for me as my woodworking projects. It’s a puzzle to figure out; you approach it one step at a time until you have something solidly constructed.” One of his backyard projects has been his Tiki Hut, a gathering place for friends and family to enjoy watching college football. “We’ve got flags flying from teams all over the country. Anyone who wants to bring their pennant is welcome to. We had a big get-together here for the National Championship with wings, pizza, meat-
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“I had been part of Sertoma [a service organization devoted to hearing health] for a long time, and when the local clubs disbanded I thought I’d shift my focus to working for the Mobile Chapter at the board level. As a sole proprietor, it’s a way to keep connections with the CPA community, too.” Reibling has been invited back to FSU several times for baseball reunions and enjoys catching up with old friends. He has plenty of plans for the future, including the 22’ X 12’ greenhouse he’s currently building. “I want to write some articles about business valuation and plan on working another 15 years. I want to get more organized [while being interviewed for this article he was having a serious clean-out of his home office], maybe go on a cruise. I certainly enjoy our social life and want to spend more time helping others.”
ontinuing to burnish the CPA brand is a priority for the Alabama Society of CPAs. Over the last two years there have been several variations in advertising programs with support from local chapters. For 2012/13, the advertising budget has been solely borne by the ASCPA itself, resulting in the use of one statewide and multiple central Alabama options. Here’s the breakdown:
PRINT Business Alabama July 2012, February and March 2013 Montgomery Business Journal January and February Prime Montgomery February and March River Region Magazine January and February
OUTDOOR Lamar Outdoor I-85/I-65 intersection
no matter what they are.
RADIO WTSU (Troy Public Radio) January 15-April 1 WTXE (Montgomery talk) December 15-April 15 Alabama Society of CPAs Free on-line referral service www.ascpa.org/public The Alabama CPA MAGAZINE
“America Counts on CPAs™”
Look and listen for these ads and give us your feedback on their placement and effectiveness. 7
Several Alabama Business and Professional Announce Their 2013 State Tax Age
By: Bruce P. Ely and James E. Long, Jr., Bradley Arant Boult Cummings LLP, Birmingham
n preparation for the 2013 session of the Alabama Legislature, which begins on February 5, Alabama’s most prominent business and trade organizations have finalized their 2013 legislative agendas. Most notably, the 5,000-member Business Council of Alabama (“BCA”) and the 4,000-member Alabama Retail Association (“ARA”) have adopted farreaching tax legislative agendas. The Birmingham Business Alliance (“BBA”), the state’s Bruce Ely largest chamber of commerce, has adopted many of the same tax agenda items and a few others. Two leading professional organizations have also weighed in. The Alabama Society of James Long CPAs (“ASCPA”) has a narrowly-focused tax agenda this year but, like the BCA, ARA and BBA, advocates the passage of the Alabama Taxpayers’ Bill of Rights II (“TBOR II”) legislation outlined below. The Alabama State Bar Tax Section has traditionally led the effort on this landmark legislation, which has also been endorsed by the American Bar Association, the Council On State Taxation, the Tax Executives Institute, and most recently, the American Institute of CPAs.
BCA State Tax Agenda The BCA’s broad-based 2013 state tax legislative agenda renews its support for several legislative proposals from last year and adds three new items. “In keeping with long-term Business Council of Alabama policy,” BCA Senior Vice President/ General Counsel Anita Archie stated, “should any tax or tax reform initiatives be proposed, BCA will not consider supporting the legislation unless it is applied fairly without levying a disproportionate burden on any individual segment of Alabama's economy. Any tax proposal must be tied to governmental accountability and the elimination of wasteful spending.” During the 2013 regular session, the BCA will actively work to: • Enact legislation creating the Alabama Tax Appeals Commission (“ATAC”) as an independent state tax agency, headed by a judge selected in a non-partisan manner who has specific training in state and local taxation. The legislation 8
would simultaneously abolish the Administrative Law Division of the Alabama Department of Revenue (“ADOR”). The ATAC provisions in TBOR II are based in large part on the ABA’s Model State Tax Tribunal Act, but also allow taxpayers to appeal final assessments of sales, use, rental, and lodgings taxes issued by selfadministered localities or their contract auditing firms to the ATAC. • Enact TBOR II, an update to and expansion of the original landmark legislation enacted in 1992, which among other things extends the appeal deadlines for taxpayers from 30 days to 60 days and enhances “innocent spouse” relief.
During 2013, the BCA will support efforts to: • Streamline and simplify our sales/use tax system so that in-state and out-of-state retailers are on a level playing field and provide a single point of filing for state and all local sales and use tax returns. • Enact legislation that provides for the repayment of all funds transferred from the Alabama Trust Fund to the General Fund, as authorized under Act 2012-490 and ratified by the voters on September 18, 2012; provided that (1) the elected leaders of each branch of government continue to eliminate waste and duplication of services in state government and that (2) no individual segment of the Alabama economy bear a disproportionate share of the financial burden. • Enact legislation to establish a non-disclosure privilege for accountant workpapers. • Enact legislation for state tax credits for the preservation and renovation of historic buildings. • Enact legislation to provide for a research and development income tax/financial institution excise tax credit, parallel to the newly-renewed federal R&D credit, with an extra incentive if a qualified research institution in the state performs the research.
At the same time, the BCA will oppose: • Any efforts to establish unitary combined reporting in Alabama. • Any attempts by state taxing authorities to require disclosure, beyond those made in federal income tax returns, for uncertain tax positions or
tax shelter items. Specifically, the BCA opposes any state-specific disclosures.
The BCA will also monitor: • Efforts to regulate and set minimum standards for individual tax preparers. • Regulatory amendments related to the calculation and proper utilization of tax credits for tax payments to other states and foreign governments by Alabama residents. • Legislation to provide for the carryforward of capital (income tax) credits on capital projects of less than $100 million of investment and that create less than 100 new jobs.
ARA State Tax Agenda The ARA’s 4,000+ members account for more than 75 percent of the total annual retail sales in Alabama. Its President, Rick Brown, stated: “Retailers would like to see the Alabama Legislature continue its course toward streamlining state government and simplifying the state’s tax and regulatory processes.” During the 2013 regular session, the ARA will actively support: • Legislation to “levelize” sales and use tax collection and remittance obligations between brick-and-mortar retailers and those that are catalog and/or internet-based. • The creation of the Alabama Tax Appeals Commission (ATAC) as an independent state tax agency headed by a judge with specific training in the area of state and local taxation, as described above. • Enactment of TBOR II, as described above.
The ARA will oppose: • “Band-Aid” or quick-fix tax schemes or singling-out one particular industry or segment of business for punitive tax increases. • Patchwork tax efforts that would require unitary combined reporting for corporate taxpayers. The ARA will also monitor any legislation that alters the sales tax paid on groceries.
BBA State Tax Agenda The BBA supports the economic development and business prosperity of the Birmingham region. Vice President of Public Policy Alison Howell stated that the “[p]assage of legislation such as the Alabama Taxpayers’ Bill of Rights II, economic development incentives, and other important tax credit legislation will all play an inThe Alabama CPA MAGAZINE
Z o e b e l e i n o n Ta x
m tegral role in the development of a vibrant and prosperous region and state. As an economic development organization, the BBA supports legislation that enhances our ability to recruit new businesses and industries to the region and that encourages growth and expansion of existing industry.” During 2013, the BBA will support: • Legislation that would provide income tax credits for the rehabilitation, preservation and redevelopment of residential or commercial historic structures to stimulate private investment, downtown and neighborhood revitalization, and job creation. • The proposed TBOR II/ATAC legislation which improves the tax climate of our seven-county region and state by, among other things, creating a more independent taxpayer appeals process. • Legislation that would enact an investment tax credit that encourages more early-stage company investments. The goal is to launch more companies capable of generating jobs and having a positive impact on the state's economic growth. • Legislation that would enact a research and development (R&D) tax credit to parallel the federal credit (including financial institutions). • Legislation that implements the enabling legislation that Congress will pass to allow state and local governments to require the larger on-line vendors to collect sales tax from their customers in Alabama and remit the tax to the Alabama Department of Revenue as the agent for both the State and the local governments. In turn, those vendors would have a single point of filing, be subjected to only one audit, and could rely on tax rate information furnished monthly by the ADOR. _________ Note: The authors and other members of the firm’s SALT Practice Group are involved in drafting and advocating the passage of the TBOR II legislation, as well as several of the other tax proposals described above. © Bruce P. Ely/James E. Long, Jr./Justin B. Cureton/Bradley Arant Boult Cummings LLP. All rights reserved. Justin Cureton is a third year law student at Cumberland School of Law at Samford University in Birmingham. The Alabama CPA MAGAZINE
Guilty Until Proven Innocent Tales of the IRS Matching Program
Thomas Zoebelein, CPA
am sure you have had clients who received a computer-generated notice that basically said they owe additional tax unless they can prove otherwise. Implied in this notice are the unspoken words “we think your preparer made a mistake”. Unfortunately, the client may leap to the same conclusion. In fact, the tax return was prepared correctly; but now we must defend the client against the mismatching of the IRS matching program. The matching program was designed to identify those individuals who were either not filing their tax returns or under-reporting their income. The problem is that the system catches innocent taxpayers, too. The matching system, like many of the IRS programs today, are all handled by computer software with little or no human intervention. The problems I have observed with the matching system can be traced to 1) the accuracy of the information reported to the IRS, 2) corrected information reported is not being updated in the system (mostly broker statements), and 3) errors by the IRS computer program. We, as preparers, have to respond to the notices despite the fact that all the information was properly included in the tax return. Billing our clients for our time is, at best, problematic. It might take multiple responses, compounding the problem. In the worst case, we responded to the notice in a timely manner, thought the issue was resolved, but the client still received a 90 day notice. At that point, their only recourse is to appeal in U.S. Tax Court, paying a fee to do so. The IRS computer is programmed to wait a fixed period and then send the 90 day notice, despite receiving a timely response. The problem is that the humans who review the taxpayer responses are so severely backed up that they never see the response before the program automatically sends the 90 day notice. I had six such cases at the end of last year, compared to only one in 2011 and none for the previous thirty-eight years of my career. I had to go through Taxpayer Advocate on four, but the other two clients had to pay the $60 petition fee to enter the appeals process in U.S. Tax Court. I had another matching program case which took a single response: a client had multiple W-2s, on which the IRS picked up the income, but failed to recognize the corresponding tax withheld. Our firm had to send in copies of the all the W-2s to clear up the claim. The client did not feel he should have to pay our fee for the IRS error. In the case where your client has received a 1099-S, I suggest that you show that amount in the tax return such that matching program can find it in the tax return (regardless if it is correct or not). You can then make adjustments to correct it to the actual taxable amount. A perfect example would be an individual taxpayer who incorporated his business (elects S). The 1099MISC is sent in the individual’s name instead of the corporation (where the income had been reported). In the taxpayer’s 1040 show the 1099MISC as income with a reversal in the same amount with a notation that it was reported in the S tax return and show the FEIN. I had this very situation come to a crisis point in December. I believe taking that simple step in the 1040 may have avoided all the drama and our time to resolve. I do not know of a perfect method to avoid all the matching issues your client may receive in the future. After the wave of 90 day notices last year I did add this phrase to my initial response, to the IRS, “If the information we have provided is deemed to be insufficient, please consider this response t as an appeal of the proposed assessment”. I received a very quick response (within a month) and the IRS accepted the information, (you must show everything gross so they can tie their reports to the tax return). This should preserve the client’s right to go to the appeals process directly and prevent the 90 day letter. The future of matching notices will, in my opinion, only increase both by the IRS and the states as they scramble to collect tax money to offset budget deficits. The state of Alabama has begun using discovery software which will result in inquiries similar to the IRS matching program. It includes not only notices for income taxes, but also sales and use taxes. My final suggestion is to make clients aware of the possibility of such notices and to include in the client engagement letter a provision which covers the time it takes to respond to an IRS or Alabama Department of Revenue inquiry. That way, the client understands that the tax preparation fee does not cover extensive responses on their behalf. 9
The Alabama CPA MAGAZINE
MEMBERS IN MOTION Promotions and New Positions Community Bank announced that Poenta Luckie has been promoted to market president in Baldwin County. Luckie is an Auburn graduate who has been in banking for 23 years and with Community Bank since 2008. Smith, Dukes and Buckalew, LLP announced that Zachary Wolf has joined the firm as an assurance/tax senior in the Mobile office. Wolf recently moved from Birmingham, where he spent three years with an accounting firm proZachary Wolf viding both audit and tax services. He has served clients in a variety of industries, including banking, insurance, broker/dealers, manufacturing, and employee benefit plans. Wolf received his undergraduate degree in 2008 from the University of Alabama and his master of accountancy in 2009 from Vanderbilt University. Todd McAdams has been named a partner at Anglin, Reichman, Snellgrove and Armstrong. McAdams serves as director of the firm's audit and assurance group and is responsible for financial stateTodd McAdams ment audits, reviews, agreedupon procedures, employee benefit plan audits, Yellowbook, governmental, and single audits. He works with clients in industries including government contracting, technology, government, notfor-profit, real estate, construction, and manufacturing. McAdams holds a BSBA in accounting and a master of accountancy from the University of Alabama in Huntsville. Barfield, Murphy, Shank & Smith, LLC announced that Daniel Brock and Cynthia Hudson have been named members of the firm. Daniel Brock, CPV, CVA specializes in financial statement audit, review and compilation Daniel Brock services for clients primarily in the construction, manufacturing and real estate industries. He also performs business valuation services which are commonly required in conjunction with the purchase or sale of a business, Cynthia Hudson succession planning, and estate and gift taxes. Cynthia Hudson works on taxation issues with credit unions, businesses, individuals and not-for-profit entities. She often speaks to not-for-profit organizations and credit unions on tax-related issues. Tammy Burgin has been promoted to shareholder of Borland Benefield, P.C. She joined the firm in June of 2003 Tammy Burgin and has since been a valuThe Alabama CPA MAGAZINE
able manager of the Birmingham office. She has over 25 years of experience in both the public and private sectors of accounting, dealing with a broad range of industries. She specializes in providing accounting software support, tax and accounting advisory services to closely held businesses.
Awards and New Designations Edward L. Thomas, Jr., a partner with AKP & Associates in Birmingham, recently completed a specialized educational program in professional divorce analysis and is now certified as a CertiEdward Thomas fied Divorce Financial Analyst (CDFA). As a CDFA, he evaluates the tax implications of dividing property and the financial impact of various settlement options for dividing marital property (including pensions), child and spousal support payments. Bryan R. Chandler, managing shareholder of Jamison MoneyFarmer PC in Tuscaloosa, Ala., has been elected to the vice-chair/chair-elect position of CPAmerica. Chandler joined Jamison MoneyBryan Chandler Farmer (JMF) in 1978, became a shareholder in 1985 and has served as the firm’s managing shareholder since 2005. CPAmerica International is a member-driven association of large independent CPA firms.
Community News Ashley Lough of Aldridge Borden was recognized for her service as treasurer of the board of directors for Montgomery’s One Place Family Justice Center at their annual meeting in November. The Center provides one-stop, wrap-around services for victims of domestic violence. Leighanne Faught of JamisonMoney has been elected vice-chair of the Alabama State Board of Public Accountancy for the 2012/13 term. She manages the firm’s accounting and auditing practice and has been a shareholder since 1998. She joins ASCPA members Leighanne Faught Chad Singletary (chair), Ken Odom, Peter D’Olive and Steve Richards on the board. Warren Averett, LLC recently merged with Atlanta-based Gifford, Hillegass & Ingwersen (GH&I) and Tampa-based Pender Newkirk & Company. The merger, effective January 1, 2013, builds a stronger presence for Warren Averett in the Southeast, while offering expanded reach and resources, additional service solutions and strengthened depth of expertise to clients. Warren Averett employs more than 725 team members and serves clients through 14 offices across Alabama, Florida and Georgia.
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Alabama Society of CPAs Nomination Form NAME of NOMINEE______________________________________________________________ TITLE__________________________________________________________________________ ORGANIZATION_________________________________________________________________ ADDRESS_______________________________________________________________________ TELEPHONE_________________________________EMAIL_______________________________ PROFESSIONAL CERTIFICATIONS_____________________________________________________ PROFESSIONAL AFFILIATIONS________________________________________________________ POSITIONS HELD (by title and date) 1. 2. 3. 4. DEGREES EARNED___________________________________________________________________ SUMMARY OF CONTRIBUTIONS (use criteria listed below) __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ (Feel free to add more information on a separate sheet.)
Outstanding Young CPA – recognizes exceptional service to the Young CPA board, Young CPA chapters or individual Young CPA projects. The Young CPA Board will make the selection of this recipient. Outstanding Accounting Educator – recognizes an Alabama college accounting teacher for excellence in teaching and active involvement in the accounting profession. This award includes a $1500 stipend. The nominee need not be a CPA nor hold a doctoral degree and can include those who are presently involved in administration or research. Past winners are not eligible. The Society’s Education Committee will review and make the selection of this recipient. Outstanding Member in Business and Industry, Outstanding Member in Government, Outstanding Public Service Awards – these nominees have managed processes, technology and resources to create value, have demonstrated leadership and commitment to their organization, have acted as a strategic business partner or leader, have provided vision and knowledge of board institutional issues, have understood key non-financial and cross-functional measures and principles, have championed change and non-traditional methods and approaches, have demonstrated leadership in adopting technological change. The Public Service award candidate should have the qualities listed above, but within a community service, or special project of the ASCPA, arena. These three awards are determined at the discretion of the Nominations Committee. DEADLINE FOR ALL SUBMISSIONS IS MARCH 29, 2013. All nomination forms should be sent to Executive Assistant Cindy Smith for distribution to the appropriate selection committee: email@example.com, PO Box 242987, Montgomery, AL 36124-2987. NOMINATOR__________________________________________________________________________________ PHONE__________________________________EMAIL________________________________________________
Educational Foundation Scholarship Season is Open!
t’s not like deer season, or turkey season – there are no targets to hit other than high grade point averages. And the rewards can be lifelong and more rewarding than a set of trophy antlers! Information about the scholarships went out to educators and chapter presidents in November. Included were all the documents necessary for the 30 scholarships awarded each year to outstanding accounting students. Due to the success of the 2011 Fortune Forward capital campaign, the scholarship program expanded in 2012 to include a general scholarship at each of the 24 accredited accounting programs across the state, three endowed scholarships, and six statewide scholarships. The last six consist of four diversity awards and two given on the basis of financial need. Of the endowed scholarships, two are from the Kassouf family for one student at Auburn University and one at the University of Alabama. The third is the Pearce Bevill Minority Scholarship, given to a student at the University of Alabama at Birmingham. The beauty of the Educational Foundation’s program is that the general and endowed scholarship applications are sent from the university accounting departments to local chapter leaders. The chapters review the applications, sometimes scheduling face-to-face interviews with candidates. That process enables chapters to develop an even closer relationship with the colleges and universities in their area, and to foster an attachment to these young men and women. Chapters also give their own scholarships, ensuring that even more students are rewarded for their hard work. You can be part of this effort by contributing to the Educational Foundation through the check-off box on your annual dues statement or by making a direct contribution to the
2013 Student Guide to Accounting Firms in Alabama
is is now available! Thank you to all the 2013 Stu den t Guid e to Acc oun tinG Firm S in AlA bAm A firms who participated in this year’s Guide. It will be distributed to students at all Next stop. university programs Success. as well as associate members (eligible to sit for the exam). Sign up now for the 2014 edition by contacting Lacey Williams, firstname.lastname@example.org or 334.386.5753.
The Alabama CPA MAGAZINE
Foundation. Combine business, pleasure and support of two good causes by joining the Young CPAs at their annual charity golf outing sponsored by PangeaTwo. Half of the net proceeds benefit the scholarship fund. For more
information on the scholarship awards, contact your local chapter president. To be part of the PangeaTwo Charity Golf Tournament, call or email Amanda Freeman at the Alabama Society, email@example.com or 334.386.5751.
Time to tee up for two great causes! PangeaTwo Charity Golf Tournament Brought to you by the Alabama Young CPAs Wednesday, June 5, 2013 Robert Trent Jones Oxmoor Valley Courses
Benefitting The Exceptional Foundation and ASCPA Educational Foundation Sponsorships and teams available. Contact Amanda Freeman, firstname.lastname@example.org, 334.386.5751 or Lacey Williams, email@example.com or 334.386.5753.
Charter HR enables its clients to cost-eﬀectively outsource the management of: • Human Resources • Employee Beneﬁts • Payroll • Workers’ Compensation Charter HR clients focus on their core competencies to maintain and grow their bottom line. Charter HR ‘s two step plan for making your business more proﬁtable: Step One - Running a successful business is what you do best! Step Two - You continue to control your business while Charter HR takes care of the details!
We can help you with compliance with the new healthcare regulations.
755 Lee Street, Suite A • Alexander City, AL 35010 • 855-234-6234 firstname.lastname@example.org • www.mycharterhr.com Contact us for more information or to receive a no cost, no obligation Charter HR Solution. 13
Bigger is Better
Accounting Practice Sales is North Americaâ€™s leader in sales because we understand practice value, have thousands of motivated buyers and know how to navigate todayâ€™s tricky financial market. When you decide to sell your practice, remember APS got to be the biggest because we earned it. We are the best at what we do. Call today for a risk-free and confidential evaluation of your practice and let us show you how simple selling your practice can be. Bigger is better! Lori Newcomer, CPA (888) 277-6040 LNewcomer@apsleader.com AccountingPracticeSales.com
The Alabama CPA MAGAZINE
State BOARD News
By J. Lamar Harris, CPA
OCTOBER-NOVEMBER 2012 CPA EXAMINATION Grades from the October-November 2012 CPA Examination were mailed to candidates on December 7, 2012 and January 4, 2013. There were 203 total candidates who sat for a total of 284 sections of the examination and passed 129 sections for a section-passing rate of 45.42%. The 203 total candidates were comprised of 32 first-time and 171 re-examination candidates. A total of 21 candidates passed. There were 35 candidates who passed section(s) to receive credit status, 48 candidates who passed a section to improve their credit status, and 99 candidates who passed no sections to remain status quo. There were 129 candidates who sat for one section of the examination, 68 candidates who sat for two sections of the examination, five candidates who sat for three sections of the examination, and one candidate who sat for four sections of the examination. ALABAMA NATIONAL SECTION PERCENT PASS PERCENT PASS AUDIT
JANUARY-FEBRUARY 2013 CPA EXAMINATION Testing for the January-February 2013 CPA Examination will close on February 28, 2013. During the month of March 2013, testing will be closed for systems and databank maintenance. We anticipate receiving and distributing the grades from the January-February 2013 CPA Examination between March 8, 2013 and April 12, 2013. APRIL-MAY 2013 CPA EXAMINATION Testing for the April-May 2013 CPA Examination will begin on April 1, 2013 and close on May 31, 2013. During the month of June 2013, testing will be closed for systems and databank maintenance. We anticipate receiving and distributing the grades from the April-May 2013 CPA Examination between June 12, 2013 and July 12, 2013. CPA Examination scores are available on-line through the Board’s website at www.asbpa.alabama.gov/exam. htm. Examination candidates will need their “Section ID Number” and “Date of Birth” to access their scores. The Board also mails official scores to candidates as soon as they are received and processed. The Board accepts submission of CPA Examination Applications during any month of the year. If you have questions, please contact Anna Baker at the Board office at The Alabama CPA MAGAZINE
334-242-5700 or in-state 1-800-435-9743. CPA Examination Application Forms, Application Instructions, and CPA Examination Qualifications may be downloaded from our website at www.asbpa.alabama.gov/exam.htm. We encourage each CPA Examination Candidate to review the “Test Tips For CPA Candidates” and “CPA Candidate Bulletin and Test Tutorial and Simulations” on the Exam Applications page of the Board’s website. 2012-2013 REGISTRATIONS On-line registration is available for 2012-2013 for CPAs, PAs, and Firms. The link to the on-line registration form can be found on the Board’s website at www.asbpa.alabama. gov/registration.htm. Licensees registering on-line for 2012-2013 will not be assessed convenience fees in addition to the required permit or registration fee. Individual and firm registration packets for 2012-2013 were mailed to all licensees on September 24, 2012. If you have not received your packet and wish to file a paper registration, please contact the Board office or visit our website and download individual and firm registration forms and instructions. The completed individual and firm registration forms for 20122013, along with the appropriate fee(s), were due in the Board office on October 1, 2012. CPE must be earned during the period October 1, 2011 through September 30, 2012 and reported on this registration form. If you failed to meet the CPE requirements by September 30, 2012 due to reasonable cause, please contact the Board office to formalize a CPE completion schedule. Registrations received after December 31, 2012 will be delinquent. A $100.00 late renewal penalty is due for registrations postmarked January 1, 2013 through March 31, 2013. The late renewal penalty increases to $500.00 for renewals postmarked April 1, 2013 through September 30, 2013. After that date disciplinary actions ensue for unpaid fees, late renewal penalties, and CPE deficits. Licensees who have not already registered are delinquent and are encouraged to file as soon as possible to avoid the escalating late renewal penalties. If you have questions concerning your 2012-2013 registration(s), please contact the Board office. ADDRESS CHANGES Board rules require that all licensees keep the Board advised of any change of address and/or change in business affiliation. Such changes must be in writing and may be submitted electronically by visiting the Board’s website and completing the On-Line Change of Information Form found on the “Change of Information” page. You may also submit such changes by mailing or faxing (334-242-2711) to the Board office. 15
Presorted Std US Postage PAID Permit No. 131 Montgomery, AL February
The Alabama Society of Certified Public Accountants 1041 Longfield Court P.O. Box 242987 Montgomery, AL 36124
Address Service Requested
Did you leave your ASCPA dues in your locker?
Classified MONTGOMERY AREA technologyoriented sole practitioner with fast-growing accounting and tax firm is seeking alliance or merger with CPA of similar situation. Also seeking CPA or CPA candidate with tax and accounting experience for full or part-time employment. Contact Sajjan Rajendra, CPA, email@example.com or 334.294.6967 for more information. Growth-oriented Montgomery CPA firm seeking a CPA with 3-5 yearsâ€™ public accounting experience in auditing employee benefit plans to join our team. Opportunity to work in challenging and rewarding environment while maintaining healthy work/life balance. Competitive salary and benefits package. Send resume to P.O. Box 1590, Montgomery, AL 36101. Established Birmingham firm seeking CPA with 4 to 6 years of experience to handle small business and personal accounting and taxes for retiring partner. Send resume and qualifications to firstname.lastname@example.org.
Donâ€™t get sent to detention. Pay your 2012/13 dues by March 1 and the principal will be happy. Questions? Contact VP Membership Betty Barker, email@example.com, 334.386.5754.
Saidie Catherine Boohaker Egeland August 5, 1956 - January 1, 2013 Birmingham, Alabama Certificate #2572
Published on Feb 7, 2013