Disclosures: November/December 2016

INSIDE this issue

It’s time to gear up for tax season! Make sure you’re in the know with the latest tax updates and changes in Virginia on page 14. And check out a primer on retail sales tax in the Commonwealth on page 18.

FEATURES

IT’S GO TIME: 2016 TAX SEASON BEGINS 14 Read about updates to the 2016 tax filing season in Virginia.

RETAIL SALES TAX: WHAT’S TAXABLE IN VIRGINIA? 18 Businesses are spending more and more time on retail sales tax, particularly if they operate in multiple states.

REVENUE RECOGNITION

Several updates issued in 2016 amend Topic 606, Accounting Standards Codification.

AFFORDABLE CARE ACT IN 2016 26 The employer update, reporting requirements and unintended consequences.

ARTICLES

marketing

SAYS

expectations survey

MANAGEMENT

problematic clients

SECTIONS

AD INDEX

Beth A. Berk, CPA 32 CPACharge

Councilor, Buchanan & Mitchell, PC

Keiter

Paychex

Health and Benefits

Group Advisors

published bimonthly for members of the Virginia Society of CPAs.

VIRGINIA SOCIETY OF CPAs

4309 Cox Road

Glen Allen, VA 23060 (800) 733-8272

Fax: (804) 273-1741 vscpa.com

disclosures

disclosures.vscpa.com

EDITORIAL STAFF

Jill Edmonds

Managing Editor disclosures@vscpa.com

Chip Knighton

Contributing Editor

cknighton@vscpa.com

David Bass

Public Relations & Communications Director dbass@vscpa.com

EDITORIAL TASK FORCE

Olaf Barthelmai, CPA

Adam Chaikin, CPA

Cheri David, CPA

Jennifer Eversole, CPA

Keith Gray, CPA

Genevieve Hancock

Alesia Lewis, CPA

Harold Martin Jr., CPA

David Peters, CPA

Mark Plostock, CPA

Barbara Sukramani, CPA

DEADLINES

Articles and advertising for future issues are due by 5 p.m. on the following dates:

Jan./Feb. 2017 Nov. 1, 2016

March/April 2017 Jan. 2, 2017

May/June 2017 March 1, 2017

July/Aug. 2017 May 1, 2017

Sept./Oct. 2017 July 5, 2017 Nov./Dec. 2017 Sept. 1, 2017

Statements of fact and opinion are made by the authors alone and do not imply an opinion on the part of the officers, members or editorial staff.

VSCPA ENDORSED PARTNERS

From Twitter

BACKTALK you said it

Kari Forden with Gregg & Bailey feeding the kittens @VSCPANews #CPAService @RALtweets

— @RVATAXCPA (BRAD BAILEY, CPA) on his firm’s CPA Day of Service activity. See page 34 for more pictures from Day of Service.

VIA FACEBOOK >>

I love your nerdself!

— LINDSEY SEEGERS on VSCPA member Carolanne Petrusiak’s CPA Week post

Way to go! Keep up the good work!

— DAVID ROPPEL on VSCPA member Chris Ekimoff’s CPA Week post

From the TWITTERSPHERE >>

Loved helping #SophieHouse on Friday! — @EGANTEAM

Gregg & Bailey — supporting CPA day of service 8th year! Thanks to our great people who volunteer. @RALtweets #CPAservice @VSCPANews — @RVATAXCPA

Thanks to @VSCPANews #volunteers! — @MAYMONT

In honor of #VACPAWeek, Cherry Bekaert encourages CPA firms and individuals to participate in @VSCPANews’ CPA Day of Service this Friday! — @CHERRYBEKAERT

@VSCPANews thanks to TJ Chpt for being a great audience at this morning’s discussion about social entrepreneurship and benefit corporations — @ERICPERKINSLAW

Thanks @VSCPANews 4 the EducatorRoundtable! @NovaELIfe & @NOVAcommcollege have opportunities 4 accounting students! — @PROFMITCHELL

Will CPAs one day wear shorts in the office? @VSCPANews has given workers the option http://spr.ly/6013Bh06h — @AICPA_JOFA

CONNECT: connect.vscpa.com

TWITTER: @VSCPANews, @FinancialFit

LINKEDIN: tinyurl.com/VSCPALinkedInGroup

FACEBOOK: facebook.com/VSCPA INSTAGRAM: instagram.com/VSCPA

Get in touch At the Virginia Society of CPAs, we love to hear from you. Whether it’s a quick email to a staff member, chat on the phone, Disclosures letter to the editor, tweet, blog comment or something different altogether, let us know what you’re talking about, how you feel about different issues affecting CPAs and how we can help.

tweet or something different altogether, let us know what you’re talking about, how you feel about different issues affecting CPAs and how we can help.

PRESIDENT’S perspective

The Leadership Academy: Shaping the future

One of the biggest challenges facing the accounting profession (and the country at large) is preparing strong leaders to help navigate an uncertain future. With change coming on a daily basis, we need CPAs who can help us solve challenges and lead the profession forward. We can’t do enough to prepare leaders to create a path forward for the profession. That’s where the VSCPA Leadership Academy comes in.

The Leadership Academy, presented in partnership with the Business Learning Institute, will be held for the fourth time Nov. 14–16 at the CPA Center in Glen Allen. The event, part of the VSCPA’s LEAD programming suite, fills a natural role between the VSCPA’s Leaders’ Institute (for accounting students) and Leaders’ Summit (for VSCPA volunteers). Between the students and the directors and partners is a group of professionals on the upswing of their accounting career, hungry for opportunities

to lead and ready to develop the skills needed to take on those opportunities.

Nurturing those leaders is truly a natural role for the VSCPA, whether through CPE opportunities like the Leadership Academy or volunteer opportunities that allow them to hone their talents. You can’t flip a switch to create a leader — it’s a continuous, ever-evolving process.

Emerging leaders need tools, skill training and insights from those who came before them. The Leadership Academy is one way we hope to provide that.

Leadership Academy attendees learn with a cohort of colleagues they can lean on for advice as they continue in their leadership journey. We believe in this program enough to send our own employees to it each year. It’s

intended to complement what firms might be offering in terms of leadership development, and it’s more specialized than a general leadership development program, covering the issues that will be crucial to the future of the profession.

Perhaps the best part of Leadership Academy is that it’s aimed at enhancing the innate skills attendees already possess. Part of the preparation for the event is that attendees work to identify their core strengths and values, and the event itself deals with how they can capitalize on those skills and hone them to lead more effectively.

The VSCPA wants to help build the future, both of the accounting profession and the country as a whole. This is a piece of that development process. By nurturing the talents of the profession’s brightest upcoming stars, we can ensure its viability for the next halfcentury and beyond. n

STEPHANIE PETERS, CAE, has served as VSCPA president and CEO since 2007. speters@vscpa.com connect.vscpa.com/StephaniePeters @StephPeters

The cream of the crop: At the 2015 Leadership Academy, 31 of the profession’s rising stars gathered at the Richmond CPA Center.

LINE items

GO Virginia aims for high growth

There are millions in financial incentives on the table targeted at growing and diversifying Virginia’s economy, advocated for by GO Virginia and signed by Gov. Terry McAuliffe this year.

GO Virginia, a bipartisan, business-led coalition, was initiated by the Virginia Business Higher Education Council and the Council on Virginia’s Future. An acronym for the Virginia Initiative for Growth and Opportunity in Each Region, GO Virginia wants to foster privatesector growth and job creation through state incentives and regional cooperation. Check out how GO Virginia plans to do that in 2017 and 2018:

>> State grants of $36 million from the Virginia Growth and Opportunity Act will inject funding into key regional economic initiatives and industry sectors. A 24-member business-led board will oversee disbursement.

>> Localities that participate in particular incentives to cooperate rather than compete can receive up to 45 percent of personal income taxes generated by eligible projects for up to six years, as mandated in the Collaborative Economic Development Jobs Act.

>> The Virginia Investment Research Fund, among other vehicles, will support research leading to new business ventures, efforts to attract scholars to Virginia research schools, lab renovation and equipment purchases. The 2017–2018 budget includes $98 million in general funds and bonds for capital investment and research.

Check out all of GO Virginia’s initiatives at govirginia.org. n

CPA ASSEMBLY DAY: JAN. 24, 2017

2017 CPA Assembly Day will take place on Tuesday, Jan. 24. Meet and visit with your elected representatives at the Virginia General Assembly in Richmond. Your presence shows Virginia legislators that CPAs are committed to being an integral part of the legislative process.

As CPAs, if we don’t advocate on behalf of the profession and our clients, who will? If you can’t attend in person, watch your email inbox that morning for virtual participation options. Visit vscpa.com/ CPAAssemblyDay to register n

FEDERALLY SPEAKING

Top news from the Capitol and other national happenings…

NEW FEDERAL DUE DATES

Last spring, Congress enacted several due date changes that take effect for the 2017 filing season. Business entity investors’ Schedules K-1 are due before the investors’ returns are due, and foreign account information (FBAR) is due (and can be extended) when the individual returns are due. Check out a comprehensive chart of the changes from the American Institute of CPAs (AICPA) at tinyurl.com/TaxDateChanges.

REDUCED FEE FOR FORM 1023-EZ

The U.S. Internal Revenue Service reduced the fee for small charitable organizations applying for tax-exempt status via the Form 1023-EZ, from $400 to $275. The reduction went into effect July 1, 2016.

FASB ISSUES NONPROFIT FINANCIAL STATEMENT CHANGES

On Aug. 18, 2016, the Financial Accounting Standards Board (FASB) issued the first major update for nonprofit entities’ financial statements since 1993. The update takes effect for annual financial statements issued for fiscal years beginning after Dec. 15, 2017, and for interim periods within fiscal years beginning after Dec. 15, 2018. Visit fasb.org for more information. n

LINE items

GIVE YOUR CLIENTS THE GIFT OF YEAR-END TAX PLANNING

Looking to provide your clients with the extra client service they expect and deserve? Here are five topics you can focus on before next year’s filing season gets underway.

1. 2016 year-end tax planning: It’s a perfect time to schedule a November or December appointment with your clients for any follow-up action. Discuss any circumstances that have changed and whether any withholding adjustments might be necessary.

2. Retirement contributions for 2016: Remind clients to double check their contributions in their 401(k) plans while there is still time to make a payroll adjustment in order to maximize the contribution for 2016. Also, for self-employed clients, now is a good time to discuss retirement plan options, such as a SEP IRA, Solo 401(k) or a SIMPLE IRA.

3. Investment opportunities: Consider collaborating with each of your clients’ investment advisers to plan for potential capital gains/losses and the tax ramifications. So, rather than relying on your client to relay the information correctly (to both sides), ask him or her to provide you their advisor’s contact information and grant you permission to disclose information. Or, schedule a meeting where all interested parties are present to discuss the what might affect the client’s financial situation.

4. Data protection: Remind clients to keep their computers secure, avoid phishing and malware, protect personal information and contact you if they suspect they are a victim of tax-related identity theft. Check out data protection resources from the U.S. Internal Revenue Service (IRS) at irs.gov and the American Institute of CPAs (AICPA) at aicpa.org.

5. Health insurance and other health care costs: Ensure your clients understand which provisions of the Affordable Care Act apply to them. If they need to obtain health insurance coverage, remind them about the open enrollment period in the marketplace from Nov. 1 to Jan. 31, 2017. Discuss their health care costs for the current and future year and ensure they spend their health flexible spending arrangement money. n

Adapted from “7 Key Communication Points for Your Client with Extended Returns” by April Walker, CPA, on the AICPA Insights blog at blog.aicpa.org.

EXCELLENT EXCEL >>

Forecast sheet: Excel’s crystal ball

In the last issue, I covered how to use the Add Chart Element button under the Design toolbar to include a Linear Forecast Trendline to your graph. While this function is useful, Karen Helderman, CPA, my colleague at the Auditor of Public Accounts, shared the following function with me, which I have to admit is cooler.

Have you ever longed for a crystal ball to help you predict what the future holds? As CPAs, we have no crystal ball, but we do have the next best thing — Forecast Sheet, courtesy of Excel 2016!

Forecast Sheet allows users to take historical time-based data and forecast the future. By highlighting a table of historical data and choosing the Forecast Sheet icon on the Data toolbar, Excel will immediately return a graph of the historic data and its forecast. Below is an example chart from Forecast Sheet that predicts future university meal-plan revenue for three years:

The blue line represents the historic data while the orange center line shows the forecast. The thin orange lines located above and below the center line shows the upper and lower forecast using the 95 percent confidence interval chosen for this example. The spread between the center, upper and lower forecast increases as the forecast grows further into the future to compensate for uncertainty. n

GEORGE D. STRUDGEON, CPA, CGFM, is an audit director at the Virginia Auditor of Public Accounts in Richmond. Email him if you have Excel topics you want him to cover.

george.strudgeon@gmail.com connect.vscpa.com/GeorgeStrudgeon

Consumers want more Virginia wine

Virginia wine continues to grow in popularity — to the tune of more than 6.6 MILLION bottles (556,500 cases) sold during fiscal year 2016, according to Gov. Terry McAuliffe’s office. That’s a 6 PERCENT increase over last year’s sales and a 34 PERCENT increase since 2010. Here are other wine stats:

>> Virginia boasts 285 wineries, ranking fifth in the nation. The Commonwealth has 16 cideries, ranking sixth nationally.

>> Total sales of Virginia wine amounted to more than $2 MILLION in wine liter tax collections in 2016.

>> Visits to Virginia wineries reached 2.3 MILLION in 2015.

>> Vineyard acreage increased by 8 PERCENT in 2015 over 2014 numbers, with grape production increasing as well.

>> Cider sales (tracked separately from wine for the second year) totaled 416,750 cases, a 52 PERCENT increase over 2015.

Wine and cider sales are doing a lot to help the state’s economy: “These vineyards and orchards are providing jobs, revenue and expanded tourism opportunities, especially in many of our more rural areas across the Commonwealth,” McAuliffe said.

Thirsty for more or to find a winery near you? Check out virginiawine.org. n

did you know?

More than half of American parents give their children an allowance, according to a poll by the American Institute of CPAs. On average, kids receive $67.80 each month, or $814 a year, and do approximately six hours a week of chores to earn their money. n

AMERICANS SOUND OFF >>

Thoughts on the U.S. tax system

More than 1,000 Americans were surveyed by WalletHub about their thoughts on the current U.S. tax system, how they think it should be improved and how they felt about the presidential candidates’ tax proposals. Key findings included:

>> They’re confused. More than 75 PERCENT of respondents rated the current tax code as either “complex” or “extremely complex.”

>> Many don’t want deductions. Nearly half of respondents (47.8 PERCENT) said the fairest possible tax code would have fewer deductions than currently available.

>> They want to pay more taxes on investments. NINE OUT OF 10 respondents said income from investments should be taxed at least as much as wages.

>> Some want a flat tax. One in four respondents (26.27 PERCENT) support a flat income tax.

>> They think companies aren’t paying their fair share. Nearly three-fifths of respondents (57.18 PERCENT) said corporations should face higher tax rates than consumers.

>> They believe some items should have higher tax rates. Taxes on wages and corporations were rated “least fair” and taxes on alcohol and tobacco “most fair.”

Check out the full survey results, including commentary and methodology, at wallethub.com. n

BY THE NUMBERS

77The percent of deficiencies found in the audits of broker-dealers inspected in 2015 by the Public Company Accounting Oversight Board (PCAOB), according to a report released on Aug. 18, 2016. While the number is high, it’s a 10 percent drop from the deficiencies found in 2014. Audit deficiencies were found mainly in revenue, with others in related-party transactions, among other areas. Visit pcaobus.org to read the full report. n

matters

To text or not to text: Mobile marketing

BY DAVID R. PETERS, CPA

Mobile technology is everywhere. How many times have you stepped into an elevator, coffee shop or restaurant and seen seemingly everyone scrolling through smartphone apps to get the weather or check a game score? A recent article in Digital Marketing magazine on the use of mobile phones said that of the 6.8 billion people on earth, 5.1 billion people own a mobile phone. To put this in perspective, only 4.2 billion own a toothbrush! No wonder people say that they feel naked when they forget their cell phone on the kitchen counter when they leave for work in the morning.

However, while the ownership of cell phones has increased, it is still questionable as to whether the quality of our interactions with others has improved. While I have many friends and colleagues who answer text messages and emails on their phones at all hours of the day, these are often the same people who barely ever take an actual call. From a marketing perspective, this phenomenon creates an interesting dilemma. Mobile marketing seems to present huge opportunities. If everyone has a phone, I have the opportunity to connect with anyone, no matter where they are. However, if my clients or prospects won’t pick up the phone, is it even worth calling them? Do I just give up and send a text or email?

While a phone call is a higher-quality way to interact with clients and prospects, people are screening their calls more than ever. According to the Telenet and Ovation Sales Group, it only took 3.68 attempts to reach a prospect in 2007. Now, it takes almost eight attempts. Similarly, according to Sirius Decisions, it takes today’s teleprospector between 100 and 500 calls to get one lead. While these statistics may appear bleak, the future of marketing by phone may not be all lost. According to Vorsight, “you are 70 percent more likely to get an appointment with someone on an ‘unexpected sales call’ if you are in a common LinkedIn group than if you aren’t.” So people still answer calls — but only from people they know. Perhaps this should come as no surprise with the continued rise in smartphone use. A picture or name of the caller pops up when you get a call from someone in your contact list. People don’t want to take time away from their busy schedules for a no-name caller.

What about texting? A good open rate for email marketing is about 20 percent. This means that four out of five emails you send to prospects or clients will go directly into the trash folder. However, the open rate on text messages is 98 percent, according to the Tatango website. And the EZ Texting site says that of those text messages, between 95 and 98 percent are actually read within minutes of receipt! While it’s possible these statistics show that people don’t know how to delete a text message from their phones without opening it first (I know that I don’t!), it’s more likely an indication that we view text messaging as a

more personal form of communication. Emails and phone calls could be from anyone, but only the people who we are close to would bother with sending us a text message.

Text messaging becomes a double-edged sword for financial services firms in this way. On the one hand, if you send a client or prospect a text, it is far more likely to be opened. On the other hand, the receiver still needs to be comfortable with this form of communication. If he or she is not, you are more likely to be perceived as crossing a line with a text message than with a phone call or email.

This is not to say that one should never text a prospect, but rather that financial services professionals should take a step back and consider what is most comfortable to the person they are contacting. If the prospect gave you a phone number to contact them, then clearly a phone call is best. If they circled the email address on their business card, then this is a hint as well! Finally, text messages are fine sometimes, but not if you noticed the prospect talking on a flip phone the first time you met. The secret to success seems to be the ability to gauge where your clients are comfortable. This requires us to be perceptive —and it takes effort. People want to do what comes naturally to them. Our job as marketers is to simply figure out where people feel most at home and connect with them in that way. n

DAVID PETERS, CPA, is the strategic relationship manager and financial advisor for Carroll Financial Inc., in Charlotte, N.C. He is also an adjunct professor in accounting, insurance and ethics, a doctoral student in financial planning and sits on the Disclosures Editorial Task Force.

dpeters@carrollfinancial.com connect.vscpa.com/DavidPeters carrollfinancial.com

The information discussed herein is general in nature and provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Nothing in this article constitutes an offer to sell or a solicitation of any offer to buy any type of securities. Registered Representative of and securities offered through Cetera Advisors Network, LLC, Member SIPC/FINRA. Advisory services offered through Carroll Financial Associates, Inc., a Registered Investment Advisor. Carroll Financial and Cetera Advisors Network, LLC are not affiliated.

SURVEY says

WORRIES

2017 Virginia Economic Expectations Survey

Stuck in neutral. That’s how VSCPA members view the U.S. economy, according to the Society’s 2017 Virginia Economic Expectations Survey, a partnership with Virginia Business magazine.

Just 52 percent of the 305 respondents answered “yes” to the question, “Do you believe the U.S. economy is moving in a positive direction?” Last year, a similar question — “Do you believe the United States is in a sustained economic recovery?” was answered positively by 53 percent of respondents, and that same question drew a 50–50 split in the 2015 survey. In similar fashion, a slight plurality (41 percent) described themselves as somewhat pessimistic or very pessimistic on their outlook on the national economy, with 30 percent answering somewhat optimistic or very optimistic.

The VSCPA and Virginia Business held a joint panel discussion at the CPA Center in Glen Allen on Sept. 13, with four VSCPA members, representing the state’s four largest metropolitan areas, on the panel:

>> David Cotton, CPA, partner, Cotton & Co., Alexandria (Northern Virginia)

>> Martin Einhorn, CPA, partner, Wall, Einhorn & Chernitzer, Norfolk (Tidewater)

>> Clare Levison, CPA, owner, Levison Consulting, Blacksburg (Roanoke area)

>> Gary Thomson, CPA, partner, Dixon Hughes Goodman, Glen Allen (Richmond area)

Twenty-three percent of respondents cited infrastructure as the most pressing issue for Virginia, followed by health care costs (22 percent), government regulation (18 percent), federal budget cuts (14 percent) and education (12 percent). Health care costs (81 percent) and tax climate (48 percent) were the top two issues respondents said needed to be addressed in the 2017 Virginia General Assembly session. Federal spending was a major concern for respondents, with 86 percent answering that the region has not done enough to lessen its dependence on federal money.

“We’ve gone from $117 billion dollars a year in government contracts rewarded in Virginia to $67 billion over an eight-year period of time,” Thomson said. “We’ve already seen a significant dip from either direct sequestration or just a peel-back in government funding.

“The good news is that has created opportunities, particularly when you look at technology, cybersecurity [and] other fields that are beyond the federal government, but even with all that positive reaction, we still are the largest per-capita recipient of federal funds. So it, by nature, will have a significant impact, and it cascades through all of Virginia.”

Discussing the economy: To watch the panel discussion, click on the video above in the digital Disclosures issue at vscpa.com/Disclosures or visit vscpa.com/ EconomicExpectationsPanel.

Respondents were pessimistic regarding the national regulatory environment, although they were more bullish on Virginia, with 80 percent rating the Commonwealth’s business climate as good or fair compared to neighboring states. Two-thirds said the regulatory environment was negatively affecting the overall economic climate, while 52 percent expected clients to experience an adverse impact from the new overtime rules from the U.S. Department of Labor.

Nearly four-fifths of respondents (79 percent) said that partisanship at the federal and state level is preventing government from addressing urgent needs that have an impact on business. In other issues:

>> 52 percent of respondents anticipated their company, firm or organization increasing revenues in 2017

>> 66 percent said their business or company is finding an adequate supply of talent in Virginia

>> 68 percent support the expansion of the Atlantic Coast Pipeline through Virginia

>> 52 percent think capital investments in Virginia will stay the same in 2017, while 37 percent think such investments will increase

>> 36 percent believe Virginia small businesses have access to adequate credit, while 31 percent believe they don’t n

PRACTICE management

How to handle problematic clients

BY RANDY R. WERNER, CPA, JD, LLM/TAX

the client needs to resolve, such as providing payment or information, or contacting the firm for a further consultation.

The letter should include a “drop-dead” date by which the client must comply to avoid disengagement. If the client does not comply, though, disengaging must be done well before the due date and preferably the day after the “drop-dead” date is missed. This will allow the client sufficient time to obtain the services of another tax preparer and thereby reduce the risk of a claim against the CPA. A well-timed letter is good defensive documentation in the event of an actual claim.

CONSIDER THE PROBLEM

When a client does not provide the information needed, carefully consider the problem. Is the problem sloppy record keeping, or is the client deliberately withholding information? If it looks deliberate, and the CPA is urged by the client to proceed with work without having proper documentation, this could be a red flag. Repeated delays might be the result of unethical or illegal activity.

CPAs are often so busy during the tax season that they don’t recognize or acknowledge a potential claim as it is developing. This has been an ongoing issue for CPAs and is particularly devastating when the damages claimed are significant and are not covered because of late reporting.

An excellent way to identify those clients is to re-evaluate your client relationships on a regular basis, at least annually. Re-evaluate tax clients while there is still ample lead time before tax season for a client to replace you in the event you decide to disengage.

Far too often, tax practitioners get too close to a filing deadline before disengaging from a client who has put them at risk by failing to provide the necessary information for a return to be prepared on time. The client may even fail to provide the information to complete a year’s worth of bookkeeping, which is supposed be used to prepare the returns.

If a client has previously exhibited behavior that indicates they will not have their information to the CPA in a timely manner, or not pay on an outstanding account balance, we recommend that the CPA either enforce the stop-work clause in their engagement letter or write a “drop dead” letter — a pre-disengagement letter indicating the problem that

It’s important for CPAs to pay more attention to potential issues and to report to their carriers as soon as they think there may be a problem with their services. CAMICO provides substantial incentives for early reporting, including deductible reductions, and tax penalty abatement and subpoena services. The company also offers “continuity of coverage,” which permits much later reporting by a CPA who has consistently renewed with us, even if that CPA knew of a potential claim but did not report it until the client makes an actual claim months or even years later.

DIFFICULT BEHAVIOR

Difficult behavior on the part of a client should be investigated. It may be an indication of a failing business, financial problems, substance abuse or other personal problems. Uncovering the source of the problem might provide the client with some help, but take swift action to remedy the situation or disengage before the situation worsens.

Some clients may pay well but are nasty to your staff, make unreasonable demands, complain excessively, argue, perhaps threaten to sue you, or are generally obnoxious, creating turmoil for you and your

Problematic or less-thandesirable clients may be keeping your firm from developing the clients it wants.

staff. Is this client worth keeping? Sometimes the answer is “no, life is too short.”

CHANGES IN CLIENT’S BUSINESS

Changes in a client’s business may lead the client in a direction that causes you to reconsider the relationship. A client may, for example, buy a business that requires services you are not qualified to do or don’t want to perform. For instance, a start-up client may grow and decide to go public, and you may not want to perform the public work. Such changes can alter the professional relationship and result in a situation that causes you to consider disengaging. Ask yourself, “Is this client a still good fit for my firm?”

CHANGES IN YOUR FIRM

When your firm changes, you may also need to alter your client base. The loss of a partner

with expertise that the other partners don’t possess or have no desire to obtain will require a decision by the firm regarding continued service to this share of the client base. You may decide that you no longer want to continue performing a particular type of work. Or, you may decide to branch out and grow your business in new services. Review your client base whenever your firm changes in order to determine whether or not all existing clients are still a good fit for the firm. Review your resources and qualifications before expanding your services, and commit to a new service before you begin seeking clients.

POTENTIAL CONFLICTS

Consider all client situations carefully to spot potential conflicts of interest, which may affect your objectivity or independence — even if you are not engaged to do attestation work. Examine potential or actual

PRACTICE management

conflicts of interest from a broad point of view, considering the client's perspective as well as those of other stakeholders such as owners, investors, partners, beneficiaries and spouses. Troublesome scenarios can include a partnership break-up, a failed investment, bankruptcy, a trust, mergers, divorces or anything else that can create opposing or disappointed factions.

DISENGAGEMENT

When you decide to disengage, seek to terminate the relationship professionally and formally, in writing. Your disengagement letter should always contain clear statements, a description of the outstanding work and completed work, and a list of any due dates or filings. Again, provide ample lead time before a client’s deadlines to better protect yourself. Your client need not feel antagonized in any way. Many disengagements occur after a conversation with the client in order to prepare them for the forthcoming letter. Done effectively, a disengagement can leave your client feeling that you have acted in the best interests of both parties.

Effective communication is a key factor in any CPA-client relationship. When you work to stay informed and in control, you safeguard your firm. In the end, disengaging is simply good practice management, and knowing how to do it skillfully and professionally will help you grow your practice with the kinds of clients that will be satisfying and remain with your firm for a long time. n

RANDY R. WERNER, CPA, JD, LLM/TAX, is a loss prevention executive with CAMICO. She responds to CAMICO loss prevention hotline inquiries and speaks to CPA groups on various topics.

rwerner@camico.com camico.com

GO TIME:

2016 tax season begins

Changes and updates to the 2016 tax filing season in Virginia

TAXATION

Unlike most recent years, there were few changes that affect a significant number of Virginia taxpayers. The few relatively significant changes are described below. In addition, Virginia practitioners are encouraged to also review the “2016 Legislative Summary” for items that may affect their clients in the following areas:

>> Sunset dates for income tax credits and sales tax exemptions

>> Employer filing requirements for income tax

>> Changes to various income tax credits

>> Retail sales and use tax exemptions and certain other provisions

>> Local tax legislation (real estate, tangible personal property tax and other taxes)

For a full report on all the changes (this list is not all-inclusive), read the “2016 Legislative Summary” from the Virginia Department of Taxation (TAX), available as a PDF at tax.virginia.gov.

Please review the Table of Contents for other items that may be of particular interest.

All changes went into effect July 1, 2016, unless otherwise stated.

TAX CONFORMITY

The 2016 General Assembly advanced Virginia’s date of conformity to the U.S. Internal Revenue Code from Dec. 31, 2014, to Dec. 31, 2015. On Dec. 18, 2015, Congress enacted the Protecting Americans from Tax Hikes Act of 2015 (PATH). This legislation extended a number of expiring federal tax provisions, modified certain expiring provisions that were extended and added several new federal tax provisions.

In addition to the PATH Act, Congress also enacted the Don’t Tax Our Fallen Public

Safety Heroes Act (HR 606), which exempts certain income received by dependents of public safety officers who die in the line of duty, and the Bipartisan Budget Act of 2015 (HR 1314), which changes the U.S. Internal Revenue Service (IRS) procedures for auditing partnerships and clarifies some of the federal partnership rules.

Virginia still disallows any bonus depreciation allowed for certain assets under federal income taxation and any five-year carry-back of federal net operating losses (NOL). In addition, Virginia will continue to deconform from certain applicable high-yield discount obligations and cancellation of debt income provisions.

The effective date was Feb. 5, 2016.

ACHIEVING A BETTER LIFE EXPERIENCE (ABLE) SAVINGS TRUST ACCOUNTS

Under the federal Achieving a Better Life Experience Act of 2014, Congress authorized states to establish ABLE savings trust accounts to assist individuals and families in saving for education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services and other expenses of individuals who were disabled or blind prior to the age of 26. The Virginia College Savings Plan is the designated state agency that will administer ABLE savings trust accounts.

Under federal law, earnings on contributions to ABLE savings trust accounts are exempt

from federal income tax. Because Virginia conforms to federal income tax treatment such earnings are also exempt from the Virginia income tax.

The 2016 General Assembly established a personal income tax deduction for contributions made to ABLE saving trust accounts. For contributors under age 70, the deduction claimed on any individual income tax return in any taxable year is limited to $2,000 per ABLE account. If the contribution to an ABLE account exceeds $2,000, the remainder may be carried forward and subtracted in future taxable years until the ABLE account contribution has been fully deducted. For contributors who have attained age 70, taxpayers may claim a deduction for the full amount contributed to an ABLE account, less any amounts previously deducted. Notwithstanding the statute of limitations, any deduction that is taken is subject to recapture during the taxable year or years in which distributions or refunds are made for any reason other than to pay qualified disability expenses or the beneficiary’s death.

This is effective for taxable years beginning on or after Jan. 1, 2016.

RESEARCH AND DEVELOPMENT TAX CREDITS

Several changes were made to the existing Research and Development Expenses Tax Credit and a new tax credit — the Major Research and Development Expenses Tax Credit — was created. u

TAXATION

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>> Dec. 6, Richmond or webcast

CORPORATE/BUSINESS INCOME TAX

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The changes include the following:

>> Allow a taxpayer to elect to compute the credit using a simplified method in lieu of the current statutory method;

>> Increase the amount of credit each taxpayer may earn annually;

>> Increase the annual credit cap from $6 million to $7 million;

>> Extend the sunset date for the credit to taxable years beginning before Jan. 1, 2022; and

>> Prohibit taxpayers with Virginia qualified research and development expenses in excess of $5 million from claiming the credit.

The Major Research and Development Expenses Tax Credit was established for taxpayers with Virginia qualified research and development expenses in excess of $5 million for a taxable year. The amount of this credit is equal to 10 percent of the difference between:

>> The Virginia qualified research and development expenses paid or incurred by the taxpayer during the taxable year; and

>> 50 percent of the average Virginia qualified research and development expenses paid or incurred by the taxpayer for the three taxable years immediately preceding the taxable year for which the credit is being determined.

Practitioners with clients who are affected by Research and Development Tax credits should become familiar with the additional requirements and provisions that are included in this legislation.

TAX CREDIT FOR CONTRIBUTIONS TO POLITICAL CANDIDATES

A Jan. 1, 2017, sunset date for the individual income tax credit for contributions to

political candidates was enacted. This credit is currently allowed for contributions to political candidates in a primary, special or general election for local or state office held in the year in which the contribution was made. The credit is equal to 50 percent of the contribution, up to $25 for an individual taxpayer, or $50 for taxpayers filing a joint return..

CONSTITUTIONAL AMENDMENT: EXEMPTION FOR SURVIVING SPOUSE OF CERTAIN EMERGENCY SERVICES PROVIDERS

Legislation provided for a voter referendum at the Nov. 8, 2016, election to approve or reject an amendment to the Constitution of Virginia allowing the General Assembly to provide a local property tax exemption for the real property of the surviving spouse of any law enforcement officer, firefighter, search and rescue personnel or emergency medical services personnel who was killed in the line of duty. This amendment provides that the surviving spouse must occupy the real property as his or her principal place of residence and that the exemption ceases if the surviving spouse remarries.

LIMITATION ON THE COLLECTION OF TAXES BY THE VIRGINIA DEPARTMENT OF TAXATION (TAX)

TAX must now cease all efforts to collect any unpaid tax seven years after the assessment of the tax, even if a collection action has been initiated before the expiration of the sevenyear period.

Under current law, the period of limitations for the TAX to make or institute collection action by levy, a proceeding in court, or any other means available to the tax commissioner under the laws of the Commonwealth is seven years from the date of the assessment. If some form of collection action is taken within the seven-year limitations period, most assessments remain collectible until satisfied.

As under current law, the period of limitations

TAXATION

on collection will continue to be suspended for periods when (i) the taxpayer’s assets are in control or custody of the U.S. Bankruptcy Court or any other federal or state court, or (ii) the taxpayer is outside the Commonwealth for a continuous period of at least six months. Legislation also clarifies that the period of limitations on collection will be suspended for any periods when an installment payment agreement between the taxpayer and the TAX is in effect. Collection actions pursuant to execution of liens created by a judgment lien or a memorandum of lien are not affected by this legislation

REAL PROPERTY TAX EXEMPTION FOR SPOUSES OF SERVICEMEMBERS KILLED IN ACTION

Legislation expanded the definition of “killed in action” as determined by the U.S. Department of Defense (DoD), for purposes of the real property tax exemption for the principal place of residence of a surviving spouse of a servicemember killed in action, to include the determination of “died of wounds received in action” by the DoD.

MULTIPLE CLASSIFICATIONS OF TANGIBLE PERSONAL PROPERTY TAX

Localities are now required to apply the lowest tax rate applicable to any item of tangible personal property that falls under multiple classifications for purposes of the local Tangible Personal Property Tax.

Under current law, localities are authorized to establish different classes of property for purposes of the Tangible Personal Property Tax and assign a different tax rate to each classification. Localities must apply the lowest rate applicable to any computer equipment and peripherals used in a data center, as well as any motor vehicle, if the property falls under multiple classifications. Current law does not specify the tax rate of other items of tangible personal property that fall under multiple classifications. n

RETAIL SALES TAX >>

What’s taxable in Virginia?

BY TERRY BARRETT, CPA

Tax practitioners tend to focus on their clients’ income tax issues. However, businesses these days find they are spending more and more time on sales tax, particularly if they are operating in multiple states. Forty-five states, including Virginia and the District of Columbia, impose some form of retail sales and use tax,1 and the rules are generally different from state to state.

In addition, some local jurisdictions impose and administer their own sales and use tax. The local rules may not necessarily be the same as the state rules. Thus, compliance can be complicated for those operating in multiple states; however, operating only in Virginia can have its own complications. Read below for general information regarding Virginia’s retail sales and use tax laws and policies with an emphasis on common business purchases.

OVERVIEW OF THE TAX

In Virginia, the retail sales and use tax laws have not changed substantially over the years. The tax is imposed on retail sales, leases or rentals of tangible personal property and limited services, as well as services in connection with the sale of tangible personal property. Pure service transactions in which there are no tangible deliverables generally are not taxable. Unlike many states, Virginia has not expanded its tax base to include new (or old) services. That’s good for businesses, considering how once goods only available in tangible format (software, books and other information sources, etc.) that are taxable are now available in digital or electronic format (not taxable).

Virginia traditionally has provided exemptions from the retail sales tax to promote investment in certain industries, such as manufacturing, research and development, broadcasting and agriculture. More recent exemptions include certain purchases for use in data centers, spaceport activities, solar and wind energy production and commercial beer production. It is important to understand, though, that while the state provides exemptions for these and other industries/activities, those exemptions generally do not extend to all purchases and are strictly construed by the Virginia Department of Taxation (TAX).

For example, only those purchases by a manufacturer that are “used directly” in the manufacturing process are exempt from the sales tax. To gain a good understanding of the extent of the exemption, you must look at the definition of “used directly” in the Code of Virginia, read the regulation on manufacturing in the Virginia Administrative Code and read volumes of ruling letters issued by TAX. Research is especially important when seeking guidance on technologies that were not even conceived when TAX last revised its manufacturing regulation in 1985.

WHAT’S INCLUDED IN THE TAXABLE BASE?

There is often confusion regarding what charges by a retailer are taxable. The retail sales tax is imposed on the “sales price” of the taxable good or service. According to the Code of Virginia, “sales price” is defined by law as “the total amount for which tangible personal property or services are sold, including any services that are part of the sale, … without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, losses or any other expenses whatsoever.” There are certain deductions from the “sales price” also detailed in the Code, such as the trade-in value, cash discounts allowed, finance charges, carrying charges, service charges or interest from credit extended on sales of tangible personal property under conditional sale contracts or other conditional contracts providing for deferred payments of the purchase price, separately stated local property taxes collected, discretionary gratuities added to the price of a meal and mandatory gratuity or service charge added by a restaurant to the price of a meal provided that gratuity does not exceed 20 percent of the price of the meal.

As noted above, included in the taxable sales price are any services that are part of the sale of tangible personal property, unless there is an exemption in the law for such services. For example, if one purchases computer hardware and has the seller train office personnel on the use of the hardware, any training fees that are contracted for in connection with the purchase of the hardware are taxable even if separately stated on the customer’s invoice. Late payment and returned check fees are examples of taxable service charges in connection with the sale or lease of tangible personal property.

Similarly, travel reimbursement charges (hotel, meals, mileage, etc.) and “trip charges”

related to the sale and installation of taxable tangible personal property are taxable, even if separately stated on an invoice, as they are considered part of the selling price of the tangible personal property. However, according to rulings from the Virginia tax commissioner, those same charges are exempt from the tax if the purpose of the trip is merely to provide exempt services to customers.

Some services that typically appear in connection with the sale of tangible personal property are specifically exempt by law, including certain delivery and installation charges. Shipping, transportation and delivery charges from the seller to the customer are exempt from the tax if they are separately stated on an invoice. However, “shipping and handling” charges, even if separately stated on an invoice, are taxable if made in connection with the sale of a taxable good. The handling component is considered a service and results in the “shipping and handling” charge being taxed. Also, to the extent shipping charges do not reasonably represent the actual shipping charges —in other words, they are marked up — these will be considered taxable by TAX. If billed lump sum, though, they are taxable. It is noteworthy that installation charges in connection with exempt items are exempt regardless of how stated on an invoice.

WHAT’S TAXABLE AMONG COMMON BUSINESS PURCHASES?

The following summarizes the tax treatment of some common business (and individual) purchases:

COMPUTER HARDWARE, OFFICE EQUIPMENT, OFFICE SUPPLIES

Because these all are tangible personal property, they generally are subject to the retail sales tax, whether purchased or leased. u

TAXATION

COMPUTER SOFTWARE AND SOFTWARE-RELATED SERVICES

Canned or off-the-shelf software is taxable if delivered in tangible format (e.g., on a CD). However, if it is delivered via email or a key is supplied that facilitates a download, the software is not taxable (as long as no tangible back-up is provided with it). License fees or “software maintenance” fees that include periodic updates generally follow the taxability of the original purchase, according to the Code and tax commissioner rulings. Thus, substantial tax savings can be achieved by purchasing software that is delivered electronically. It is important, though, to ensure that any documentation, including the invoice and contracts relating to the software purchase, indicate the software is delivered electronically and no tangible product is provided. Do not accept documentation from a vendor that states the software may be delivered electronically or in tangible format.

A Virginia auditor will jump all over that.

Custom software is not taxable regardless of the method of delivery. However, to be considered “custom” software in Virginia, it truly must be developed from “scratch.” By law it must be specifically designed and developed only for one customer. The Code says the combination of two or more prewritten programs, or the modification of a prewritten program, do not constitute a custom computer program. Separately stated charges for modifications to canned software and custom software are exempt from the tax, however.

Software maintenance charges that include periodic updates and technical support generally follow the original purchase. If the original purchase was in tangible format, the maintenance is generally taxable on 50 percent of the sales price; however, if the original purchase was in electronic format and

subsequent updates are in electronic format, the maintenance charges are not taxable.

SOFTWARE AS A SERVICE AND OTHER SIMILAR ELECTRONIC SOFTWARE PLATFORMS, CLOUD COMPUTING, HOSTING SERVICES

Virginia considers software as a service, cloud computing and website or software hosting services as exempt services as long as no tangible medium is provided to customers.

DIGITAL PRODUCTS AND DATABASE, INFORMATION OR SUBSCRIPTION SERVICES

Services not involving an exchange of tangible personal property which provide access to or use of the Internet or any other related electronic communication service, including software, data, content and other information services delivered electronically via the Internet are not taxable. This includes virtually all digital products and content regardless of how you want to describe them, whether newspapers, magazines, eBooks, music, videos, movies, database services, subscription services or information services. However, if a tangible product is provided in connection with the digital good, the entire transaction may be taxable.

FOOD AND MEALS

Food purchased for home consumption is taxed at 2.5 percent statewide. This includes snacks, bottled water, coffee, tea and other items purchased at a grocery store for employees to enjoy at work. Catered meals, on the other hand, are taxed at the normal sales tax rate, and may also be subject to the local meals tax. Caterers must collect the meals tax based upon where their operations are and not where a customer is located. Discretionary

tips are not taxable; however, mandatory tips that exceed 20 percent of the charge for the meal are taxable on that portion of the tip that exceeds 20 percent.

MAINTENANCE CONTRACTS

Although the law changed effective Jan. 1, 1996, there still is some confusion about the proper tax treatment of maintenance contracts. Here are the general rules:

>> Maintenance contracts for real property (e.g., periodic maintenance or repair of elevators):

• These are not taxable to the consumer. The provider of the maintenance service is the taxable consumer of all materials used in providing the maintenance, whether supplies, repair parts or tools.

>> Maintenance contracts for tangible personal property (e.g., computer hardware maintenance):

• If the contract covers both repair labor and parts (even if no parts are ever provided under the contract), the sales tax applies to one-half the total charge for the contract.

• If the contract is for labor only, it is not taxable.

• If the contract is for parts only, it is taxable in full.

>> Maintenance contracts for exempt tangible personal property (e.g., manufacturing equipment, farm machinery, etc.) are not taxable.

Some in-state vendors may not collect the proper amount of tax. Common errors are with “shipping and handling” charges and services in connection with the sale of taxable tangible personal property.

TAXATION

INTERNET OR OUT-OF-STATE PURCHASES

A purchase of a taxable item from an out-ofstate or Internet seller is treated the same as if the purchase was made from an in-state retailer. The difference, though, is that the out-of-state or Internet seller may not collect the tax on the transaction. In this case, use tax should be self-assessed and reported by the business directly to TAX. This includes purchases made with company procurement or credit cards. Receipts should be maintained to document that the tax was paid or the transaction was not subject to the tax. Virginia auditors tend to focus on these types of purchases.

Keep in mind that while Amazon does collect the tax on sales made to Virginia consumers,

third-party sellers who sell through Amazon may not collect the tax unless required by law.

It is noteworthy, too, that some in-state vendors may not collect the proper amount of tax. Common errors are with “shipping and handling” charges and services in connection with the sale of taxable tangible personal property. In these instances, a business should self-assess and report use tax directly to TAX. Some businesses erroneously think that if the tax is not charged by the seller, whether instate, out-of-state or online, it is not due. n

1. Throughout the article, “sales tax” generally refers to the retail sales tax. In Virginia there are other sales taxes, like the motor vehicle sales tax (imposed on motor vehicle sales), the aircraft sales tax (imposed on aircraft), a watercraft sales tax (on watercraft), a communications sales tax (on telecommunications services), etc.

TERRY BARRETT, CPA, is a tax senior manager at Keiter in Glen Allen. Terry focuses on state and local tax consulting and primarily non-income tax issues, such as sales and use tax and business license and personal property tax, in Virginia and other states.

tbarrett@keitercpa.com connect.vscpa.com/TerryBarrett (804) 273-6254 keitercpa.com

Decoding revenue recognition amendments

An update on Topic 606, Accounting Standards Codification

BY GARY DITTMER, CPA, CMA, CGMA

In the July/August 2015 issue of Disclosures, I discussed the basic principles of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which was a joint effort between the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). Below I’ll detail several new ASUs issued during 2016 that amend Topic 606.

ACCOUNTING

An ASU is not authoritative; instead, it merely communicates how the Accounting Standards Codification (ASC) is being amended and provides other information (in some cases examples) to assist users in understanding why Generally Accepted Accounting Principles (GAAP) are being changed and the effective dates of those changes. See fasb.org for more on ASUs: Click on “Standards” then “Accounting Standards Updates Issued.”

As a reminder, ASU 2015-14, issued during August 2015, deferred the effective dates of implementation for both public and private enterprises. Public business entities, nonprofit entities and certain employee benefit plans that have issued publicly traded securities or that file financial statements with the U.S. Securities Exchange Commission (SEC) have an effective date for annual reporting periods beginning after Dec. 15, 2017. For all other entities, the effective date is for annual reporting periods beginning after Dec. 15, 2018.

When ASU 2014-09 was issued, FASB and IASB established the Joint Transition Resource Group for Revenue Recognition (TRG). This group was formed to advise the rule-setting bodies of implementation issues of this sweeping new standard. The TRG has held numerous public meetings and the last scheduled meeting is on Nov. 7, 2016, at the FASB office in Norwalk, Conn. More information on the TRG is available at fasb.org.

The new ASUs are the result of issues raised by the TRG.

2016 REVENUE RECOGNITION ASUs

2016-08: PRINCIPAL VERSUS AGENT CONSIDERATIONS (REPORTING REVENUE GROSS VERSUS NET)

This March 2016 ASU was issued, according to its summary, to reduce the potential for diversity in practice from inconsistent application of the principal versus agent guidance and the cost and complexity of

applying the new revenue recognition standard. In other words, one of the amendment’s goals is standardization among the many diverse entities and industries that are subject to this guidance. This may be a lofty goal in a global business environment that grows more diverse and creative.

The amendment consists of what appears to be rather common-sense examples of the differences between a party acting as either a principal or agent. For example, in section 606-10-55-36, it states that a party should determine its performance obligation under the contract, which may be either to provide goods or services itself (it would be acting as a principal) or if it arranges for another party to provide goods or services (that other party would be acting as an agent).

Revenue is recognized as the entity, acting as a principal, satisfies a performance obligation. The amount of revenue is the gross amount it expects to be entitled when the exchange of goods or services is complete. An agent recognizes revenue when it satisfies a performance obligation; the amount of revenue is the fee or commission it will be entitled to for arranging for the goods or services provided by the principal. This fee or commission may be determined as the net amount the agent retains after the goods or services are exchanged.

2016-10: IDENTIFYING PERFORMANCE OBLIGATIONS AND LICENSING

This April 2016 amendment clarifies how to identify performance obligations in a contract with a customer and considers whether licensing revenue should be recognized at a point in time or over a period of time. It also includes examples (several dealing with software revenue recognition) to demonstrate how to analyze facts and circumstances to arrive at a recognition solution consistent with Topic 606.

This amendment is most helpful to those entities that deliver bundled goods and/or

services to a customer and recognizes revenue from licenses.

One of the core principles of Topic 606 is to identify the performance obligations in the contract, which is critical to allocating the transaction price to those performance obligations. Essentially, this amendment clarifies how to identify as a performance obligation each promise to transfer to the customer either:

1. A good or service, or a bundle of services, that is distinct (that is, different)

2. A series of goods or services that are substantially the same and are transferred to the customer in the same pattern

Licensing creates some unique revenue recognition issues that this amendment hopes to clarify to avoid diversity in practice. Examples of licenses of intellectual property stated in paragraph 606-10-55-54 include, but are not limited to, the following:

1. Software (other than certain hosting arrangements not meeting the criteria of 985-20-15-5)

2. Motion pictures, music and other forms of media and entertainment

3. Franchises

4. Patents, trademarks and copyrights

One of the interesting questions regarding licenses is determining the nature of the entity’s promise. This involves identifying the nature of the intellectual property to which the customer will have rights. Two types of intellectual property are defined:

1. Functional intellectual property: This has significant standalone functionality, such as processing a transaction, performing a function or task or being played or aired. Generally, this license would be recognized at a point in time. u

ACCOUNTING

2. Symbolic intellectual property: This does not have standalone functionality and its utility is derived from its association with the past or ongoing activities. This license would be recognized over time.

If your company or client offers bundled services or licenses intellectual property, you should thoroughly review this amendment, including the examples, which illustrate several industries such as software, manufacturing, drugs, hotel management and music.

2016-12: NARROW SCOPE IMPROVEMENTS AND PRACTICAL EXPEDIENTS

This amendment, issued in May 2016, covers several areas of Topic 606 that are listed and discussed below and discussed below:

1. Assessing the collectability criterion in Paragraph 606-10-25-1.

2. Accounting for contracts that do not meet the criteria for step 1 (applying paragraph 606-10-25-7).

3. Presentation of sales taxes and other similar taxes collected from customers.

4. Noncash consideration.

5. Contract modifications and completed contracts at transition and technical corrections.

ITEMS 1 AND 2 — COLLECTABILITY ISSUES

There are five criteria listed in Paragraph 606-10-25-1 that dictate when a contract with a customer is within the scope of Topic 606. Collectability is one of the criteria and the ASU states the following in the first sentence (bold words are the amended text):

It is probable that the entity will collect substantially all of the consideration

to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

What happens if the contract does not meet the criteria of the above paragraph? Essentially, if revenue recognition is similar to the cash basis? The contract must meet one of the following criteria:

1. The entity has no remaining obligations to transfer goods or services to the customer and all or substantially all of the considerations promised by the customer has been received and is nonrefundable.

2. The contract has been terminated and the consideration received is nonrefundable.

ITEM 3 — TAXES COLLECTED ON BEHALF OF THIRD PARTIES (TRANSACTION TAXES)

This amendment allows an entity to make an election to exclude from the transaction price all taxes assessed by a governmental authority collected by the entity from a customer. This paragraph (606-10-32-2A) does not apply to taxes assessed on an entity’s total gross receipts or imposed during the inventory procurement process.

Based on my experience, most companies do not include transaction taxes in revenue; if they did, the sales taxes paid would be accrued as an expense.

ITEM 4 — NONCASH CONSIDERATION

This specifies the fair market value (FMV) of noncash consideration at contract inception is the contract transaction price. It goes on to state that subsequent changes in the FMV of noncash consideration are not included in the transaction price. However, if the subsequent change in the FMV of noncash consideration is due to changes in the form of consideration, then the entity should rely on the guidance

on variable consideration (606-10-32-5) that allows an entity to estimate the amount of consideration.

ITEM 5 — CONTRACT MODIFICATIONS, COMPLETED CONTRACTS AT TRANSITION AND TECHNICAL CORRECTIONS

This amendment represents a simplification from the original guidance. It also eliminates the requirement to provide certain transition disclosures that would be required by Topic 250, Accounting Changes

The simplification is contained in item f of 606-10-65 and states that an entity may use one or more of the following practical expedients:

1. An entity need not restate contracts that begin and are completed within the same annual reporting period.

2. For completed contracts that have variable consideration, an entity may use the transaction price at the date the contract was completed instead of estimating variable consideration amounts in the comparative reporting periods. n GARY DITTMER, CPA, CMA, CGMA, is the senior tax director for USA Mobility, Inc., in Springfield. He is an adjunct professor at George Mason University and the University of Virginia School of Continuing and Professional Studies, where he teaches taxation.

gdittmer@comcast.net connect.vscpa.com/GaryDittmer

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HEALTH care

THE AFFORDABLE CARE ACT IN 2016

BY RITTER JONAS

The employer mandate, reporting requirements and unintended consequences

HEALTH care

Six years have now passed since the Affordable Care Act (ACA) was enacted. During this time, the implementation timeline has been a winding road of changes, delays and deferrals. Many of these changes will be implemented in 2016, in addition to the full implementation of the employer mandate. Here are some items to be mindful of this year and perhaps a few unintended consequences of the ACA.

EMPLOYER MANDATE

Among many other changes, 2016 is the year in which full implementation of the employer mandate and its penalties take place. The employer mandate now applies to all employers with 50 or more full-time equivalent employees (FTE). While initially delayed for employers with 50–99 FTEs, those employers will now have to comply with the regulations. Employers with less than 50 FTEs are not encumbered by the requirement. The penalty for failure to comply with the employer mandate can be steep, with the penalty multiplied by the number of FTEs greater than 30.

New for 2016, employers must now offer 95 percent of FTEs and their dependent children (up to age 26) group health coverage or face penalties.

This is a change from 2015, in which the requirement was 70 percent of FTEs. Penalty charges for non-compliance of the employer mandate increased in 2016 to $2,160 multiplied by the number of FTEs over 30, up from $2,080 for number of FTEs over 80 in 2015.

Employers that meet the 95 percent rule may still face penalties if the plans offered do not

meet the definition of both affordable and minimum essential value. There was a modest change in the definition of an “affordable plan” for 2016. To be considered affordable, a plan’s employee-only coverage premium cannot exceed 9.66 percent of an employee’s total household income up — from 9.5 percent in 2015. Penalties could be also placed on employers who do not offer minimum essential value in the plans offered to their FTEs. Failure to comply is triggered when at least one FTE obtains a premium credit in an exchange plan and their employer’s group health coverage offering fails to cover at least 60 percent of the total allowed cost of benefits.

REPORTING REQUIREMENTS

Changes to ACA reporting in 2016 have been minimal, focused primarily on the addition of penalties for non-compliance of the reporting requirements. Similar to the employer mandate, the current ACA reporting requirements apply mostly to employers with 50 or more FTEs, with a few exceptions for small group employers. Reporting is accomplished by completing U.S. Internal Revenue Service (IRS) Forms 1094-B, 1094-C, 1095-B and 1094-C. The reporting requirement is a shared responsibility with the insurance carriers, with employers completing the “C” reporting forms and insurance carriers completing the “B” forms, except for a few

instances that involve self-insured group health plans. For 2016 tax deadlines, Forms 1095-B and 1095-C are due to employees by Jan. 31, 2017. Forms 1094-B, 1095-B, 1094-C and 1094-C are due to the IRS by Feb. 28, 2017, if filing on paper or March 31, 2017, if filing electronically.

For employers with less than 50 FTEs, reporting could be required under a few situations. If either the small group employer is part of a larger controlled group that represents more than 50 FTEs and/or the small group employer is self-insuring their health insurance coverage, even if they are below 50 FTEs, reporting is required.

Penalties for failure to file an informational return and failure to provide payee statements have both increased for 2016. For each return or payee statement failure, the penalty has increased to $250, up from $100 in 2015. The maximum penalty that can be imposed for each category cannot exceed $3 million.

UNINTENDED CONSEQUENCES OF THE ACA

Although the ACA was created with the best of intentions, there have certainly been some unexpected outcomes. On state health insurance exchanges, some insurers are losing millions of dollars and dropping out, u

HEALTH care

spurring carrier consolidation that the U.S. Department of Justice (DOJ) now views as uncompetitive.

When the ACA was enacted, health insurance exchanges were set up to be destinations for individuals to compare and purchase health insurance from private insurance companies while maintaining a competitive environment. Two years in, it is no secret that the ACA exchanges are not performing as they were intended. With major insurers exiting the exchange markets, enrollment is much lower than expected and premiums continue to rise. The ACA exchange model needs much improvement before it can be declared a success.

Some people attribute the beginning of these issues to lower participation of the young and healthy on the exchanges. The concept was designed based on an estimate of the total enrollment, but also the expectation of an equal distribution of demographical enrollees (younger/older, healthy/sick). On the surface, the actual enrollment is considerably lower than expected. Initial enrollment predictions were that 20 million would be enrolled by the end of 2016. Current enrollment sits around 11 million, far short of the prediction. Enrolling the “young invincibles”, those between ages 18–34, was an important part of the plan to stabilize the exchanges. By enrolling the young and healthy and their lower expected claim costs, the claims for the older and sicker would have been subsidized, therefore stabilizing the costs to the insurers. Unfortunately, the enrollment numbers for these ages are also falling far short of expectations, with around 20–25 percent enrollment versus the 40 percent predicted. With an exchange that has a higher percentage of sicker or more costly enrollees, claims are significantly higher than expected, leaving the insurers unprepared and suffering incredible losses.

Some of the insurers’ losses can be attributed to the failure of a “reinsurance mechanism” to work as expected. From the start, there was an expectation that not all of the

insurers would be profitable, so there were “safety” measures put in place. A reinsurance mechanism (called a risk corridor) was set up to aid insurers, which required insurance companies that were overly profitable to put a portion of their profits into a fund. Insurers that were losing large amounts of money would be able to request aid from the risk corridor to stay afloat. When a majority of insurers experienced losses, a failure of the reinsurance mechanism took place. Insurers were then requesting more aid from the fund than was ever put in to it. Many insurers ended up taking losses in the hundreds of millions of dollars; others were forced to close their doors resulting in a reduction of the number of carriers in markets around the country.

Initial enrollment predictions were that 20 million would be enrolled by the end of 2016. Current enrollment sits around 11 million, far short of the prediction.

Enhanced competition was also a key component of the ACA exchanges. Competition between insurance companies brought with it the expectation of better rates and choices for enrollees. With major insurance companies exiting exchange markets around the country, this is becoming an increasingly more difficult proposition. Less carrier options on the exchanges means less competition, but it is even more serious for some parts of the country. There are many states that are expected to have just one or two carrier options available, likely causing rates to increase even further. Rates are expected to increase again this year. In the coming year, some are predicting modest rate increases of around 10 percent, while others are expecting average increases of 20–30 percent.

Another unintended outcome of ACA is carrier consolidation. As a result of the increased pressure on health insurance carriers, several mergers have been proposed. Anthem-Cigna and Aetna-Humana are two recent, well-publicized mergers. Certainly, one could understand why the insurers would want to join forces in the face of the ACA. The DOJ does not see it the same way, suing to block both mergers, which they believe violate antitrust laws and would ultimately lead to higher premiums.

The uncertainty around the future success of the ACA coupled with the upcoming election is sure to provide more twists and turns ahead. So buckle up for the road to come. n

RITTER JONAS is is an account executive with OneDigital Health and Benefits, formerly known as Digital Insurance and Digital Benefit Advisors. rjonas@onedigital.com (804) 523-7168

Empower. Connect. Achieve.

Enroll in MentorMatch today, and take your career to the next level! You’ll expand your network through peer coaching and enhance your leadership skills. Our mentors will share their knowledge and provide a fresh perspective on the profession. Here’s what one of our mentors said about his experience:

“I became a mentor because I believed that I could make a difference in a professional’s life by sharing my experiences. It’s a great feeling to know that you are helping someone else progress in their professional life.” — Henry Davis III, CPA

The next session begins January 15, 2017. Register today!

vscpa.com/MentorMatch

VSCPA financials

Statements of Financial Position & Statements of Activities

The following Statements of Financial Position and Statements of Activities reflect the VSCPA’s and VSCPA PAC’s financials for the 2015–2016 fiscal year. The full audited financial statements are available online in the “For Members” section of vscpa.com. More information on the VSCPA’s 2015–2016 programs and initiatives is available in the 2015–2016 “State of the VSCPA” report, also available at vscpa.com.

APRIL 30, 2016 2015

ASSETS

Current Assets

Cash and cash equivalents $ 1,643,171 $ 1,336,866

Trade accounts receivable 114,329 95,582

Investments 650,525 1,111,838

Prepaid expenses 258,569 226,456

Total current assets 2,666,594 2,770,742

Investments 602,209 175,223 Property and Equipment, Net 1, 289,939 1, 244,870

$ 4,558,742 $ 4,190,835

LIABILITIES AND NET ASSETS

Current Liabilities

Accounts payable $ 62,459 $ 53,244

Accrued expenses 169,744 135,688

Deferred revenues 588,453 576,928

Accrued retirement 168,096 148,799

Total current liabilities 988,752 914,659

Net Assets

Unrestricted

Invested in property and equipment 1, 289,939 1, 244,870

Board designated for facility and technology 555,671 552,106 Board designated for operating expenses 1,037,627 945,467

Undesignated 604,890 413,581 3,488,127 3,156,024

Temporarily restricted (VSCPA PAC) 81,863 120,152

Total net assets 3,569,990 3,276,176 $ 4,558,742 $ 4,190,835

VSCPA financials

YEARS ENDED APRIL 30, 2016

Change in Unrestricted Net Assets Revenue:

Program:

Continuing education

Seminars

$ 1, 202,075 $ 1, 287,504

Conferences 409,619 394,524

Ethics 1,052,700 567,566

Online 234,349 155,378

Other CPE 20,952 19,730

Total continuing education 2,919,695 2,424,702

Peer review 205,839 203,669

Membership 2,285,928 2,173,528

Communications 36,243 42,292

Students and young professionals 92,201 106,536

Public relations 25,000

Net assets released from restriction, VSCPA PAC 89,665 81,308

Total program revenue 5,654,571 5,032,035

Other:

Affinity income 186,621 173,444

Investment income 13,410 9,991

Unrealized gains on investments 1,965 1,831

Rental income 35,017 38,657

Gain/(loss) on disposal of property and equipment (4,672) 1,128

Miscellaneous 3,685 10,637

Total support and unrestricted revenues 5,890,597 5,267,723 Expenses:

Program Services:

Continuing education 2,456,805 2, 371,650

Leadership 394,096 309,950

Peer review 211,921 186,274

Membership 777,426 701,180

Communications 290,908 266,417

Students and young professionals 316,686 262,541

Public relations 176,557 81,114

Legislative 217,604 262,497

VSCPA PAC 89,665 81,308

Supporting Services:

Administrative and general 626,826 693,656

Total expenses 5,558,494 5,216,587

Change in unrestricted net assets 332,103 51,136

Change in Temporarily Restricted Net Assets

Contributions to the VSCPA PAC 51,376 70,498

Net assets released from restriction, VSCPA PAC (89,665) (81,308)

Change in temporarily restricted net assets (38,289) (10,810)

Change in net assets 293,814 40,326

Net Assets — Beginning of Year 3,276,176 3,235,850

Net Assets — End of Year $ 3, 569,990 $ 3, 276,176

Attention CPAs:

Whether A Decision Maker Looking To Upgrade Your Talent, Or A CPA Looking to Upgrade Your self/Your Skills, Ask Yourself:

Who really chose who in joining your company?

Are you/your professional staff really at the right level where you should be/you need them to be?

Are you/your staff in a position that truly suits your/their personality, values, and professional and personal needs?

Why leave your future to chance?

If you’re seriously interested in making the “right” move for your next hire, I can help you. I am an actively licensed CPA in Maryland and Virginia with over 20 years of experience including public accounting (E&Y) and consulting (KPMG), financial accounting (American Cancer Society), internal audit (Moneyline Tele rate), and recruiting (Acsys, formerly Don Richards). As a networker who truly enjoys helping others and sharing my career experiences to guide fellow professionals, here is how I can help you:

Decision Makers:

Ask you questions, and most likely ask many more questions than other recruiters about your company, duties involved, skills required, corporate culture and more

Work with you on finding the “right” professional that is the “right fit”

Provide you with valuable information about the professionals I work with, the marketplace, what your competitors pay, and more

Career Seekers:

Guide you on career paths available in public accounting and industry

Enable you to capitalize on your strengths

Coach you on how to put your best foot forwa rd to find the “right fit”

Advise you when to stay in your current position if that is the right move

If you’re interested in working with a recruiter who understand s your background, skills, and is genuinely interested in helping you find the “right fit

then I welcome meeting you!

BETH A. BERK, CPA , CGMA

Recruiter

How to gain crucial leadership experience

In this installment of the LEAD Round, we’re quizzing a seasoned CPA and a young professional about how young CPAs can gain leadership experience and grow in their careers both inside and outside the office. To answer the question, we reached out to two VSCPA members with extensive recruiting experience: BETH BERK, CPA, a recruiter from Bethesda, Md., and LAUREN SOLES, CPA, financial recruiting manager at Vaco Richmond.

How can young CPAs gain and capitalize on leadership experience?

BB: Reflect back on jobs held and/or volunteer roles, including activities and/or associations prior to graduating undergrad and/ or graduate school. Also, think back to high school too such as yearbook related, cheerleading, sports, babysitting, camp counselor, fundraising, etc. Aside from titles you may have held, most likely you did something that required being responsible for others’ well-being and/or a company’s assets, help raise money and/or learned something that others may not know and would like to learn. Create a document describing how you led in these various roles/activities, and determine if any patterns in your actions and/or skills. This exercise can help you articulate what skills you have gained to date, may want to continue to enhance and shed light on what you would like to learn so you can seek opportunities to do so.

Once you have some clarity about leadership skills gained to date, find out what your company looks for from its employees. During this discussion, share what you have done to date. Keep in mind that there will be costs related to activities and time needed to attend and participate so you may need to come up with a budget and plan. Let management know you will schedule another discussion and come back with ideas on how to further capitalize on your leadership experiences so you can show management how you can lead within and/or outside the office. To prepare for that next meeting, you can re-read the ideas

below, Google or ask your peers about activities they participate so you can determine which ones may be best for you to get started. This should be a continual process throughout your career.

LS: There are so many opportunities out there for young CPAs to get involved and begin developing professionally. I think these opportunities can initially be found inside the workplace. Typically, there are task forces or smaller committees within your company that require the time and energy of staff members. This is a great way to become associated with an initiative within your company, and it’s also a very easy way to meet colleagues who may not work on the same team as you do. Before you know it, people will start to peg you as the “go-to” person on that specific initiative, whether it’s technical in nature or more centered around networking and social planning. Volunteering your time internally will absolutely jumpstart your leadership and professional growth.

Once you have done a little bit of research and know more about some of the organizations around your community, I would encourage you to volunteer at an event or for a smaller committee within that organization. This will give you the chance to learn more about the mission, the purpose, the leadership team, etc. Once you’ve been exposed to various groups and initiatives within your community through volunteering your time, you will quickly find your passion. You will find the group that you love volunteering with, and you’ll want to dedicate more of your time to that mission and that organization. Be proactive in getting to know more about the folks you're volunteering with, and show that you are genuinely interested in being a part of something so wonderful. Once you do this, and once you prove that you are reliable and you start to build your reputation, they will seek you out for a leadership role within their organization. They will want you on their team, and they will value you more than you could ever imagine. Throughout this whole process, I would also recommend being very open and honest once you’ve made a commitment to an organization. Make sure you can dedicate the necessary amount of time.

The benefits of being involved with different organizations around Richmond are and will continue to be invaluable in my life. I have grown my network, found quite a few passions, enhanced my leadership skills and gained lifelong mentors. My career started about seven years ago, and I certainly wouldn’t be in the position I am today if I hadn’t taken a few chances and taken the time to connect and form relationships with other professionals in my community. n

Visit the VSCPA LEAD website at vscpa.com/ LEAD

BETH BERK, CPA

LAUREN SOLES, CPA

Thanks for a great CPA Day of Service!

It was another successful CPA Day of Service across Virginia and beyond! As always, Day of Service — which was held Friday, Sept. 23 — was the culmination of Virginia CPA Week, proclaimed this year by Gov. Terry McAuliffe as Sept. 18–24.

VSCPA members helped organizations including Maymont, the Richmond Animal League, Staunton-Augusta-Waynesboro Habitat for Humanity, Ronald McDonald House of Richmond, the Foodbank of Southeastern Virginia, the Virginia Beach Society for Prevention of Cruelty to Animals, Sophie House, the Boys and Girls Club of the Virginia Peninsula, the Fauquier Free Clinic, the Children’s Science Center of Fairfax, the Northern Virginia Therapeutic Riding Program

FIND THE CPE TEST ONLINE

Visit vscpa.com/CPE. Choose “On Demand” from the side filters to find the exam and others from previous Disclosures issues. n

and many more. Visit the VSCPA Facebook page (facebook.com/ VSCPA) to watch interviews with several Richmond-area Day of Service volunteers.

We’re thrilled to be able to mobilize so many good, giving people who are so eager to give back to the communities where they live and work. Thanks for being a CPA Day of Service volunteer — you make us all look good! Interested in additional volunteer opportunities? Visit vscpa.com/Volunteer to learn more.

We’re holding a food drive at the Richmond CPA Center through Dec. 7, so if you’re joining us for a class, bring a can of food to donate! n

100% MEMBER FIRMS

VSCPA 100% Member Firms show their commitment to their employees, the profession and the association. A 100% Member Firm is simply a Virginia CPA firm or company that has all of its CPAs enrolled as members in the VSCPA. The list of VSCPA 100% Member Firms has been omitted due to space. A full list is available at vscpa.com/100Percent. n

Scenes of service. Left: Hope Egan did planting and groundskeeping work at Sophie House in Glen Allen. Middle: Members of the VSCPA’s Tidewater Chapter volunteered at the Foodbank of Southeastern Virginia in Norfolk. Right: Brian Wendroff, CPA, of Wendroff & Associates, loaded meals for delivery for Meals on Wheels in Arlington.

Congratulations to the following members!

THE VSCPA MOURNS THE LOSS OF...

LINDA COOPER, CPA, of Chesapeake. She volunteered with the VSCPA Speakers Bureau and was a participant in Financial Fitness Day.

HARTLEY DEWEY, CPA, of Virginia Beach. A graduate of the College of William & Mary, he worked for Peat, Marwick & Mitchell, Landmark Communications and Schaubach Industries and was a deacon and elder at Kempsville Presbyterian Church. He served on the VSCPA’s State and Local Taxation Committee.

ALLEN GREENSPAN, CPA, of Fairfax. A U.S. Army veteran, he graduated from Adelphi University. n

NEW HIRES >>

CHRISTINE ALLEN, CPA, has joined Updegrove, Combs & McDaniel in Warrenton as a senior staff accountant.

JULIE SOKOLOWSKI, CPA, has joined the Chesapeake office of Corbin & Company, PC, as vice president and principal.

JEFFREY STEPHENSON, CPA, has joined Dixon Hughes Goodman’s financial services practice in Norfolk as a senior manager.

PROMOTIONS >>

MATTHEW BRADY, CPA, was named partner at Cherry Bekaert in Richmond and Virginia Beach.

BRIAN BURNS, CPA, has been promoted to director of Dixon Hughes Goodman’s Forensics and Valuation practice in Richmond.

APPOINTMENTS & AWARDS >>

BRADLEE ROGERS, a student at Radford University, won a $1,000 scholarship from the National Society of Accountants.

FRANK STITELY, CPA, received the Golden Quill Award from the National Society of Accountants.

FIRM NEWS >>

SSI CONSULTING in Vienna has received the 2016 BI360 Sales Evangelist Award from Solver. n

THE VSCPA’S NEWEST CPAs

JEEVAN BASNET MARIAM BELLO EDINA BLAZEVIC KRISTEN BRUCE CHRISTOPHER COLBERG JOHN DAYTON KRISTINA DLUGOZIMA DANA DYTANG TYLER GAMBILL ELENA GILLEY STEPHANIE GOLDSMITH LUCAS HOGUE CLAIRE HOMZA WESLEY HOST ADRIAN HUNG MEGHAN IREY KATHERINE KLINE MORGAN LEWIS MICHAEL LUPTON

ERIK MARTINO ANNA MCGUIRE REGINA MOORE SELMA NUHANOVIC COLLEEN O’DONNELL NICOLE PROULX KRISTOPHER ROBINSON GREGORY ROWLAND TEJDEV SANDHU DENNIS SANESKI YUANJUN SONG CRAIG STEWART ROSS SUMNER KARISI TSO JOANNA WEDELL ERIC WONG JACQUELINE XU NAM YANG ALICE YEH

List from August and September. Compiled Oct. 4, 2016. n

Brian Burns, CPA, and Bradlee Rogers

VSCPA

Staff news

Do you want to be recognized?

Or do you know a Virginia CPA who deserves to be honored as one of the VSCPA’s best? Don’t let exceptional work go unnoticed. Nominate yourself or a worthy colleague for a VSCPA Distinguished CPA Award:

TOP 5 MEMBERS UNDER 35: Nominate a young CPA member (35 or younger as of April 30, 2017) who has shown excellence in one or more of the following: professional achievement, VSCPA or local VSCPA chapter accomplishment, community contribution or dedication to the CPA profession.

OUTSTANDING MEMBER OF THE YEAR: Nominate a VSCPA member who has provided outstanding service to the profession through participation in VSCPA activities, civic engagement and charitable activities that further a positive image of accounting and the CPA profession.

Nominations are due by Friday, Dec. 2. Nominate online at vscpa.com/Awards or email VSCPA Member Engagement Manager Laura Cobb, CAE, at lcobb@vscpa.com. n

WE WANT TO HEAR FROM YOU!

Email disclosures@vscpa.com if you have exciting news to share.

The VSCPA prints news of members’ awards, appointments and promotions as well as new hire and job change announcements. Firm news, such as mergers and acquisitions and community service activities, is also welcome.

Feel free to send headshots, but please make sure they are high-quality, 300 dpi JPG files.

Due to space constraints, we cannot print degrees or designations awarded to members. n

President & CEO STEPHANIE PETERS, CAE, celebrates her 19th anniversary with the VSCPA on Dec. 1.

Education Director LINDA NEWSOM-MCCURDY, CAE, celebrates nine years with the VSCPA on Nov. 13.

Communications Manager CHIP KNIGHTON marks six years with the VSCPA on Dec. 13.

BEN MUNFORD has joined the VSCPA as an accounting assistant. He was previously an accounts payable specialist at McGuireWoods. Welcome to the team! n

OPEN VSCPA VOLUNTEER POSITIONS

Thanks to all our volunteers who have used the VSCPA’s new volunteer management system! As a reminder, you can visit vscpa.com/VolunteerManager for a tutorial on how to sign up. We’re currently seeking volunteers for the following opportunities:

Accounting & Auditing Advisory Committee

>> Tax Advisory Committee

>> VSCPA Board of Directors (closes Dec. 15)

>> VSCPA Educational Foundation Board of Directors (closes Dec. 15)

>> VSCPA PAC Board of Trustees (closes Dec. 15)

>> Young Professionals Advisory Council (closes Dec. 15)

>> Writing and speaking opportunities

>> You Can Afford College workshops

Visit vscpa.com/Volunteer to sign up. n

Stephanie Peters, Linda Newsom-McCurdy and Chip Knighton.

CLASSIFIEDS

GROWTH, SALES & ACQUISITIONS

WHAT IS YOUR CPA FIRM WORTH?

Please download our free Practice Value Report by visiting http://poegroupadvisors. com/value. Find out why Poe Group Advisors is the premier accounting practice brokerage firm by visiting us at http://www. poegroupadvisors.com.

MERGER OPPORTUNITY — Well-established 2 partner Northern Virginia CPA firm is seeking a similar sized CPA firm or sole practitioner who is interested in merging with and eventually managing the firm. The firm specializes in individual income taxation but also has small business tax, payroll and compilation clients and prepares a significant number of trust tax returns. The ideal firm would have the ability to assist with the firm’s current workload. Reply in confidence to #100, VSCPA, 4309 Cox Road, Glen Allen, VA 23060, or email disclosures@vscpa.com. Please put “Blind Box 100” in the email subject line.

ADVERTISE HERE

Classified ads are a great way to reach VSCPA members — 94 percent rate the information in Disclosures as excellent or good. What are you waiting for? Contact us at classifieds@vscpa. com or visit vscpa.com/Classifieds for rate information. Members receive a discount.

2016 Educational Foundation Scholarship Recipient

“The financial assistance of this scholarship allows me to continue pursuing a higher education at a prestigious and highly competitive university. I’m extremely honored and grateful.”

— Selmira Avdic, University of Richmond 2017 VSCPA Undergraduate recipient

To support other students like Selmira or make a recurring monthly or quarterly gift, please visit VSCPAFoundation.com today.

AM the vscpa

Two minutes with Michael Straus, CPA

GARY THOMSON, CPA >>

Extending CPAs’ influence to the government arena.

Michael Straus, CPA, is a partner at PBMares in the firm’s Richmond office. He is a graduate of Virginia Tech and a 30-year public accounting veteran. He is a multiple-time Super CPA award winner who has volunteered numerous times for the VSCPA’s CPA Day of Service and NBC 12 Tax Call-In programs, as well as the VSCPA Governmental Affairs Committee. Outside of work, he likes playing with his kids, hosting parties and traveling.

I AM PASSIONATE ABOUT… Family, friends and fun. Life is too short not to make the best of it. I am one of those people who does not like to sit still. I want to be doing something, going someplace or sharing a drink or meal with someone.

PEOPLE DON’T KNOW THIS, BUT… I have owned a restaurant, limousine company and tanning salon in the past. Being a partner in my firm creates too many demands to have those now. I have also visited 29 countries.

IF I WEREN’T AN ACCOUNTANT, I WOULD BE… In the construction industry. Growing up, I was always telling my family I wanted to be an electrician and a plumber, so you can imagine the things I was playing with as a child.

MY ADVICE TO FELLOW CPAs IS… Don’t sweat the small stuff, and remember, it’s all small stuff. Our jobs are very demanding. We don’t need to add more pressure to them. It is much easier to manage each day if we stay relaxed.

I NEVER LEAVE HOME WITHOUT… Looking at my kids asleep in their bed (or my bed). My kids range in age from 1 to 16.

I WISH CPAS KNEW… The tax laws before the end of the year.

I’M A CPA BECAUSE… I liked the accounting classes better than the other business classes. I never knew I was headed in this direction until I was in college. Now I like saving clients money on their taxes. n

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