Winter 2022 - Florida CPA Today | Volume 38, Number 1

WINTER 2022 | VOLUME 38, NUMBER 1

T H E TA X I S S U E

C3: CHILDREN, CONSERVATION AND CRYPTOCURRENCY PAGE 16

PAGE 20

PAGE 25

IRS Power of Attorney Form 2848

Accounting vs. U.S. Taxation for Derivatives

Navigating Recent Tax Law Changes

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CONTENTS PRESIDENT & CEO Shelly Weir EDITORIAL COMMITTEE Lynda M. Dennis, CPA, Chair Joel M. DiCicco, CPA David J. Hochsprung, CPA, Jonathan S. Ingber, CPA Douglas B. Keith, CPA Michael S. Kridel, CPA Ryan A. Myers, CPA Will Quilliam, CPA FICPA STAFF Leah Pritchett, Director of Marketing and Communications Nick Menta, Communications Manager and FCT Editor Alejandra D’Jermanos, Graphic Designer All articles submitted to Florida CPA Today are subject to technical review, Editorial Committee review, space availability, and editing requirements and restrictions.

Statements expressed herein are those of the identified authors and not necessarily those of the Florida Institute of Certified Public Accountants, Inc. (FICPA), nor should statements be considered endorsements of products, procedures or otherwise.

The FICPA reserves the right to reject any editorial material or paid advertising that does not meet Florida CPA Today criteria or detracts from its ethical and professional standards.

Florida CPA Today is published quarterly by the Florida Institute of Certified Public Accountants, Inc., 3800 Esplanade Way, Suite 210, Tallahassee, FL 32311. Telephone: (850) 224-2727 or (800) 342-3197. Visit our website at ficpa.org.

This magazine is provided to members of the FICPA. No specific amount of your dues, either expressed or implied, is for this publication. This magazine is not available for purchase by either FICPA members or nonmembers.

For display advertising information, contact the FICPA Marketing Department at (850) 224-2727, Ext. 270. © 2021 by the Florida Institute of Certified Public Accountants, Inc. All rights reserved.

Reproduction in whole or part is prohibited without the express written consent of the FICPA.

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COVER STORY C3: CHILDREN, CONSERVATION AND CRYPTOCURRENCY DEPARTMENTS

FEATURES

9 10 16 20 25

2021 Discussion Leader of the Year Awards FICPA Honors 16 Graduates of Inaugural Leadership Academy IRS Power of Attorney Form 2848: New Methods for Processing and Submission Accounting vs. U.S. Taxation for Derivatives: Book-Tax Differences Are Here to Stay Navigating Recent Tax Law Changes

2 4 6 28

CEO’s Message

33 34 36 38

Scholarship Foundation Update

40

Marketplace

Chair’s Message News Briefs Top 250 CPA/PAC Contributors

Upcoming Conferences DOR Update Business Technology Column

Visit issuu.com/ficpa to access and download the digital version of Florida CPA Today.

WINTER 2022 | FLORIDA CPA TODAY

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CHIEF EXECUTIVE OFFICER’S MESSAGE

Our FICPA community is our greatest strength

SHELLY WEIR

I saw our full FICPA community in action – and I can’t wait to see even more in 2022.

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The start of a new year gives us all the opportunity to do two things – to look back and to look forward.

Since joining the FICPA last spring, I’ve relished the opportunity to meet our members, work with our staff, and chart a course for the future of our profession.

When I look back on the year that was, it’s the interactions, relationships and friendships that I focus on the most.

It’s been a joy to make my way around the state, dropping into organizations and offices from the Panhandle to South Florida, learning about your goals, challenges, and ideas to advance your businesses and our profession.

Of course, remote work has become a necessary part of our lives, and it’s here to stay. The Omicron variant has prompted us to evolve and pivot all over again.

That’s why FICPA remains committed to your safety and to offering opportunities to learn and network in a variety of formats.

But our time apart has highlighted just how special it still is to gather in person.

I direct your attention to the opposite page, to a quick look back at November’s Florida CPA Summit, because it gives me the most excitement about what’s ahead.

Seeing FICPA leadership, staff and members all in one place, learning from one another and laughing with one another, was a testament to the vibrancy of our CPA community. I saw our Young CPAs pedaling down the streets of Fort Lauderdale. I saw our Leadership Academy participants taking the next steps in their promising careers. I saw veteran members greet old friends they hadn’t seen since before the start of the pandemic.

I saw our full FICPA community in action – and I can’t wait to see even more in 2022.

Our recent Virtual Advocacy Day and Hike the Hill events were a fantastic success, kicking off a new calendar year that will offer our members a chance to enjoy everything the FICPA has to offer. In addition to our four in-person CPE events coming this spring – the CFO and Controller Conference, Health Care Industry Conference, Florida State University (Go ‘Noles!) Accounting Conference and Not-for-Profit Accounting Conference – I want to draw your attention to our annual extravaganza: MEGA. MEGA will return as an in-person event June 7-11 at Disney’s Contemporary Resort, offering up to 32 hours of CPE all in one place. Registration is now open, and I encourage you to bring your family, see your friends, and experience the magic of MEGA at Disney.

FICPA will continue to monitor COVID-19 and prioritize your health, safety and comfort, because we know we’re at our best when our members come together.

Join us however, whenever and wherever is best for you, and make the memories and relationships that will last a lifetime.

Thank you to everyone who joined us this past November in South Florida for the

And thank you to our sponsors:

WINTER 2022 | FLORIDA CPA TODAY

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CHAIR’S MESSAGE

FICPA’s advocacy efforts give CPAs a voice I want to start off our new year by saying thank you to everyone who participated in January’s CPA Advocacy Days. Spearheaded by our fantastic Governmental Affairs team, Virtual Advocacy Day and Hike the Hill were valuable learning opportunities for our members and a wonderful display of our profession’s impact and influence in Tallahassee. Both events gave our members the opportunity to interact with and learn from our state’s most influential lawmakers, who are now actively engaged in the 2022 Legislative Session. You’ll find a full recap of both our CPA Advocacy Days in the Spring issue of Florida CPA Today.

I also want to thank Florida’s new Secretary of the Department of Business and Professional Regulation, Melanie Griffin, who served as our keynote speaker during the Hike the Hill. The FICPA welcomes Secretary Griffin into her new role and is excited to continue working closely with DBPR to further the cause of Florida’s CPAs.

KRISTIN BIVONA CPA

We welcome any and all FICPA members who want to take an active role in promoting and protecting our profession.

Just as our state’s leaders educated FICPA members on the political process, FICPA leadership plays a critical role in advising legislators about the hidden impacts of pending legislation. Even when we’re not advocating for or against a specific bill, we’re available to state leaders as a resource. FICPA members are experts in a variety of disciplines, and we believe it’s important to remain an engaged and relevant player throughout the legislative process.

Inside this issue (on page 10), you’ll find the very first graduating class of our FICPA Leadership Academy. These 16 outstanding Young CPAs represent the future of FICPA and the CPA profession, and we were proud to have on hand in Tallahassee to get an up-close look at FICPA’s most important member benefit. I encourage all of you to follow their lead by taking an active role in our grassroots advocacy efforts.

Unsure how to stay engaged or how to make your voice count?

First, if you have a personal relationship with a Florida lawmaker, reach out to the FICPA Governmental Affairs team and become part of our network of Key Person Contacts. We’re always looking to make new relationships with lawmakers and to strengthen the successful partnerships we’ve worked so hard to build.

Second, consider joining the Florida CPA/PAC! You’ll find more information about the PAC on pages 28-31, including our annual PAC 250 and individual contributors. The PAC’s success is thanks to the ongoing generosity of its benefactors, and its your contributions that ensure the value and protection of the CPA license.

Finally, you can stay up to date on the latest new and notes impacting the CPA profession by following our regular Advocacy Updates posted to FICPA.org and sent directly to your inbox. These updates, authored by our Director of Governmental Affairs Justin Thames, keep you on the cutting edge of what’s happening in Tallahassee.

Advocacy is at the heart of the FICPA, and we welcome any and all FICPA members who want to take an active role in promoting and protecting our profession.

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Make your voice heard — SUPPORT THE CPA/PAC. Stand with our profession and make a voluntary contribution to the Florida CPA/PAC. Donating to the Florida CPA/PAC is the most effective way to ensure you have a voice in the political process.

Your donations go directly towards vetting, educating, and electing pro-CPA, pro-business candidates who understand the issues affecting our profession.

We carefully research and interview every candidate we support so that your dollars go towards supporting positive legislative change. And with multiple membership tiers and ways to give, we make it easy for you to make a difference this November.

MEMBERSHIP TIERS: Trendsetter: $500 or more Pacesetter: $250 Committee of 100: $100

Sustaining: $50 Active: $25

VISIT FICPA.ORG/PAC TO DONATE TODAY Please note: contributions are strictly voluntary and are not deductible for federal tax purposes.

The Florida CPA/PAC is an entity completely separate from the FICPA. The Florida CPA/PAC WINTERis2022 | FLORIDA CPA TODAY supported solely by the voluntary contributions of members of the FICPA and others.

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NEWS BRIEFS

INDUSTRY NEWS

INDUSTRY NEWS

DeSantis appoints Griffin Secretary of DBPR

Florida Gov. Ron DeSantis in December appointed Melanie Griffin as Secretary of the Florida Department of Business and Professional Regulation (DBPR).

“I am excited to get to work advancing Governor DeSantis’ pro-business agenda,” Griffin said in a statement.

“Florida is the best in the nation for business owners and I’m elated for the opportunity to further advocate on behalf of the business community.”

“I personally know Secretary Griffin and can attest to her passion for service. We will be working closely together during the weeks ahead to make a seamless transition as we continue to support the DBPR team in ongoing initiatives,” said current DBPR Secretary Julie Brown, who will now Chair the Florida Gaming Commission.

Griffin, of Tampa, is an Attorney with Shumaker, Loop & Kendrick and senior advisor for Business-to-Business Relationships for Shumaker Advisors Florida.

She is also the Founder and Owner of Spread Your Sunshine, a business that provides speaking and professional training services and designs, manufactures and sells inspirational products and gifts.

Griffin is President of the Hillsborough Association of Women Lawyers Executive Board of Directors, serves on the Florida State University College of Law Board of Visitors, and is a Fellow of The Florida Bar Foundation.

She earned her bachelor’s degree in finance, master of business administration and juris doctor degree from Florida State University.

The FICPA congratulates Secretary Griffin and looks forward to working with her to advance the cause of Florida CPAs.

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Platau, Blend elected Chair, Vice Chair; Vasallo appointed

The Florida Board of Accountancy (BOA) has welcomed a new member and elected its Chair and Vice Chair for 2022.

On Nov. 5, Gov. Ron DeSantis announced the appointment of Caridad “Carey” Vasallo to the BOA. A current FICPA Foundation Trustee, Carey is the owner of VMBG Accounting in Hialeah. In addition to being CPA, she is a certified fraud examiner, certified valuation analyst, certified anti-money laundering specialist and certified forensic consultant. Vasallo was recognized as the Coral Gables Chamber of Commerce’s Businesswoman of the Year and previously served on the FICPA Board of Directors.

On Dec. 17, the BOA elected Steve Platau and William Blend as Chair and Vice Chair for the upcoming 2022 Board service year. FICPA President & CEO Shelly Weir and FICPA Board member Key O’Keefe were both in attendance.

FICPA thanks the Board of Accountancy for its continued partnership and leadership, and we congratulate Carey, Steve and Bill on their new roles.

INDUSTRY NEWS

NASBA installs Caldwell on Board of Directors

The National Association of State Boards of Accountancy (NASBA) recently announced members of its 2021-2022 Board of Directors.

She is a former chair of NASBA’s Audit, CPE, Diversity, Enforcement Resources and Peer Review Compliance Committees, and its CPE Standards Working Group.

Caldwell also has served on NASBA’s Administration and Finance, CPE, Diversity and Joint AICPA/NASBA CPE Standards committees.

We offer Maria our sincere congratulations and look forward to working with her in her new role!

Members were installed Nov. 2-3 during NASBA’s 114th Annual Meeting.

Longtime FICPA member Maria Caldwell, CPA, of Miami was elected director-at-large and appointed chair of the Peer Review Compliance Committee.

Caldwell, an audit director at Deloitte & Touche, specializes in hospitality, real estate and the gaming industries.

She is a former chair of the Florida Board of Accountancy.

Caldwell is a former NASBA southeast regional director and director-at-large from 2014-2020.

Notice of Regular Council Meeting FICPA OFFICIAL NOTICE In compliance with Article XI, Section 6 of the FICPA Bylaws, be it known that a regular meeting of the FICPA Council will be held on Friday, June 10, 2022, at 10:00 a.m. at Disney’s Contemporary Resort in Orlando (held in conjunction with the Mega CPE Conference).

WINTER 2022 | FLORIDA CPA TODAY

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NEWS BRIEFS

FICPA NEWS

FICPA NEWS

CIRA meets with DBPR

FICPA hosts first Accounting Educators Summit

On Dec. 15, the FICPA CIRA Committee and the Florida Department of Business and Professional Regulation (DBPR) held their annual liaison meeting in Tallahassee.

The meeting, which has taken place for more than 20 years, continues to provide productive collaboration on issues impacting the community association industry.

This year’s annual meeting included roundtable discussions, updates on issues affecting both groups, and a 2022 Legislative Session update.

“The longstanding collaboration between the FICPA and DBPR has provided opportunities to recognize and resolve numerous technical questions about the regulation of common interest realty associations,” CIRA Committee Vice Chair Tony Gregory said. “We look forward to continuing our successful working relationship and partnership with DBPR for years to come.”

Is Your FICPA Profile up to Date?

Have you moved or changed jobs recently?

Make sure you add an alternate email to stay connected.

Visit FICPA.org and make changes under: My Account > Account Details > Update Profile

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FLORIDA CPA TODAY | WINTER 2022

On Nov. 12, FICPA hosted its first Accounting Educators Summit. With more than 20 of our Florida colleges and universities represented, the discussion focused on CPA Evolution and strengthening our professional pipeline.

Shelly Weir, FICPA President & CEO, kicked off the event by welcoming the AICPA’s Carl Mayes and NASBA’s Dan Dustin, who offered the latest updates on CPA Evolution.

Gleim, a Florida based CPA Review Provider, had representatives Amy Ford and Valerie Wendt on hand to communicate how they intend to help students study for the entire exam, including each separate discipline.

As for the pipeline, our FICPA Scholarship Foundation shared information on how fourth and fifth-year students can fill tuition gaps after their Bright Futures Scholarships phase out at the end of Year 4.

There is a declining number of students in accounting, but firms are still seeing interest in the CPA designation. Lorienne Dittmar with Kaufman Rossin, Erin Buss with Purvis Gray, and Jessica Espaillat with Spoor Bunch Franz offered insight into skills students are missing when they enter the profession, giving educators specific areas of focus.

To wrap up the day, a panel of authors and educators addressed some of the revisions being made in textbooks to support the upcoming changes in the accounting curriculum.

For additional information on the Summit, please email Jennifer Allen at Jennifer@ficpa.org.

2021 Discussion Leader of the Year Awards The FICPA is proud to announce the recipients of the 2021 Discussion Leader of Year Awards for their outstanding contributions to the FICPA and their excellence and commitment to education.

The Discussion Leaders have been session leaders for conferences, seminars, or webinars over the past year. Award recipients are determined by attendee evaluation scores.

Congratulations to the recipients of the 2021 FICPA Discussion Leader of the Year Award: M. Bret Hood is a retired Special Agent with the FBI and is the Director of 21st Century Learning & Consulting, LLC. He is a frequent speaker on fraud, internal control and why people lie.

Steven E. Morrison is a Partner in National Assurance – Audit Quality Group at CohnReznick. He addresses specific issues for companies in a variety of industries. He is a frequent speaker on auditing, practice management, and fraud risks.

Michael Cheng is a Partner at Frazier & Deeter who oversees the firm’s professional practices related to accounting and audit. Mike specialized in assisting clients with complex accounting and financial reporting issues. He is a frequent speaker on FASB Updates.

Carrie Cherveny is the Senior Vice President of Strategic Client Solutions in HUB’s Risk Services Division. She works closely with clients to identify compliance risks across the organization and develop responsive strategies and solutions that ensure compliance and further the overall organization goals. She is a frequent speaker on the future of work, controlling employer health plan costs, and what employers need to know about the COVID vaccine.

James C. Bourke is a Partner, Member of the Board of Directors and Management Committee at WithumSmith+Brown. He is the Director of Firm Technology and Managing Director of Advisory Services.

He is a frequent speaker on technology and innovation solutions, technology’s role in changing the accounting profession, and remote auditing.

Eugene Ristaino is the owner of Ristiano & Company and provides valuation services for private companies along with accounting and auditing consultation and technical reviews for small and medium-sized CPA firms.

He is a frequent speaker on auditing, internal control, risk assessment, analytical procedures, and accounting for income taxes.

WINTER 2022 | FLORIDA CPA TODAY

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LEADERSHlP ACADEMY FICPA honors 16 graduates of inaugural Leadership Academy The Florida Institute of Certified Public Accountants (FICPA) is proud to recognize the graduates from its inaugural Leadership Academy.

“The future of accounting is bright with the advancement of these 16 individuals through the FICPA Leadership Academy,” FICPA President & CEO Shelly Weir said. “We are proud to play a part in their professional development and look forward to watching them climb the career ladder in professional accounting in the years ahead.”

FICPA’s Leadership Academy is a selective, high-impact program for CPAs age 35 and under who are looking to grow as leaders. These 16 participants took part in three Leadership Academy sessions hosted in Davie (Nov. 8-9), Tampa (Dec. 13-14) and Tallahassee (Jan. 11-12).

Leadership Academy participants graduated on Jan. 12 while attending FICPA’s Hike the Hill event at the State Capitol, where they had the opportunity to learn from state lawmakers.

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FICPA partnered with the Succession Institute to develop the Leadership Academy’s curriculum. A pair of Succession faculty members – former AICPA Chair Bill Reeb and Former AICPA and FICPA Chair Tommye Barie – challenged participants to evolve, create a roadmap for change, and increase their skills.

“We are thrilled to work with the FICPA on its Leadership Academy,” Reeb said. “As a Past Chair of the FICPA, Tommye is especially excited to play a role in developing the organization’s future volunteer leaders. Our high-impact program is focused on developing real-world, practical, instantly implementable skill-level changes.”

“Bill has been working with leaders in programs like this for almost two decades,” Barie added. “We have seen that those who participate in this curriculum quickly rise into leadership positions within their organizations. We teach people the fundamental changes to make and skills to develop to be successful as they transition from being technicians into being leaders.”

Rummesa Abrar Ernst & Young

Jason Beck BDO USA

Nicklaus Children’s Health System

Robert Chiste Kaufman Rossin

Alexander Frey Thomas Howell Ferguson

Elizabeth Jackson RSM US

Kristin Kalley Nelson Financial Planning

Dan Kolbenschlag Grant Thornton

Einat Laver Kaufman Rossin

Robert Millwee Great HealthWorks

Sasha Moore CBIZ MHM

Evaristo Palmer Cherry Bekaert

Lauren Passaro Ernst & Young

Heber Rojas Tapia, Rojas & Associates

Kari Sagehorn CAE USA INC

Victoria Tercilla Kaufman Rossin

Jessica Bormey

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CHILDREN, CONSERVATION AND CRYPTOCURRENCY, C3: CREDITS AND COMPLIANCE

By Carol A. Vance and Nathan Wadlinger

T

his article will address three topics relevant to the three socioeconomic classes of clients CPAs serve. First, the child tax credit has been expanded to provide monthly cash payments1 to lower-income taxpayers with children. Importantly, obtaining the credit and correctly managing the advance payments and impending income tax return with potential liability will likely require professional assistance. Second, conservation will cover a few residential energy credits available for typical taxpayer home improvements. Finally, we’ll offer an update for those brave souls dabbling in the cryptocurrency world.

The March 11, 2021, American Rescue Plan Act expanded the Internal Revenue Code (IRC) Section (§) 24 child tax credit. The Act made this credit fully refundable in 2021 (for one year only) for child dependents age 17 and younger.

In addition, the Act, again for one year only, increased the amount of the credit from $2,000 to $3,000 per eligible child with a further increase to $3,600 per eligible child under

age 6, as of the close of 2021.2 Fifty percent of the credit is available in advance of the 2021 income tax return filing, unless taxpayers opt out of the credit using the Internal Revenue Service (IRS) online portal.3 Payments were made to taxpayers between July 1, 2021, and Dec. 31, 2021, based on 2020 or 2019 Form 1040 filings. The taxpayers will reconcile the advanced payments received against the actual credits due on their 2021 Form 1040.4 Non-filers may also

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1 I.R.C. §7527A 2 I.R.C. §24(i)(3)

CHILDREN - CHILD TAX CREDITS

FLORIDA CPA TODAY | WINTER 2022

3 I.R.C. §7527A(c)(1) 4 I.R.C. §24(j)

be eligible for advanced payments and must use the “IRS Non–Filer Sign up Tool” found at www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-up-tool to register.

The same website offers the ability to opt out of the monthly advance payments and manage bank account information for direct deposit payments, demographic information, and payment history.

This advanced credit is limited to taxpayers who resided in one of the 50 states, U.S. possessions,5 or the District of Columbia for more than half of 2021. A qualifying home includes a house, apartment, shelter, or temporary lodging and does not need to be the same physical location throughout the year. Each qualified child must have a social security number before filing date deadline and each parent must have an individual taxpayer identification number or social security number.6 Any child that is properly claimed as a dependent of the taxpayer, is under age 18 in 2021, and does not provide more than half of his or her support will be considered a qualifying child.7 The IRS child tax credit portal and taxpayer instructions state that advanced credit payments will not impact income reported for any welfare benefit programs. The maximum credit will be available for taxpayers with modified adjusted gross income equal to or less than $150,000 if married filing jointly or $112,500 if head of household or $75,000 or less for single or married persons filing separately.8 The increased credit is phased out $50 for each $1,000 of modified adjusted gross income over those applicable threshold amounts.9 Taxpayers should note that the 2020 $2,000 child credit with income thresholds of $400,000 and $200,00010 still applies in 2021 for taxpayers who will not qualify for the higher credit in 2021.

At time of publication, no additional information about reconciling the prepayments to the credit available on the 2021 filing existed, other than the statutory sections 7527A and 24(i).

AGI of $125,000 and is reduced to a 20% credit on qualified expenses for AGI over $400,000. The income exclusion for employer-provided dependent care assistance is raised to $10,500, up from $5,000, for 2021.12 CONSERVATION - RESIDENTIAL ENERGY CREDITS

The residential energy credits include both the residential efficient property credit and the non-business energy property credit. Residual energy credits are available for qualified energy efficiency improvements on existing and newly constructed homes,13 while non-business energy credits are only available for existing homes. Houseboats, manufactured homes, condominiums, and cooperatives may also utilize these credits for the resident’s proportionate share of allocated and unsubsidized costs. Floridians can benefit from heat pumps, central air conditioners, insulation, and water heaters. Version 6 Energy Star skylights, exterior windows and doors are also available for credits.14 The taxpayer’s principal residence within the meaning of IRC §121 must be located in the United States to utilize these credits.

Unfortunately, the non-business energy credit is limited to a lifetime amount of $500; the residential energy credit is limited to the taxpayer’s annual tax liability with several adjustments, but a carryforward is available for unused credits.15 Basis must be reduced for all credits allowed on the taxpayers’ tax returns.16 Most of the residential energy credits are tied to the fuel efficiency gained from the newly installed energy product. Form 5695 is required and as taxpayers are shopping for these improvements, approved product specifications may be found at www.ENERGY.gov.

Consultation with a licensed contractor may also be wise in determining credit eligibility.

Newly constructed or rehabilitated energy efficient home credits are available under IRC §45L and apply to eligible contractors and homebuyers. These credits are limited to $2,000 and $1,000 for each party, respectively.

The Child and Dependent Care Credit also received refundable credit status in the American Rescue Plan Act. Effective for 2021, IRC §21 is a refundable credit if the taxpayer parent or his/her spouse lived in the United States for more than one half of the year. Fifty percent, up from 35%, of eligible child and dependent expenses are available for working taxpayers with adjusted gross income levels up to $125,000, up from $15,000, making the refundable credit worth up to $4,000 for one qualifying child and $8,000 for two or more children.11 The 50% credit reduction starts at

The real tax savings for homeowners comes from IRC §25D(g) as applied to Energy Star solar roofs and roof panels and residential solar energy systems. Tax credits were 30% of the costs of qualified property placed in service before Jan. 1, 2020, 26% if before January 2023, and 22% if placed in service prior to Jan. 1, 2024. The IRC §25D credit is permitted for existing or newly constructed homes. IRC §48(a) (2)(A) provides a 30% solar energy credit for commercial property if construction begins before Jan. 1, 2024. After careful analysis of business credits available under IRC sections: 48(a)(5)(D), section 38 (general business credit) and

5 I.R.C. §24(k) 6 I.R.C. §24(e) 7 I.R.C. §152(c) 8 I.R.C. §24(i)(4)(B)

12 I.R.C§129(a)(2)(D) 13 I.R.C. §25D 14 I.R.C. §25C(c)(2), 25C(c)(3) and 25(d)2-(d)5

9 I.R.C. §24(i)(4)(A) 10 I.R.C. §24(h) 11 I.R.C. §21(g) American Rescue Plan Act §9632;

15 I.R.C. §25D(c) 16 I.R.C. §25D(f)

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the exceptions permitting energy credits under IRC §50(b) (2)(D), solar panels installed on residential rental property qualify for the 30% credit. The taxpayer’s basis in their real property is reduced for the credit allowed.17 Sections 25D and 48 are not refundable credits; instead, unused credits may be carried forward.

According to IRS Letter Ruling 201130003 and IRC §25D(e) (1), all the costs incurred for a qualified residential solar electric property expenditure (QSEPE) include labor costs allocable to onsite preparation, assembly, or original installation and piping or wiring to interconnect such (QSEPE) property to the dwelling unit. IRS Letter Ruling 201809003 further provided that the costs of the battery and software management tool and installation necessary to monitor the charging and discharging of solar energy is also a QSEPE. To benefit from these energy credits, much documentation and several calculations will be required. Many taxpayers are likely incurring home improvement costs eligible for some of these credits.

CRYPTOCURRENCY - VIRTUAL CURRENCY

The Treasury continues to consider virtual currency as property, and the general rules of property transactions apply when virtual currency is sold or exchanged for other currency, assets, goods or services. The difference between the fair market value of the virtual currency exchanged or property/services received and the virtual currency’s basis to the taxpayer determines the gain or loss, and the character of the virtual currency in the hands of the taxpayer determines the character of the income.18 Reporting requirements for virtual currency transactions follow typical compliance filings for Forms 1099s and W-2s.19 In 2019, Form 1040, Schedule 1 asked taxpayers if they had a financial interest in any virtual currency during the tax year. A new box appeared on page 1 of Form 1040 in 2020. The box now requires the taxpayer to respond to the following inquiry: At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? There is some confusion over this question because the IRS FAQs state that taxpayers should respond negatively if they simply acquired and held virtual currency; whereas, the IRS notice instructs us to respond affirmatively for any acquisition. To avoid the penalties associated with noncompliance, CPAs should advise their clients based on the authoritative notice language.20 17 I.R.C. §25D(f) 18 IR Notice 2014-21, supplemented by Rev. Rul. 2019-24 19 IR Notice 2014-21 20 Polizzano, Brad and Heroux, Mark, The Tax Adviser: Virtual Currency Update July 1, 2021.

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While there is not much guidance on virtual currency, the IRS is attempting to crack down on unreported virtual currency transactions and has gained some ground. Many agencies are circling their wagons on this topic. The Treasury Department was working in 2021 to finalize the rules requiring anti-money laundering reporting for cryptocurrencies.21 A federal district court ruled in favor of the IRS requesting information about transactions exceeding $20,000 in value from Bitcoin.22 The February 2020 Government Accountability Office report recommended that the IRS increase information reporting on virtual currency, further recommending that the IRS and FinCEN address how foreign assets reporting applies to virtual currency. FinCEN Notice 2020-2 confirms its intent to amend the Bank Secrecy Act (BSA) regarding reports of Foreign Bank and Financial Accounts (FBAR) to include virtual currency as a type of reportable account under 31 CFR 1010.350.

The Treasury Department’s FinCEN, along with the Federal Reserve, have clarified that the definition of money under the Bank Secrecy Act applies to virtual currencies that can convert to legal tender or a substitute for fiat currency.23 For gamers, the IRS confirmed that video game currency that never leaves the gaming environment is not considered convertible currency and therefore not subject to tax compliance.24 As stimulus revisions are added to the tax code to help taxpayers get through this pandemic, more complexity is added to nearly every area of a tax return. Even non-filers are impacted by unpaid stimulus checks and refundable credits that will need to be reconciled with any prepayment credits received. CPAs will need to be ever more diligent with checklists and client communication.

21 Weinberger, Evan, Securities Law: Treasury to Wrap Crypto Anti-Money Laundering Rules by Fall. June 11, 2021, Bureau of National Affairs.

22 United States v. Coinbase, Inc, Case No 17-cv-01431-JSC (N.D. Cal.11/28/17) 23 Weinberger, Evan, Securities Law: Treasury to Wrap Crypto Anti-Money Laundering Rules by Fall. June 11, 2021, Bureau of National Affairs. Fiat Currency is a government issued currency that is not backed by a commodity such as gold.

24 As in V-bucks, an in-game currency used in the game Fortnite. According to IRS website newsroom release dated Feb 14, 2020, regarding virtual currency. Stausfeld, Dave, The Tax Adviser: IRS says no need to report most video game currency transactions. May 1, 2020.

Nate Wadlinger is a member of the Federal Tax Committee at the FICPA, and a lecturer in Tax and Accounting at the University of Central Florida.

Carol Vance is the chair of the Federal Tax Committee at the FICPA, a USF faculty member, and a practicing CPA and lawyer representing highnet-worth entrepreneurs from cradle to grave.

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WINTER 2022 | FLORIDA CPA TODAY

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IRS Power of Attorney Form 2848: New Methods for Processing and Submission

By Russell Dunn, CPA

M

any tax practitioners need to discuss their client’s tax matters with the Internal Revenue Service (IRS). The Internal Revenue Code (IRC) § 6103 prohibits the disclosure of tax return information to persons other than the taxpayer unless such person has obtained written authorization as specified by Code § 6103(c) as well as Treas. Reg. § 301.6103(c)-1. Also relevant to this discussion is the authority for methods of signing returns and other documents under Treas. Reg. § 301.6061-1.

Prior to the pandemic, practitioners typically submitted Form 2848, Power of Attorney and Declaration of Representative (POA), by fax to the IRS employee with whom they were working. This employee submitted the POA to the Centralized Authorization Function (CAF) Unit. The practitioner could also send the POA by fax directly to the CAF unit. The Memphis CAF Unit has been designated as the correct CAF unit for Florida practitioners.

These forms were to have “wet” signa-

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tures, meaning the signatures for the taxpayer(s) and the representative(s) were signed in ink and not signed in an electronic format. The impact of the pandemic as well as efforts toward IRS modernization caused changes to occur recently.

This article provides information on two new methods of submitting POAs. The two methods are the “Submit Online Method” and the “Tax Pro Account Method.” These methods will be described and compared. The most important change is that both methods allow taxpayers and practitioners to utilize electronic signatures as opposed to “wet” signatures.

The two new methods adopted in 2021 are different from the temporary relief that was provided in 2020 in direct response to the pandemic. On March 27, 2020, Deputy Commissioner, Services and Enforcement, Sunita Lough issued a “Memorandum for All Services and Enforcement Employees.”

Included in this memorandum was the temporary authorization to accept

digital signatures on certain forms, including the POA. This temporary authorization ended on Dec. 31, 2020, as noted in IR-2020-194, dated Aug. 28, 2020. The IRS stopped accepting digital signatures after this date unless one of the two new systems was used. This Information Release (IR) added additional forms to the prior authorization for digital signature and announced the expiration date.

The Taxpayer First Act of 2019 (P.L. 116-25), Section 2302, amended IRC §6061(b)(3). The change directed the IRS to publish guidance on uniform standards and procedures for the acceptance of taxpayers’ electronic signatures for requests for tax return information to be released to tax practitioners.

SUBMIT FORMS ONLINE OPTION

On Jan. 25, 2021, the IRS announced a new option to submit Form 2848 and Form 8821 in IR-2021-20. This option allows the taxpayer and the representative to sign these forms electronically. According to this release, “the

new online option negates need for specific equipment (e.g., fax machines, scanners), saves tax professionals’ time in obtaining signatures, reduces person-to-person contact, and allows complete flexibility in completing the form anywhere, anytime, for both the tax professional and client.”

The IRS issued FS-2021-01 in January 2021. This Fact Sheet (FS) pronouncement provided information about the new “Submit Forms 2848 and 8821 Online” tool. This can be referred to as the “Submit Online” tool to distinguish it from the Tax Pro option discussed later. As stated in this pronouncement, “This new tool is part of the Internal Revenue Service’s efforts to develop remote transaction options that help tax practitioners and their individual and business clients reduce face-to-face contact.”

The important information contained in this pronouncement includes the announcement that revised Forms 2848 and 8821 were going to be released soon. Also, it was noted that if these forms are submitted by fax or mail, only handwritten (wet) signatures will be accepted. This pronouncement also disclosed new procedures for the authentication of the identities of “unknown clients.” The process of authentication has particular required procedures. According to the FAQs on the IRS website, the documentation proving the compliance with these procedures are considered “books and records” and “must be retained as long as their contents may become material in the administration of any Internal Revenue law.”

The authentication requirement occurs when a taxpayer signs the form in a remote location and not in the physical presence of the tax practitioner and the tax practitioner does “not have a personal or business relationship with them.” The FAQs refine this

ST. DENIS & DAVEY, P ATTORNEYS AT LAW

requirement by specifying that the tax practitioner “does not have personal knowledge of the taxpayer’s identity.”

FLORIDA It would likely be a best practice to perform and document the authentication if there is any doubt in the practitioner’s determination of whether authentication is required. The three steps for authentication are noted as Inspect, Record and Verify.

taxpayer’s name, address, and SSN or ITIN through secondary documentation, such as a federal or state tax return, IRS notice or letter, Social Security card or credit card or utility statement.” There are other authentication rules specific to business and non-profit taxpayers.

The Submit Online option requires the tax practitioner to have a “Secure The Inspect requirement is met by Access” username and password from Reclaiming Justice examining “a valid government-isan IRS account. Many practitioners sued photo identification (ID) of the have established Focusing on legal malpractice and an e-Services account taxpayer and compar[ing] the photo to which satisfiesSt. this requirement. accounting malpractice statewide, Denis the taxpayer via a self-taken picture of When practitioner enters the & Davey, P.A., Attorneys are the led by Super Lawyers honoree W. St. Denistool andfor the first time, the taxpayer or video conference.”

The Donald Submit Online honoreethere BrianisW.a Davey.

Record requirement isRising met byStars creating one-time requirement to a written document containing “theand Davey, accept the terms of for service. After this For St. Denis finding justice clients who have been let down inhas thebeen past satisfied, the name, Social Security Number (SSN) requirement the ultimate gratification. or Individual TaxpayerisIdentification practitioner will be asked a series of Number (ITIN), address, and date questions ensure “Clients come to us jaded abouttothe legalthe proper routing of birth of the taxpayer.”

The Verify of the form.they see process.”

St. Denis says.

“When hard we“the work and how hard our experts requirement is met by how examining The form tothat be submitted may be in work, they’re very thankful to see the legal system can ultimately work for them.”

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several file formats such as PDF, JPG or PNG. Upon a successful submission, the word “success” will be displayed on the screen. A confirmation email will be sent to the email address associated with the e-Services account. There will be no other confirmation of acceptance. However, if there is a rejection of such form, a rejection notice will be mailed by the IRS to the practitioner and the taxpayer.

The IRS has stated in the FAQs that the Submit Online option does not have a time advantage over other methods of submission as to when the form will be input into the CAF system. All forms submitted to the CAF unit are processed on a FIFO basis. There is no telephone support for this tool; if there is a failure of any sort, the FAQs suggest obtaining a wet signature and submitting the form by mail or fax.

TAX PRO ACCOUNT OPTION

The IRS issued an Information Release, IR-2021-154, on July 19, 2021, announcing the launch of the new Tax Pro Account. This new tool allows a practitioner and a taxpayer to create an authorization relationship on a totally digital, non-form-based platform. The distinction between this tool and the Submit Online tool is that this tool does not require an IRS employee to take action to input the form into the CAF system. The designation of a practitioner by an authorized POA occurs in a completely digital environment. If all steps are completed successfully, there is an immediate creation of the POA authority on the CAF system in most cases. According to this IR, “Some authorizations may take up to 48 hours.”

The requirements to use this system from a practitioner’s perspective are the same as the Submit Online option. “Tax professionals must be in good standing with the IRS and 18

FLORIDA CPA TODAY | WINTER 2022

already have a CAF number prior to making requests through the Tax Pro Account.” Additionally, the CAF address for the practitioner must be in the United States or the District of Columbia. A very important difference to use this method is the requirement that a taxpayer has already established an online account with the IRS. This requirement may be a bar for some taxpayers who may not have such an account nor the desire to create such an account.

The Tax Pro tool starts with the login by the practitioner to their Online Account at the IRS. The practitioner then completes information on several screens to create a request for the taxpayer to digitally sign the POA that will be placed in their IRS online account. The practitioner then informs the taxpayer to login to their IRS online account to electronically sign the POA. The taxpayer can review the information prior to providing the electronic signature.

There are other limitations to this system as compared with submitting a Form 2848. Tax matters can only be for individuals for years 2000 to three years from the present year. Income tax and civil penalties as well as other limited issues can be addressed. The submission of the POA using the Tax Pro tool revokes all prior authorizations for the same tax matters. If the practitioner and taxpayer wish to keep prior authorizations intact, a Form 2848 must be submitted by mail, fax, or online.

SUMMARY

It is not a secret that IRS operations have been severely impacted by a perfect storm of a diminishing workforce due to attrition and budget limitations while coping with the effects of a pandemic. The Federal Tax Committee of the FICPA had a telephone conference earlier this year with the IRS to

discuss the problems practitioners have been dealing with since the start of the pandemic. The IRS acknowledged that incoming mail could take months to be processed. Practitioners have reported cases in which a check was sent to the IRS and wasn’t cashed for more than six months. Form 2848 POA is the first form needed to work on these issues.

Electronic processing of signatures and submission alternatives provide much convenient and practical relief, as well as the avoidance of face-to-face meetings between practitioners and taxpayers.

Tax practitioners now have two excellent options for creating POA authorizations with the IRS. Each of these methods should be evaluated for their ability to meet the needs of the taxpayer and the representative. Since the beginning of the pandemic, tax practitioners have needed to be flexible and creative to continue providing excellent service to their clients. The IRS has created two new tools to facilitate the creation of the POA authorization in an efficient and safe modality. The prudent practitioner should evaluate these two new choices as alternatives to “wet” signatures as well as submission online versus mail or fax. The Tax Pro account is somewhat more limited and may not be as useful as the Submit Online option because of the requirement to have the taxpayer establish an online account with the IRS. Russell Dunn is a former IRS agent who is a tenured professor in accounting and taxation at Broward College. He concentrates his professional practice in IRS controversy. Professor Dunn also provides CPE content for the FICPA.

WINTER 2022 | FLORIDA CPA TODAY

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Accounting vs. U.S. Taxation for Derivatives:

Book-Tax Differences Are Here to Stay

By Joel DiCicco and Richard Gendler

T

he term “derivatives” has different meanings in various disciplines. This article will first address the everyday usage of derivatives in finance before summarizing a comprehensive bill proposed by Senate Finance Committee Chair Ron Wyden that would overhaul the terminology and treatment of derivative products for taxation.

After elaborating upon the tax side, the very complex definition of derivative instruments under generally accepted accounting principles (GAAP) will be addressed. Finally, we conclude with some parting thoughts as to why the accounting and tax regimes differ in their treatment.1 Generic Finance Definition of Derivatives

Warren Buffett and Charlie Munger in their 2002 Berkshire Chairman Letter stated that “derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.” Yet, the companies that Berkshire manages all have derivative products, as these financial constructs serve the purposes of hedging and risk management. In basic financial terms, a “derivative security

is an agreement between two counterparties whose payoff depends on the value of an underlying asset.”2 The concept seems simple enough; so, why all the drama?

Tax Derivatives Definition

Let us first take a look at the Modernization of Derivatives Tax Act of 2021 (“MODA”) introduced by United States Senator Wyden on Aug. 5, 2021. MODA is the latest of a series of continuing proposals aimed at simplifying the complexity of derivative taxation.3 This proposal clarifies that these tax rules prescribe federal tax treatment of derivative instruments without regard to their treatment under accounting rules, making the complex reconciliation between books and tax even more onerous.

In short, this bill would require mark-to-market treatment for all derivatives, treat gains and losses from all derivatives as ordinary gains and losses, and source gains and losses from all derivatives to the taxpayer’s country of residence.

Currently, the U.S. tax laws and regulations governing derivatives are piecemeal and lack any coherent policy. You can find tax laws relating to derivatives in a number of sections in the Internal Revenue Code (IRC) and related Treasury Department interpretations, including Sections 475 (Mark-to-Market), 1221 (Capital Assets), 1092 (Straddles), and 446 (Methods of Accounting). The treatment of derivatives also varies depending upon the type of taxpayer, the use of the derivative, and where it is traded. Under MODA, there would be new code Sections 491 (treatment of derivatives), 492 (hedging) and 493 (defining derivatives) designed to consolidate the existing morass of rules and regulations.

Proposed new code Section 491 defines taxable events with respect to derivative contracts and the tax treatment of gains and losses.

1 Note: Neither the accounting nor taxation of derivatives for hedges will be analyzed.

2 Derivatives Essentials - Aron Gottesman, page 3 3 A similar bill was proposed in 2017 and did not become legislation.

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Gains or losses on derivatives are taxable upon termination and those derivatives not terminated are proposed to be treated as if terminated or transferred at the end of each taxable period and then marked to market with gains or losses taxed at ordinary rates. This provision would also allow taxpayers to rely on book valuation for tax purposes. Gains and losses on a derivative would be sourced to the country of residence of the taxpayer.

Under the proposed IRC Section 493, a derivative is defined as any contract “the value of which, or any payment or other transfer with respect to which, is (directly or indirectly) determined by reference to one or more of the following: (1) any share of stock in a corporation; (2) any partnership or beneficial ownership interest in a partnership or trust; (3) any evidence of indebtedness; (4) any real property (other than real property for which an exclusion is available, which is discussed further below); (5) any commodity that is actively traded within the meaning of section 1092; (6) any currency; (7) any rate, price, amount, index, formula, or algorithm; and (8) any other item prescribed by the Secretary. For this purpose, the term ‘contract’ includes any option, forward, future, short position, swap, or similar contract. The term ‘derivative’ does not include any item described in (1) through (8).”

3) net settlement. While each of the three criteria appear straightforward, they need to be examined quite carefully to properly determine whether a financial instrument is indeed aderivative under GAAP. In general, derivative and hedge accounting is quite challenging. Adding to this challenge are the constant changes to GAAP. The Financial Accounting Standards Board (FASB) Technical Agenda, for example, includes a project to modify existing GAAP relating to hedge accounting. Plus, there are a myriad of exceptions to the guidance in ASC Topic 815.5 Why then do we have the need to recognize whether a particular instrument is deemed a derivative for accounting purposes? It has to do with not only the accounting and reporting of the transaction but also the related comprehensive disclosure requirements.

Under ASC Topic 815, derivatives are measured at fair value and are reported as assets or liabilities on the balance sheet. While derivatives are generally measured at fair value, non-derivatives may or may not be, depending on the particular transaction.

4 In the accounting world, GAAP and IFRS have similar takes on how to handle financial products via ASC 815 and IFRS #911.

5 Adding to this confusion are the scope exceptions, such as loan commitments and interest-only strips.

As with Accounting Standards Codification (ASC) Topic 815, Derivatives and Hedging (discussed in the next section), MODA also has scope exceptions that prohibit certain instruments from derivative treatment. For instance, in terms of exclusions, MODA states that American Depository Receipts, Repurchase Agreements, Insurance Contracts, and Options received in connection with the performance of services would not be considered derivatives.

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Legislators have over the last several years noted the abuses of derivatives in taxation and have tried to rectify the problem. Whether this bill passes in the near future or not, it will only be a matter of time before these changes take place.

Accounting Derivative Instruments Definition4

So, what is a derivative according to the accounting rules? Under ASC Topic 815-10, a derivative product must include these three elements: 1) underlying, notional amount, payment provision, 2) no initial net investment, and

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Under ASC Topic 820, Fair Value Measurement, a fair-value hierarchy promotes reporting consistency and transparency of fair value measurements. Derivative instruments generally fall under either Levels 2 (inputs other than quoted prices in active markets) or 3 (unobservable inputs for the asset or liability). Determining the appropriate level is critical because the intensity of the disclosure requirements is enhanced for the Level 3 category.

The Bottom Line

to control when misapplications are found. Simply look at IRS Form 8886-Reportable Transaction Disclosure Statement to gain an understanding of the various abusive transactions utilizing derivative instruments, such as credit default swaps, equity swaps, basket options, foreign currency options, and so forth. The goal of MODA is to “establish a single set of straightforward rules governing the tax treatment of these financial products” in the hope of stemming the exploitations currently at play.

Will the definitions and rules governing the taxation and accounting of derivatives ever come close to matching?

It’s doubtful. As we all know, financial reporting is about providing investors with timely, accurate, and transparent information on the financial position, results of operations, and cash flows of an organization. Taxation, on the other hand, balances social and economic policies along with revenue enhancements. If measured by restatements, accounting has seen less abuse in the areas of derivatives. Based on a review of the Audit Analytics database,6 the number of total restatements in financial derivatives declined from the high of 70 in 2005 to only three in 2019. One assumption is that the low number of restatements in such a complex area is due to additional internal controls relating to reporting derivative instruments.

Conclusion

Taxation is a different story, though. Abuses have proliferated using derivative products and the Internal Revenue Service (IRS) has been forced to take a piecemeal approach

Richard S. Gendler, J.D., LL.M, J.S.D. serves as full time faculty at the Florida Atlantic University College of Business. He has been widely published in professional and academic journals on topical issues concerning accounting and insolvency.

The likelihood of reconciling the variances between book and tax treatments of derivatives seems remote, whether or not MODA passes. Practitioners should understand the differences in the accounting and taxation definitions of derivatives because of the disparate treatment they are given in each context. Finally, the need to stay abreast of the frequent refinements of the tax definition is imperative.

6 Whalen D, Coleman D, Tanona D (2020) 2019 Financial Restatements. A Nineteen Year Comparison. Audit Analytics.

Joel M. DiCicco, CPA, PhD, MST, MBA is full-time faculty at Florida Atlantic University School of Accounting. He has published in both academic and professional journals in the areas of accounting, taxation, and valuation.

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Navigating Recent TAX LAW CHANGES

By Keith Johnson

I

have been in practice for almost 25 years. I remember learning about, lecturing on, and advising clients on major tax legislation such as the Taxpayer Relief Act of 1997, Economic Growth and Tax Relief Reconciliation Act of 2001, Jobs and Growth Tax Relief Reconciliation Act of 2003, American Recovery & Reinvestment Act of 2009, Patient Protection and Affordable Care Act of 2010, Protecting Americans from Tax Hikes Act of 2015, Tax Cuts and Jobs Act of 2017, and the Setting Every Community Up for Retirement Enhancement Act of 2020. These statutes helped shape the current tax landscape we have today. All of the aforementioned legislation became law roughly every three years from 1997 to 2020.

However, stimulated by the COVID-19 pandemic, we have seen more changes in the Internal Revenue Code over the last roughly 20 months than the last 20 years combined.

Staying abreast of all the new laws and changes has been a challenge for practitioners, as the constantly shifting state

of the virus and the effects on the economy have required Congress and Presidents Trump and Biden to pass one new major tax act after another, leaving little time for individuals, businesses, and practitioners to adjust. Fear not, here is the latest and most relevant information on the multiple new laws that may affect your clients.

COVID-19 took a devastating toll on the nation’s economy and individual savings and jobs. In an attempt to restore the economy to pre-pandemic levels, Congress has passed a series of major laws of which your clients must be aware.

On March 18, 2020, Congress passed and then-President Trump signed the Families First Coronavirus Response Act (FFCRA). This first in the series of laws required businesses to provide sick leave and expanded family and medical leave to employees who a) contracted COVID-19, b) were under government orders to quarantine, c) cared for someone with COVID-19, or d) were forced to care for their children due to closure of the schools. The FFCRA called for WINTER 2022 | FLORIDA CPA TODAY

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paid leave of up to $511 per day (depending on normal wages) for up to 10 days for those who caught or who were exposed to the virus. Those forced to care for someone or their children due to closed schools received up to $200 per day for 10 days with some exceptions. The employer would be compensated through payroll tax credits claimed on their quarterly Form 941 tax returns. While the law expired on Dec. 31, 2020,1 you may still have clients requesting you amend their payroll tax returns. Thus, it is important to ask your clients questions to see if they fall within the purview of FFCRA. Just a few days later, on March 27, 2020, Congress and President Trump passed and signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This law was the first to affect most Americans via the benefits outlined below.

For Individuals: • A $1,200 economic stimulus check (called the Recovery Rebate Credit or RRC) per taxpayer and a $500 check per eligible child.

Single filers whose adjusted gross income exceeded $75,000 per year ($112,500 for head of household and $150,000 for married filing jointly) experienced phaseout or elimination of the stimulus.

• Extended unemployment benefits • Forbearance on evictions and mortgages • Forbearance on student loan payments

For businesses: • The creation of the Paycheck Protection Program and expansion of the Economic Injury Disaster Loan program to allow small businesses low- or no-interest loans to continue operations • Aid for certain essential industries

As of this writing, we are still experiencing the effects of the CARES Act in tax advisement and tax preparation. As the RRC was based on adjusted gross income, the 2018 and 2019 income tax returns were used to calculate the credit. If your clients did not qualify for the credit based on the 2018 or the 2019 income tax return, the 2020 income tax return may be used to claim the RRC. Another major issue concerns individuals who normally were not required to file a tax return using an Internal Revenue Service portal to file a “dummy” return to claim the RRC. Subsequent to the filing of the return, these filers found themselves receiving other income requiring them to file. Upon attempting to e-file their 2019 or 2020 return, the e-filed return was rejected; the false return counted as the e-filed return, requiring the return to be mailed, which, due to the four-month shutdown of the IRS, delayed refunds for many months.

The key takeaway for CPAs: Ask clients, especially new ones, lots of questions. You need to a) ascertain their eligibility for the RRC to claim on their returns, b) determine the timing of claiming the RRC, and c) determine the method of filing the return. We occasionally obtain new clients needing to file several years of returns, so be prepared to ask the new client challenging questions to ensure an accurate and timely return.

On Dec. 27, 2020, President Trump signed a second stimulus act into law. Aside from the actual stimulus, there were not many provisions affecting taxpayers. This law allowed a $600 check to all taxpayers and their eligible children. The second stimulus was again subject to adjusted gross income limitations. While the timing of the checks resulted in most taxpayers receiving the RRC check in 2021, the law and IRS considers the second stimulus a 2020 tax item. Those not receiving the payment, but otherwise eligible, can claim the RRC on their 2020 return. Again, it is important to confirm with the client their eligibility and receipt of this payment.

In January 2021, control of the Presidency and Congress flipped to the Democrats. After several weeks of discussions and disagreements on the amount of a third stimulus, Congress passed and President Biden signed the American Rescue Plan Act (ARPA) on March 11, 2021.

• Funds to develop vaccines and ventilators

For governments: • $150 billion of funding to replace lost payroll and property taxes

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1. The American Rescue Plan Act of 2021 does not renew the requirement that private employers must provide employees with paid or unpaid leaves of absence for reasons related to COVID-19 – as originally mandated by FFCRA almost exactly one year ago.

ARPA does extend and expand the availability of payroll tax credits if employers voluntarily provide paid leave consistent with FFCRA.

ARPA provided, among other items: • Expanded Child Care Credits and creation of the Advance Child Tax Credit • A $1,400 stimulus for each taxpayer and eligible dependent regardless of age • Excluding first $10,200 of unemployment benefits received, subject to phaseout • Forgiveness of any required Premium Tax Credit repayments for 2020 • Changes in the Child and Dependent Care Credit • Changes in eligibility and premiums for Affordable Care Act health insurance policies

Although ARPA was passed in 2021, Congress allowed for retroactive treatment of the unemployment benefit exclusion and the premium tax credit repayment forgiveness.

This caused some delays and confusion amongst preparers and software providers to update software and advise on the fly.

With many of the provisions in effect for 2021, ARPA will dominate the upcoming tax season. As with the prior stimuli, those either not eligible due to income or not receiving payments, may be eligible to claim the RRC on the 2021 return. Again, it is critical that the practitioner ask the right questions of their clients.

With clients coming in for 2019-21 tax issues for years to come, it is vital that CPAs get up to speed on all COVID-19 related tax laws to ensure their clients pay no more tax than required. Be prepared to have frank and detailed discussions in order to provide the best service possible.

Keith E. Johnson CPA, CIA, is Principal of Keith E. Johnson CPA PA in Jacksonville. Founded in 1997, the full-service firm engages in accounting, attest, tax, insurance, and financial services for individuals, small businesses, and exempt-organizations. Mr. Johnson has been a member of the FICPA since 1998 and has been active in the Federal Taxation Committee as well as an author and lecturer for Florida CPA Today and FICPA Conferences for many years.

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PAC’s Work Is Crucial in Redistricting Year

By Justin Thames, FICPA Director of Governmental Affairs

Each of Florida’s 27 U.S. representatives and 160 state legislators are elected from political divisions called districts. U.S. Senators are not elected by districts but by the states at large.

District lines are redrawn every 10 years following completion of the U.S. Census.

During the 2022 Legislative Session, the state of Florida will undergo reapportionment, or redistricting. This is the process by which the new congressional and state legislative district boundaries are drawn.

Each year, your generous contributions make the work of the Florida CPA/PAC possible.

Now more than ever, the Florida CPA/PAC needs your help to impact state government on behalf of the CPA profession.

This year, the firms participating in the annual “Top 250” fundraising campaign are recognized for their steadfast commitment to our advocacy efforts. Firm support, combined with individual contributions, strengthens our position in the political landscape.

The CPA profession continues to thrive in Florida because of the commitment shown by the members of this year’s “Top 250” campaign.

Thank you again to all the individuals and firms that support the Florida CPA/ PAC’s efforts.

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FLORIDA CPA TODAY | WINTER 2022

Top 250 CPA/PAC Contributors PLATINUM CLUB ($5,000 OR MORE CONTRIBUTION) KAUFMAN, ROSSIN & CO.

Blain L. Heckaman Miami

GOLD CLUB ($2,000 OR MORE CONTRIBUTION) THOMAS HOWELL FERGUSON

Jeffrey E. Barbacci, CPA Tallahassee

CHASTANG & PARTNERS

Lawrence J. Chastang Orlando

ELLRICH, NEAL, SMITH & STOHLMAN

W. David Ellrich Palm Beach Gardens

INDELIBLE BUSINESS SOLUTIONS

Joshua Hay Jacksonville

TUSCAN & COMPANY

Jeffrey M. Tuscan Fort Myers

State elections are often the CPA profession’s first opportunity to advocate for particular issues with future elected officials. The best chance for CPAs to shape the future is to champion those who would support CPAs once in state office. The Florida CPA/PAC has a 90 percent success rate in supporting candidates who represent CPAs’ interest and seeing them successfully elected to the Florida Legislature.

Throughout the year, the PAC interviews, educates and builds relationships with candidates running for office. These efforts help ensure candidates understood the issues important to the CPA community. By engaging in the political process and supporting pro-CPA candidates through the PAC, the profession increases awareness and furthers its advocacy goals.

SILVER CLUB ($1,000 OR MORE CONTRIBUTION)

SILVER CLUB ($1,000 OR MORE CONTRIBUTION)

CHERRY BEKAERT

SPOOR BUNCH FRANZ

David Appel Coral Gables

W.G. Spoor II St. Petersburg

SALTMARSH, CLEAVELAND & GUND

Lee Bell Tampa & Pensacola

STONE, PARKER & COMPANY

G. Michael Stone Port Richey

SINES BLAKESLEE MADYDA

Derek Blakeslee Winter Garden

BRONZE CLUB ($500 OR MORE CONTRIBUTION)

MARK BRECHBILL

GELLERRAGANS

Mark Brechbill Stuart

Kristin Bivona Orlando

LIBERTY PARTNERS OF TALLAHASSEE

CABALLERO FIERMAN LLERENA & GARCIA

Jennifer J. Green, CAE, DPL Tallahassee

Nestor Caballero Coral Gables

BASHOR & LEGENDRE

Percy J. Legendre Tampa

THE HURST COMPANY

W. Henry “Hank” Hurst, Jr., CPA Amelia Island

CAVANAUGH & CO

Michael R. Pender Jr. Sarasota

JOIN THE PAC ficpa.org/paccontribute

JUDA, ESKEW & ASSOCIATES

Kimberly Juda Plantation

Please note: Contributions are strictly voluntary and are not deductible for federal tax purposes. The Florida CPA/PAC is an entity completely separate from the FICPA. The Florida CPA/PAC is supported solely by the voluntary contributions of members of the FICPA and others.

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2021 CPA/PAC Individual Contributors The Florida CPA/PAC recognizes and thanks these FICPA members for their individual contributions. Their support helps make it possible for the PAC to engage in elections for pro-CPA candidates running for the Florida Legislature each election year. Most importantly, due to their commitment to the profession, these supporters have ensured the PAC will have the resources needed to help re-elect the three CPAs currently serving in the legislature. Again, we thank these members for their investment in the PAC’s success.

TRENDSETTER/ PACESETTER Ignacio J. Abella Mike U. Akwue Carshena T. Allison Ernest N. Almonte Domingo A. Alvarez Ashley Andren Yvette N. Aubin Jeffrey E. Barbacci David G. Barbeito Nadia H. Batey Michael E. Batts Glenn A. Bedonie Bruce Berger Sheldon F. Bernau Kristin A. Bivona Derek Blakeslee Donna M. Bloomer Anthony M. Bragano John L. Brantley Michael S. Brault George D. Brewer Alvin L. Brown Stephen M. Bunch Justin D. Callow Ronit Canet Dr. Valrie Chambers Yvonne M. Clayborne Reynolds J. Cochrane Marianela Collado Lena G. Combs Victor V. Coppola Jerome F. Cruitt Maureen DeCicco Katherine A. DeFilippo Peter V. DeSanctis Lydia C. Desnoyers Luis E. Diaz Richard A. Donner David A. Dorsey Stephen G. Douglas Julian D. Dozier Eduardo Duarte Kenneth O. Dudley Abigail F. Dupree Partner Thomas V. Durkee William H. Durkin Kimberly V. Dyson Margaret G. Edmiston Kathryn L. Ennis 30

Joseph A. Epstein Scott D. Evaul David C. Fine Alan N. Finkelstein Delia F. Finnerty Lawrence R. Flaws Casey A. Fletcher Sylvia L. Fletcher Gary A. Fracassi Richard B. Franz III John K. Freeman Steven E. Fuller Patrick L. Gallagher Dennis K. Gallant Elizabeth Garrido Arlen S. Gay Mark T. Godwin Russell Goldberg Glenn H. Gopman Marianne E. Grabowski Jennifer B. Gunter C. Michael Halfast James A. Halleran Shelly M. Hamilton Joseph P. Handy Lindsey C. Hardee Allison J. Harrell Harry C. Harrell Daniel Henn Luis F. Hernandez Ira M. Herschbein Sheri Hoble David J. Hochsprung Paulette M. Holder Paul T. Horgan Kathryn K. Horton Christopher M. Howell Winston K. Howell William H. Hurst Jr. Jonathan S. Ingber Spencer A. Ingram Marilyn R. Jacobs Barbara J. Jagusztyn Gleeson P. Johnson Malcolm P. Johnson Keith A. Jowers II Kimberly A. Juda Stephen M. Kalifeh II Martin Kaye Jennifer K. Keller Patrick J. Kelly

FLORIDA CPA TODAY | WINTER 2022

Michael J. Kierzynski Charles Krblich Steven B. Kreinik Jason K. Lafser Geraldine Lazarre Amada Lopez-Cantera Catherine H. Lorie Ruth A. Loubier Concetta R. Lupardo Erick S. Magno Anthony E. Marcus Gary J. Margolis Joseph V. Marullo Sr. Andrew J. Mason Katherine M. Maynard John P. Miller Joseph C. Moffa Ada E. Montano Patricia A. More Yolanda R. Nader Yamila Nelson Hiram D. Ocariz Key G. O’Keefe Evelyn F. Parkes Linda G. Parks Cecil Patterson Jr. Michael R. Pender Jr. Douglas Perreault Canita G. Peterson David A. Ralicki Mindy P. Rankin Josette M. Rappel Thomas F. Reilly Jaret P. Rice Juan F. Rivera Jr. Heber F. Rojas Peter L. Rosasco Jr. Michael L. Rosciam Todd M. Russell Melvin L. Sams IV Raskin Shah Richard L. Shapiro Brion L. Sharpe Alisa L. Sherman Jacob C. Shumacker III Regis M. Simasek W.G. Spoor II Stam W. Stathis Christopher P. Stemley Ben A. Stevens III Catherine J. Stout

John H. Stroemer John Sundeman William G. Tapp Wendy Y. Terry James F. Thielen David J. Thomas III Daniela C. Thomason Ronald Thompkins Christopher M. Todd Laura J. Violante James H. Wade Jr. Shelly Weir Alan M. West James R. White Terrell W. Witcher Steven R. Wright COMMITTEE 100 Jeffrey M. Aguiar Richard A. Amado Thomas A. Andrews Gerard A. Arsenault Kimberly H. Beaumont David Bergstein Joseph K. Bing John I. Bishop Jr. Shawne W. Blair Ann G. Blakeslee Aubrey Bourgeois Bonny Bowyer Kathleen E. Brothers Paul N. Brown Robert S. Buddy III Peter S. Burgess Deric V. Cablish Carlos M. Castellon Emmelina S. Ceguerra Randall T. Coleman Lillian M. Conrad Kristen M. Crawford R. Kevin Cross Cynthia S. D’Artagnan Beatriz De La Rua A Keith Dean CPA James H. Dixon Jr. Lee Draper III Laurel Dreyfuss Timothy J. Fadgen David J. Fasano George G. Fox Eric S. Friedfeld John F. Froehlich

Luigi J. Fuoco ichael D. Futterman Jacqueline A. Gibbons-McIntosh Robert H. Gibson Irvin N. Gleim David J. Goodman Daniel B. Grossman Anne Marie Hicks Lisa R. Holbrook Michele M. Hoover Peter Howley Orlando Hoyos Anthony Hueston III RH Hunnings Richard S. Ingram Jr. Michelle L. Jackson Ronald E. Jackson Tarsha R. Jacobs Daryl A. Johnson Linda K. Johnson Timothy D. Kane Lawrence J. Kendzior Deborah L. Leonard Monica R. Leonard Albert D. Lopez James M. Luffman Robert J. Maya John J. McKnight Jr. Robert M. Melby Thomas A. Menchinger Mark R. Mutchnick Kristian N. Nenov Michael H. Novak Chris Oatis Joshua G. Owens Timothy D. Pappas Joseph A. Paul Russell L. Perkins Phillip W. Price Jr. Peter T. Pruitt Jr. William D. Pruitt Jr. David R. Ramos Barbara T. Rodriguez Sharon L. Roma Richard A. Romans Mary Lou Ruderman Felipe R. Ruiz John M. Sarris Reina L. Schlager Mark J. Schou Terry L. Seaton

Raul O. Serrano Jr. Barbara A. Sloan Richard D. Smith Cheri Swain Carolyn C. Sweeney Bernardo C. Tacoronte John W. Taylor Jr. Alan M. Wagner Tyson P. Walters Nancy L. Watson Leslie A. Welsh Nanette N. Winzell Howard Zolin Steven J. Zucker SUSTAINING Kelly L. Abraham Donna S. Adams Richard Aguilar Heidi B. Allen Nicole B. Andrews Regina W. Baniakas Sheldon L. Barat Sidney Barclais Karen W. Barr Kathryn F. Barton Ray D. Bastin William F. Becker Jr. Alyssa L. Belcher Elizabeth S. Bloeser Karla J. Bodden Steven K. Borden Imre Borsanyi Jennifer L. Bucior Mark J. Burger Dalia Cantor Traci B. Cash Lawrence M. Cohen James P. Colonna Martha E. Cronk James D. Davidson Christopher M. Davis Lisa M. De La Pointe Kelly R. Dee Joseph A. DeMilia Jr. Brandon P. Doddo James K. Duerr Jay N. Edinger Michael M. Everett Leon W. Faris Sirkka S. Firley Bruce E. Frazey Richard A. Garcia Eleanor W. Gasi Joseph A. Genovese Adel J. Gonzalez Nestor L. Guillen Brian A. Hall Ronald A. Harris Michael S. Hayes Donna M. Heddlesten Kenneth R. Henry

Christian Hernandez David A. Hexter Stephanie C. Gainey Forrest H. Hilton Letha B. Hinote Sherrill W. Hudson Birgit Hugel RH Hunnings Stewart W. Hurst William J. Hyatt Harry B. Jamieson Steven J. Johnson George A. Jones William Jones Jorge H. Jordan Edward M. Kaplan James T. Keefe Russell L. Kelton Tracey J. Kinker Gebert Jason H. Klein David A. Kofsky Daniel S. Kushner Coman Leonard III Seth M. Lipson Debra K. Lockwood Jorge J. Lopez Kenneth T. Marsh Joel F. Martineau Anthony C. Martinelli Deborah P. Mason Michelle D. McCann Leslie A. McElhinney Todd S. Menahem Rosaline N. Mendoza Julia E. Mercier Joel S. Miller Jeetesh D. Mistry Pamela J. Mullins Stephen L. Needleman Natasha O. Neuberger Paul C. Nick Jennifer Niebla John S. Olivari Laura S. Olszewski Laura Plotner Nancy H. Porter James J. Pulkowski Timothy P. Raines Melodie A. Rich Robert J. Ritzenthaler William T. Robinson William C. Ross Cheryl A. Salgado Carlos M. Samlut Glenn D. Saslow Sally A. Scala Cassandra A. Searle Lisa H. Seiffer Rose P. Shelley Charles M. Sincell III Cynthia C. Slack

ficpa.org/paccontribute

Gary G. Smith Charles W. Smithers Jr. Lisa L. Smithson Michele N. Stefanelli Keith M. Suckno Johnny P. Svajko Nancy B. Swift Kristine W. Taylor Barbara E. Teeling Robert F. Thomson II Rimma R. Tinel Ana M. Toca J S. Vermaas T Jay Vitarelli Misty L. Weinger Cedrick L. West Sophia C. West Constance C. Wiberg Mary Ann Wilson Karen L. Wiltsie Wilda G. Womer Robert R. Wott Roberta N. Young Mark J. Zand ACTIVE Miriam N. Abreu Leslie Adler Jose L. Alookaran Daniel R. Anderson Jeffrey L. Andrade Daniel P. Armstrong Janet S. Baldwin Jacqueline Baptiste Joseph B. Barnes Dennis W. Bartlett Thomas M. Bizzell Mary Braznell Jill H. Brickel Dianne K. Briery Joseph J. Buongiorno Sr. William R. Burke Hoa N. Burrows Henry M. Cairo Allison P. Carter Brian T. Carter Carlos A. Cerezo Jr. Marrillyn M. Chandler Mirta Chediak Robert S. Cheskes Tamara L. Cindrich Vincent R. Coello Daniel J. Cole Harold L. Covert Stacia M. Deitrich Michael J. DeMarie Richard M. Dotson Carol E. Dozier Jonathan El-Chalouhi Richard S. Fechter Norma Fernandez-Lucena Eric W. Filkins

Michael V. Finuccio Frederick E. Fisher Milton G. Fisher Raquel B. Fontana William C. Fowler Jr. Ronald S. Friedman Frank R. Fusco Claudia K. George Anne E. Geraghty-Neal Sean M. Gerold Sheila B. Ginsberg Betsy A. Glickman Phyllis R. Graybow Herbert J. Greenlee Jr. Robert V. Grieb Kelsey A. Griffin John C. Guarino Eduardo A. Guernica Christopher J. Gulya Marshall D. Gunn Jr. Albert L. Haft Patricia K. Hagan Rex E. Harper Daryl E. Haupt Heidi L. Haye Nelson L. Hernandez Roger L. Heymann Christine E. Hill Sanford V. Howard Jr. Willie Howard Jr. Jason B. Jackson Casper J. Jacoby IV Elsa G. Johnson Laurie A. Johnson Rachel Johnson Diane M. Johnston Sorel Joseph Kristin A. Kalley Terri S. Kane Harold F. Keene Terry C. Keene Kolman Kenigsberg Robert W. Kidd Juliana M. Kierstein Jacob D. Kinsel Donald J. Kitaif Sheryl S. Kitaif Stuart A. Klein Susan C. Knapp Norman M. Kronstadt Valarie J. Law Kathryn M. Leavins Rodney P. LeBlanc Vincent U. Levito Geoffrey L. Lorah Charles A. Lota Victoria A. Loyola Douglas Maniscalco Joseph A. Manning Elizabeth C. Margolis Raymond F. Marin

Sharon R. Martinelli Joan M. Mazurek Lynn A. McFadden Donna L. Mcginnis Elizabeth A. McMillan Marilu Mendoza Marianne Micco Frank A. Mortillo Karen L. Mosteller Timothy H. Myers Stephen R. Nelson Carl I. Nickel Joni L. Norton Lisa M. Oberdick Gwendolyn M. Ogden Solon F. O’Neal Jr. Shanna N. Pace Stephen B. Parent Matthew Parker Stanford A. Paul Steve R. Picha Vladimy Pierre-Louis Alice A. Posada Carlos Rivas Fanego Merrill I. Rosen Stephen G. Rosen Kathryn V. Ross Jennifer Ruffino-Cook Robert M. Rumsey Jane E. Rydberg Ryan Carlos A. Sabater John W. Schilthuis Raymond F. Schultheis Stephen M. Schwartz William S. Schwarz Steven Silverman Gladys C. Soteldo Alan M. Spertell Peter J. Steffens Harold P. Sullivan Christopher N. Thomas Kenneth L. Thomas Mario E. Toca Normand Tousignant Joseph B. Trepani Yohana M. Tuguta Andrew P. Tyack Adam A. Urban Marianna Vaughan Raymond E. Wasser III Sankey E. Webb III Andrew R. Webber Alison N. Wester Michael E. Wheeler John B. White Jr. Lawrence H. Whitfield Hugh Whyte Virginia L. Yeagle

WINTER 2022 | FLORIDA CPA TODAY

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Tackling Challenges and Priorities for Nonprofit Organizations

May 19-20, 2022 | CPE: Up to 16 HILTON ORLANDO BONNET CREEK + ONLINE

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FLORIDA CPA TODAY | WINTER 2022

FICPA.ORG/NFP

CPAs working in the nonprofit sector have to make the most of their resources and stay up to date on changing regulations.

This conference will fill you in on everything you need to know to keep your nonprofit in the best possible position for continued success.

STAFF REPORT

By Laura Cutchens, Director, FICPA Scholarship Foundation

2021 Scholarship Nights

Apply Now for a FICPA Scholarship

This fall we celebrated our Class of 2021 throughout the state at our Central Florida, South Florida and Tampa Bay Scholarship Nights. We are grateful to our sponsors and thankful to have them as part of our team!

We have more than 70 scholarships available, including five worth $5,000 for African-American, fifth-year or graduate students.

CENTRAL FLORIDA DELOITTE

BKHM

JAMES MOORE & CO.

RAPOSA PERRY & YOUNG

OLIVARI & ASSOCIATES

Scan the QR Code to learn more and apply, and you could be our next FICPA Scholar!

Become a Foundation Trustee

SOUTH FLORIDA BERKOWITZ POLLACK BRANT COHNREZNICK DELOITTE KAUFMAN ROSSIN

WATSONRICE MMR CPA JASON H. KLEIN CPA CALLAGHAN & MARGOLIS CPAS

We are looking for members to join our Board of Trustees!

Trustees are driven individuals who care about our mission, can allot at least two hours to Foundation efforts each month, and can assist our fundraising efforts.

A new three-year term begins on July 1, 2022. We have two in-person meetings during the year.

If you’re interested in becoming a Trustee, please visit www.ficpascholarshipfoundation.org/trustee-application.

TAMPA BAY PENSERVCO

BODINEPERRY

PRIDA GUIDA & PEREZ

CBIZ

PURVIS GRAY

CIBC

UPCOMING EVENTS

RISK AVOIDANCE MANAGEMENT

CLIFTONLARSONALLEN CROWE

RIVERO GORDIMER & CO

JAMES MOORE & CO.

SPOOR BUNCH FRANZ

KERKERING BARBERIO LCG ADVISORS LES & JUDY SMOUT FOUNDATION

GET INVOLVED TODAY! Visit www.ficpascholarshipfoundation.org/get-involved Follow us on Linkedin, Instagram and Facebook @ficpascholarshipfoundation For more information contact Laura Cutchens at 850-521-5934 or laura@ficpa.org

April 1-15 – Anywhere, USA

GOLFING FORE EDUCATION

FICPA Scholarship Foundation Mia A. Thomas Endowmenmt Fund

May 6 - Eagle Creek Golf Club, Orlando

DAY AT THE RACES

May 6 – Day at the Races Tampa Bay Downs, Oldsmar July 21-23 – Family Retreat Ocean Reef Club, Key Largo

WINTER 2022 | FLORIDA CPA TODAY

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UPCOMING CONFERENCES

Challenges and opportunities abound in health care

By Carlos Hernandez, Partner, RSM

Editor’s Note: The FICPA’s Health Care Conference provides insight and tools for CPAs and other financial professionals in Florida to tackle the latest industry challenges. Carlos Hernandez is the national leader of RSM’s Health Care Consulting practice and an audit partner. He is a past chair of the HCC and offers this look at the industry and a preview of our conference, slated for May 2-3, in Orlando and online.

The health care industry in the United States continues to be challenged with opportunities to improve its efficiency and effectiveness when it comes to the delivery of care. As the industry evolves, health care providers need to remain flexible and adaptable. As the National Health Care leader for RSM US LLP, I strive to position our firm to be at the forefront of all obstacles.

emergence of new variants.

At RSM, we recently hosted a Virtual Health Care Day for all our dedicated health care professionals, clients and friends. Health Care Day was kicked off by a “Fireside Chat and Industry Outlook,” which included world-renowned epidemiologist Dr. Michael Osterholm, RSM’s Chief Economist Joe Brusuelas, and RSM’s senior health care analysts, Rick Kes and Matt Wolf.

8. Strategic and financial investors will continue to pour money into the health care sector.

THEIR DISCUSSION FOCUSED ON 10 KEY TOPICS IN THE INDUSTRY:

1. Pandemic surges and hot spots will continue to stress the health care industry.

2. Population-based data systems are fragmented in the U.S. systems, and reporting improvements are paramount to improve pandemic response.

3. Robust economic growth is expected in the United States, the best since the 1980s.

4. The reopening of the U.S. economy is not complete due 34

FLORIDA CPA TODAY | WINTER 2022

5. Health care has underinvested in the patient experience.

6. Patients will demand a customized experience that delivers value.

7. Telehealth volumes are slowing, but the genie is out of the bottle. Patients like the service.

9. The labor market will challenge sustainability and growth in the health care ecosystem for the foreseeable future.

10. Leading health care organizations will leverage technology to augment administrative and clinical workforces.

These are just some of the challenges that are clients are facing today, and who knows what will be coming in the future? A little more than two years ago, had I told you there would be a worldwide viral outbreak that would lead to an economic shutdown and temporary ICU beds in the parking lots and conference rooms of our hospitals, you would have found it difficult to believe.

Fortunately, we are a strong industry. We have technology, perseverance, and talent on our side. We continue to overcome the obstacles that are placed ahead of us while protecting the dignity of the patient. It remains a great time to be in the health care industry.

IN PERSON AND ONLINE

MAY 2-3, 2022

Rosen Plaza Hotel, Orlando 9700 International Dr, Orlando, FL 32819

FICPA.ORG/HCC E N D O R S E D BY:

WINTER 2022 | FLORIDA CPA TODAY

35

DOR UPDATE

Florida taxpayers to see changes in corporate income/franchise taxes

By Robert DuCasse Florida Department of Revenue

Did one of your clients owe Florida corporate income/franchise tax last year? If so, they may receive a partial automatic refund from the State of Florida in April or May of 2022.

The automatic refund is governed by section 220.1105, Florida Statutes, and is calculated on Florida corporate income returns filed on or before Feb. 1, 2022, for a taxable year beginning between April 1, 2019, and March 31, 2020. (For most taxpayers, this will be their Dec. 31, 2020, taxable yearend return.) The automatic refund is based on the positive total corporate income/franchise tax for the taxable year(s) plus the amount of any Florida Tax Credit Scholarship Program credit taken on the return.

If your client has an outstanding liability with the Department of Revenue (Department) for tax, penalty or interest, the refund will be first applied against that liability. In this situation, the Department will provide a refund offset notice when the automatic refund is applied against outstanding liabilities from other taxes and other corporate income taxable years.

Refund amounts less than $10 will be credited to the taxpayer’s corporate income tax account.

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FLORIDA CPA TODAY | WINTER 2022

Taxpayers with negative or zero total corporate income/franchise tax due without application of any Florida Tax Credit Scholarship Program credit for the applicable taxable year(s) are not eligible for an automatic refund.

Changes in tax rate Florida’s 5.5% corporate income tax rate was temporarily reduced in 2019 to 4.458% (applicable to 2019 and 2020) and again in 2021 to 3.535% (applicable to 2021). For taxable years beginning on or after Jan. 1, 2022, the Florida corporate income/franchise tax rate will return to 5.5%. Taxpayers will need to take care when computing how much to remit in estimated tax payments for the first taxable year with the 5.5% tax rate.

Like all taxable years, when estimated tax payments are required, a taxpayer must pay 25% of 90% of the tax due after credits for each of the estimated tax payments for the taxable year.

However, any estimated tax penalty and interest determined under that computation are not due when the installment payments meet the prior year exception. Pursuant to s. 220.34, F.S., the amount necessary to meet the prior

year exception is: An amount equal to the tax computed at the rates applicable to the taxable year, but otherwise on the basis of the facts shown on the return for, and the law applicable to, the preceding taxable year Since the applicable tax rate for the first taxable year beginning on or after Jan. 1, 2022, is 5.5% instead of the lower prior-year taxable rate, it is necessary to recompute the prior-year tax due using the current year tax rate of 5.5%. This number will then be used in determining the amount of estimated tax due by each installment due date to meet the prior year exception.

For updated information throughout the year, the Department encourages tax filers and practitioners to sign up to receive real-time electronic updates by visiting floridarevenue.com/dor/ subscribe.

If you have any questions on corporate income/franchise tax or other taxation issues, call the Florida Department of Revenue’s Taxpayer Services at (850) 488-6800, Monday through Friday, excluding holidays.

1 in 4 people will become disabled before reaching age 67.

If you were suddenly diagnosed with a long-term disability (LTD) would you be able to make ends meet despite losing your paycheck?

As a member of the FICPA, you have access to a Member Group LTD Plan that can help protect your income if you become disabled as the result of a covered accident or illness—including pregnancy. The plan offers up to $10,000 of monthly own-occupation coverage*, and there is no annual fee.

Get the protection you need to safeguard your future.

Get an instant quote at memberbenefits.com/ficpa A Member Benefit of:

ADMINISTERED BY:

*Income and underwriting limits apply. Disability statistics courtesy of the U.S. Social Security Administration. Products sold and serviced by Business Planning Concepts, Inc dba Member Benefits, the program administrator. The FICPA is not a licensed insurance entity and does not sell insurance.

WINTER 2022 | FLORIDA CPA TODAY

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COMMITTEE COLUMN

BUSINESS TECHNOLOGY

Talent vs. Technology

By David Bergstein, CPA, CITP, CGMA, chief innovation officer, A David Bergstein CPA

The future of accounting is changing as the need for personnel is rising. The path forward requires a change of mindset for the hiring party, which can increasingly employ technology to fill the gap. Moving forward, personnel will be a combination of bots and people.

Everything around us can be delivered in a digital format, which means the process of recording, sorting, and summarizing data can and should be automated. There is no need for an accountant to perform what was previously called “write up,” just as there is no need for the client to do bookkeeping manually.

As professionals, we should guide, teach, and implement processes and procedures for our clients that allow them to work in a more efficient, automated fashion. As advisors, we should sit down with current and prospective clients and inquire about their goals. This is our starting point, establishing why they need us and how we can help them.

I have been working with clients for more than 40 years, getting paid for generating tax returns, financial statements, and assistance. Yes, these services keep my clients compliant, but they benefit substantially more from our advisory sessions, producing plans to move their businesses forward with profit and efficiency gains.

The accounting profession is at a crossroads, as many non38

FLORIDA CPA TODAY | WINTER 2022

CPAs are coming into the market and offering similar services (save for audit). Most of our profession is comprised of firms with fewer than five staff members; to survive and profit, changes must be made in the way of implementing automation. Artificial intelligence allows us to provide better service and increase our profits.

Given the variety of AI solutions available, firms need to approach this digital pivot with a plan in mind. There’s no shortage of articles explaining how to implement change; the key, however, is in choosing an anchor platform and building around it. Anchor platforms consist of a leading provider - such as QBO, Xero, or any other accounting app - and an ecosystem around said provider. On the tax side, there are additional choices, such as Thomson, Wolters Kluwer, Intuit, Drake, and others.

Remember: The evolution of technology and AI haven’t necessarily changed your firm’s specific needs, but a shrinking talent pool is making tech adoption more vital than ever.

David Bergstein has been a practicing accountant since 1966. He has held high-level positions at the Top 3 accounting software providers and is an adjunct college professor. He has been an IRS chief and member of their speaker’s bureau. Accounting Today listed David as one of their Top 100 Most Influential People in the accounting profession in 2015 and 2017.

Val Steed, CEO at K2 Enterprises, LLC, added him to his Top 15 Accounting Technology Executives of all time.

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PRACTICES WANTED FOR PURCHASE OR MERGER

PRACTICES FOR SALE

READY TO MERGE OR SELL YOUR FIRM? Are you a retirement-minded CPA but don’t have a clear plan of what to do? Give us a call. KSDT CPA is one of South Florida’s fastest growing firms. Contact Jeff Taraboulos at info@ksdt-cpa.com or (305) 670-3370 to learn about favorable purchase terms.

RETIREMENT MINDED CPA - SOLE PRACTITIONER. Located in a high-growth area of Volusia County. Annual 2020 revenues in excess of $500K and on the same track for 2021. Primarily a tax practice seeking association with a Sole Practitioner or Firm with ultimate sale of practice. For information, E-mail msc@ficpa.org and reference Ad#609.

PRACTICES FOR SALE

GROWING MIAMI CPA FIRM ($1.8M). High-volume business tax, monthly accounting and some audits.

Profitable. Great, long-tenured staff. Youthful owner/ rainmaker wants to continue to work another for to five years as employee, but less. Looking for resources.

Lots of opportunities to cross and up-sell client base, including financial services. Email 4ragan@comcast.net or call 954-526-3600.

PROFESSIONAL ACCOUNTING SALES. Florida practices available statewide including, Ft Lauderdale ($2,45M+), North Dade County CPA ($2.1M), PensacolaTallahassee ($2.2M+), Tampa-Sarasota ($1M+), West Palm Beach ($500K+), and many others including Orlando, Pompano Beach, New Port Richey, and Port St. Lucie.

Special bank financing available with 10% down to qualified buyers. Sellers cash out at closing! Confidential, prompt, professional. Contact Professional Accounting Sales at 800-729-9031 or 561-666-6737.

FICPA Conferences Are Where Members Make Memories SAVE THE DATE FOR THESE UPCOMING EVENTS

March 24-25, 2022

May 2-3, 2022

May 19-20, 2022

Orlando + Online

Orlando + Online

Tallahassee + Online

FICPA .ORG/CFOC

FICPA .ORG/HCC

FICPA .ORG/FSU

May 19-20, 2022

June 07-11, 2022

Orlando + Online

Lake Buena Vista + Online

August 04-06, 2022 Lake Buena Vista + Online

FICPA .ORG/NFP

FICPA .ORG/MEGA

FICPA .ORG/SVC

TO SEE ALL FICPA CONFERENCES & TO REGISTER VISIT, FICPA.ORG/CONFERENCES

PRESORTED STANDARD U.S. POSTAGE

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Tax Preparation

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