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CPAs Wanting to Do It Themselves

  • Written by Joshua Fluegel

In its ongoing effort to stay on the forefront of developments in tax profession technology, CPA Magazine talks to Mark Strassman, president of Make My Day CPA. Strassman discusses CPAs’ current adoption of “do it yourself” practices and some crucial mistakes that must be avoided.

What are some recent developments with Make My Day CPA?

Strassman MarkMake My Day CPA has begun a very active growth and acquisition strategy. It is our goal to build an iconic brand for entrepreneurs, startups and micro-businesses. Of course we will take on clients of all sizes and needs, however, our expertise is in the unique needs of what we feel to be a very undeserved market, “the little guy.”

To reach that goal we are in talks with several Washington D.C. area firms who are of similar thought and would like to be a part of building a bigger name and network, to be a part of a new brand in public accounting. From there it is our intention to grow regionally and then nationally both through acquisition and organic office openings.

I also believe to combat the potential flight of the tax client, firms must start providing a great number of other services to fill in the gap. Wealth management has grown within firms. Other similar ancillary services such as benefit administration, human resource consulting type suites of services will help bring the CPA firm closer to one stop shopping for clients’ business as well as financial and tax advisory needs.

What is a current challenge in the tax profession?

Two major problems facing the profession at the moment and one on the horizon.

Currently, from a pure growth perspective, there is a great challenge within the smaller to mid-market client base. Many of these type clients, both corporate and individual are becoming heavily invested in the “do it yourself” (DIY) model. The advent of numerous software options available to these users is appealing in that it gives them the feeling of control and cost certainty and savings.

However, the DIY user creates a major problem: doing the job right. In many cases, even with highly efficient software at their disposal, many users are preparing workpapers and tax returns with a vast number of errors. They don’t fully understand the rules, but if the software accepts the input, the user assumes it’s good to file. Of course, the IRS sees things a little differently. Thus, many clients are finding themselves in trouble. So much for cost savings and control as they end up right back in their accountants’ office, in many cases, spending more time and money than had they brought it to their CPA in the first place. That’s not to say there isn’t a place for DIY, but the user must be capable and recognize their limitations.

Secondly, and this is an age-old problem: staffing. Finding a qualified staff that is committed to a career in public accounting, much less taxation, seems to get more difficult with every passing year. It takes great time, effort and commitment to find, hire and train staff to bring them up to the level of expertise that a firm expects of their staff, and certainly at a level the client expects. With it becoming more acceptable in today’s working world for staff to move on in shorter and shorter periods of time, a firm must evaluate the risk/reward of investing the time and money into in depth training.

As for future concerns, it seems like with every new administration we hear rumors of tax change and simplification of the tax code. While some change is good for accounting firms, much conversation is had over what major simplification might mean to the tax preparation and planning part of the industry. But we aren’t there yet.

What do you see as a solution to this challenge?

We have begun to encourage the use of DIY software for those clients that feel compelled to go that route. Solution to the DIY issue is not fighting the concept but supporting it through education and at times training of our client base. We stay close, offer encouragement and guidance and let them know we are there for them if they have questions or concerns. It is our belief that whether it is audit-related issues, or other more difficult tax issues that software simply doesn’t make self-explanatory, we let it be known we won’t turn them away. We have also built a unique billing plan for such clients.

As for staffing, we always keep a pipeline of potential new hires in process. Even when we do not have an opening, we are looking for the needle in the haystack, the talented individual that embraces a career in taxation. As for those where transition appears to be a forgone conclusion, you do your best to treat them extremely well to get them stay in the firm as long as you can, thus maximizing your ROI.

Where have you recently seen significant progress in the tax profession related to technology?

As I mentioned, the DIY options do offer some wonderful options for our clients. Not without challenges, but still, a positive change if used in the right situations.

As for the progress for the tax profession itself, I believe the ability for most financial software to integrate with each other has been a wonderful advance. From financial statements and workpapers to research to the firm’s CRM, many systems allow it all to tie together quite nicely. Add the cloud to the mix and for better or worse, you can be at “your desk” 24/7.

What is a mistake you see CPAs make?

Being slow to change. Surprisingly, the accounting practice is changing. Some change has to do with technology, some with changing needs of clients and staff. But the industry is aging and many of the old guard still make the rules. They still see it through a filter that was on target 20, 30, 40 years ago but not with today’s need for change and adaptation.

A related problem to the aging industry and firm leaders, is succession and transition planning. A large number, over 50% of non-national firms don not have a well thought out succession plan.

What do you suggest CPAs do to avoid this mistake?

If more firms had solid succession plans, ones that included younger staff, it would solve two major problems at once: staff, seeing how they are a part of the future of the firm would feel more engaged and may choose to stay with the firm longer, and the partners would expose themselves to more modern thought.

What do you see occuring in the future?

For us at Make MY Day CPA it is all about growth through embracing the change in the CPA firm industry. Embracing technology and the needs of the millennials, both as new clients and as staff to grow with.

As for the tax and CPA industry as a whole, I think it will have to go through a few pains that come with change. Against the norm, the larger firms seem to be adopting change at a more rapid pace than the smaller, seemingly more nimble firms. But as the need for change becomes more apparent to the smaller firms, I think they will adapt by bonding together in alliances and networks that support each other, and assist in the growth of the small to medium size firm.

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Top Small Business Software All Provide Phone Support

  • Written by T. Steel Rose, CPA

CPAs serving small businesses have many demands for their accounting software. Recent updates attempt to meet those demands from the top vendors who all offer phone support.

AccountantsWorld Accounting Power Provides Multiple Data Entry Methods

"There have been many new enhancements added to Accounting Power in 2017, but the most significant improvements include bill payment workflow and digital checks..." said Dr. Chandra Bhansali, co-founder and CEO of AccountantsWorld. The cloudbased system allows the CPA and client to log in to the same application without having to transfer data between incompatible systems.

Red Wing Software CenterPoint Accounting Also Has Farm Accounting

With a full complement of accounting modules Red Wing is probably best known for its payroll. The Red Wing General Ledger provides income statements, cash flows, balance sheets, and budgets. You are able to search, view and edit original source transactions and have the information returned to a spreadsheet style report; useful as an internal or external auditing tool. You are able to drill down from summarized reports to detailed reports, and then drill down further to the original transactions. In addition Red Wing also offers Fund Accounting for Non-Profits and Municipalities and Farm Accounting software.

QuickBooks Online Collaborates with Third-Party Developers

“In the past year, QuickBooks Online has implemented multiple new integrations with the most popular apps on the market aimed at helping users eliminate manual entry, save time and reduce errors. Customers who use TSheets to track time, invoice clients and manage payroll can now easily review, edit and approve time straight from within QuickBooks Online. Users who useBill.com for electronic bill pay will also be able to import, review and pay bills directly from QuickBooks Online, while fans of G Suite can invoice clients directly from Gmail and even schedule billable appointments using Bill My Time with Google Calendar,” said CeCe Morken, executive vice president and general manager, Pro-Connect Group of Intuit.

Intuit QuickBooks Premier 2017 Includes Smart Search

“In the 2017 version [of QuickBooks Premier], new automated reports let you know that your reports are on time and accurate based on the data provided, automatically generated and emailed to you when you schedule them. Additionally, reports filters are easily viewable and can be applied across multiple reports and viewed on one screen. You can now print information about what filters have been included in reports, as well as make multiple-record filter selections more easily.

“More improvements to QuickBooks Premier include smart search, which is a personalized autocomplete feature that helps you search for names, account numbers, and transaction amounts quickly,” said CeCe Morken, executive vice president and general manager, Pro- Connect Group of Intuit.

Sage Small Business Adds Sage Impact Hub

Sage Impact is used by accountants and bookkeepers to access a variety of apps including making proposals. Although offered free it’s good to review the terms and conditions which state that if you continue to use any of the products for which Sage charges, you may incur charges after four months. Sage offers a head-spinning assortment of accounting products. The starter package is Sage Start which provides Sales Invoicing and the ability to see how much customers owe and chase overdue balances. Clients may connect their bank and bank data flows in automatically. Reports include Profit & loss, Balance Sheet and Trial Balance.

Sage Cloud Accounting

Sage One is described as Simple Cloud Accounting Entrepreneurs and Small Businesses to manage cash flow and invoices. Sage Live is described as customizable cloud accounting for small and mid-sized businesses that create customizable reports, manage inventory, chart of accounts, manage multiple business units or locations and connect with Salesforce. The multi-dimensional general ledger may be used to track financial performance from multiple perspectives: by territory, team or project.

PC Software Accounting® Provides Windows Computer Checkbook

The Checkbook System is designed to directly interface to PC Software Accounting Windows® Client Write-Up System for accounting to prepare payroll and financial reports. The Checkbook System writes payroll and payables checks. It can also prepare deposit slips, and allows “journal entries” to be made to record other accounting transactions such as debit card transactions, online payments or accumulated depreciation. The system has a bank reconciliation feature that allows bank and credit card accounts to be formally reconciled. There is also a job costing feature and a fixed assets system available.

Wave Features Scheduling and Recurring Invoicing

"The most significant improvement in Wave this year is an end-to-end elevation of invoicing and payments," said Kirk Simpson, CEO and co-founder of Wave. "We've rolled out new workflows to make invoicing easy and clear. We've introduced industry-leading scheduling for recurring invoices, automatic payments for credit card customers, and extensive invoice customization. And we've relaunched our mobile apps for iOS and Android to great reviews from thousands of customers."

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The IRS Issues Final Treasury Regulations Governing R&D Tax Credit Claims

  • Written by Peter J. Scalise

scalise peterOn October 3, 2016, the IRS issued Final Treasury Regulations setting forth guidance on research and development efforts in connection to Internal Use Software (IUS) for purposes of claiming the Research & Development Tax Credit (RTC) under I.R.C. § 41.

As a synopsis, the newly issued Final Treasury Regulations are substantially the same as the previously issued Proposed Treasury Regulations which were issued on January 20 of 2015(REG-153656-03). The previously issued Proposed Treasury Regulations were intended to provide a practicable definition of IUS while offering guidance for when IUS development satisfies the high threshold of innovation test required in order for IUS to qualify for the RTC. As it should be recalled, the previously issued Proposed Treasury Regulations were praised by tax professionals as a practical framework to identifying, gathering, and documenting IUS RTC claims. Consequently, it was not surprising that the regulations were later finalized in substantially similar form. As a reminder, Treasury Regulations provide the official interpretations of the Internal Revenue Code by the Treasury Department and have the force and effect of law. The most common forms of Treasury Regulations include:

• Proposed Treasury Regulations (e.g., binding only on the IRS and not the taxpayers);

• Temporary and Final Treasury Regulations (e.g., binding on both the IRS and the taxpayers); and

• Preambles (e.g., treated just like legislative histories to demonstrate congres­sional intent and may underlie either type of the aforementioned Treasury Regulations regardless of status as Proposed, Temporary, or Final).

Consequently, with the issuance of these Final Treasury Regulations governing IUS RTC claims, the onus for tax compliance is now binding upon both the IRS and the taxpayers effective October 4th of 2016 which represents the date in which these Final Treasury Regulations have been published within the Federal Register.

Synopsis of the Final Treasury Regulations

IUS Defined
The Final Treasury Regulations adopt the Proposed Treasury Regulations’ definition of IUS as software primarily “developed for use in general and administrative functions that facilitate or support the conduct of the taxpayer’s trade or business. General and administrative functions include: (1) financial management and supporting recordkeeping, such as accounts payable and receivable, inventory management and budgeting; (2) human resource management; and (3) support services that support the taxpayer’s day-to-day operations.” In addition, the Final Treasury Regulations further adopt, with some clarifications, the Proposed Treasury Regulations’ definition of software not developed primarily for internal use as software that is “not developed for use in general and administrative functions that support the conduct of the taxpayer’s trade or business.” Examples of this software include software that is developed to be commercially sold, leased, licensed, or otherwise marketed to third parties; and software that is developed to enable a taxpayer to interact with third parties or to allow third parties to initiate functions or review data.

High Threshold of Innovation Test
Select IUS initiatives may be eligible for the RTC if, among other things, the software adheres to the three attributes of the high threshold of innovation test: (1) the software is innovative in that would result in a measurable improvement that is substantial and economically significant if the development is or would have been successful; (2) the development involves significant economic risk and there is substantial uncertainty due to technical risk; and (3) the software is not commercially available for use by the taxpayer in that the software cannot be purchased, leased, or licensed and used for the intended purpose without modifications that would satisfy the innovation and significant economic risk requirements.

Dual Function Software
For software that serves both internal uses and external uses (i.e., Dual Function Software), the Final Treasury Regulations presume that such software is developed primarily for a taxpayer’s internal use. However, this presumption does not apply in connection to the portion of the software for which the taxpayer can identify a subset of elements that enable the taxpayer to interact with third parties or allow third parties to initiate functions or review data on the taxpayer’s system. It should be duly noted that the Final Treasury Regulations provide a safe harbor that allows a taxpayer to include 25% of the Qualified Research Expenditures (e.g., Wages, Supplies, and 3rd Party Contract Research) of the Dual Function Software in computing the amount of the taxpayer’s RTC so long as the research constitutes qualified research and the use of the Dual Function Software by third parties is reasonably anticipated to constitute at least 10% of its use.

Intent of Software Development Benchmark
The Final Treasury Regulations make clear that whether software is developed primarily for internal use depends on the intent of the taxpayer and the facts and circumstances as they exist at the beginning of the software development process. However, it should be duly noted that the Final Treasury Regulations leave open the question of what actually constitutes the beginning of the software development phase and therefore creating some uncertainty for taxpayers. Conceivably further administrative guidance may be later disseminated to the public that will address this matter and provide better clarity to get to a sustainable tax return filing position. It is imperative that taxpayers recognize that absent such administrative guidance, there is certainly some level of interpretation and tax compliance risk that needs to be mitigated as the IRS could take the position that the taxpayer did not have the necessary intent at the proper time. This is particularly possible if the purpose of the software development changes over a period of time that could conceivably span over multiple taxable years.

The Final Treasury Regulations are prospective only. The Final Treasury Regulations will apply to taxable years beginning on or after October 4, 2016. For tax years ending on or after January 20, 2015, and beginning before October 4, 2016, the IRS will not challenge any RTC claim that is consistent with the Proposed Treasury Regulations or the Final Treasury Regulations. The Final Treasury Regulations can be accessed at: https://www.federalregister.gov/documents/2016/10/04/2016-23174/credit-for-increasing-research-activities


Peter J. Scalise serves as the Federal Tax Credits & Incentives Practice Leader for the Americas at Prager Metis CPAs, LLC a member of The Prager Metis International Group. Peter is a highly distinguished BIG 4 Alumni Tax Practice Leader and has over twenty years of progressive CPA Firm experience developing, managing and leading multi-million dollar tax advisory practices on a regional, national, and global level. Peter serves on both the Board of Directors and Board of Editors for The American Society of Tax Professionals (ASTP) and is the Founding President and Chairman of both The Northeastern Region Tax Roundtable and The Washington National Tax Roundtable, operating divisions of ASTP.

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Breaking Developments in 1040 Tax Software

  • Written by T. Steel Rose, CPA

There have been many changes to 1040 tax software over the last year. In preparation for the 2018 tax season, are the latest developments.

Drake Software Offers Optional Hardware to Serve Remote Clients

Drake offers an optional digital signature pad to esign forms and bank applications. A 2D barcode scanner allows importing W-2s or K-1s with 2D barcodes. “Some of the more notable improvements we’re working on will make it easier for preparers to serve the remote client and provide a smooth appointment-free filing experience,” said Jamie Stiles, president of Drake Software. “Streamlining the process of securely transferring documents, communicating with the client, and completing return preparation, including signature and payment, are areas we are focusing on.”

Lacerte from Intuit ProConnect Offers Dual Monitor Support

“[With dual monitors], Lacerte users can speed up their workflow by eliminating the hassle of toggling between input and output screens,” said CeCe Morken, executive vice president and general manager, ProConnect Group of Intuit. “Users set up one monitor as the input screen and see the data flow on their second monitor to validate where it is represented on a tax form.” Lacerte provides automated calculations for depreciation, amortization and debt forgiveness. An optional form reviewer tool allows a CPA to check and edit data before importing. Clients can pay tax prep fees out of their refund. Another option is eSignature which includes a function to collect client payment at the same time. Other add-on options include the Lacerte Tax Analyzer and Lacerte Tax Planner.

ProSeries from Intuit ProConnect Has Fixed Asset Manager Import

“ProSeries’ most-requested feature allows customers to lock returns from being changed once filed, and open previous year returns without mistakenly changing them,” said CeCe Morken, executive vice president and general manager, ProConnect Group of Intuit. A missing client information tool solves tracking down client data by pinpointing input fields with missing information and then sending an email to request data from the client.

A K-1 data import feature transfers data to individual returns. Other features of the Professional version include Quick Entry Sheets, Split Married Filing Joint, Client Checklist, Client Specific Billing Options, Client Advisor with 71 Planning Suggestions, a Tax Planner, Task Scheduler, Client Snapshot and Import from QuickBooks, Quicken and TXF files.

TaxAct Professional Editions Have Additional Security Options

With TaxAct Professional CPAs can organize their client list with Client Manager and track and review what’s occurred within a client return. Professional Reports may be used to track the status of clients’ e-filed returns. There are client letter, invoice and mailing label templates and optional cloud networking. CPAs can backup client returns on TaxAct’s secure servers and save scanned documents with client returns in the Document Manager.

UltraTax CS Increases E-filing

For tax year 2017 Thomson Reuters announced “new electronic filing capabilities for at least 18 filings, spread across a number of states and localities, further limiting the number of returns which practitioners and their clients must file on paper,” UltraTax CS said Jordan Kleinsmith, manager for tax innovation for Thomson Reuters. With UltraTax CS professional tax software up to four separate monitors may be used to view input, forms, prior year input and diagnostics. The forms synchronize with one another, so as a CPA navigates to the Itemized Deduction entry, UltraTax CS navigates to show the Schedule A and last year’s Itemized Deductions entries.

CCH Axcess Tax and ProSystem fx Tax Implement IRS Fraud Prevention Initiatives

“As part of the IRS/ State Tax AgenciesPrivate Sector Industry Security Summit partnership we’ve implemented tax-payer and tax return preparer safeguards,” noted Jill Deems, product line manager, tax, Wolters Kluwer Tax & Accounting. Improvements for 1040 tax prep include: Jump to Supporting Statement – In Tax Forms view where users will be able to view “see statement” or an icon on any line that includes a statement. Additionally firms can now e-file Form 1040-NR, the U.S. Nonresident Alien Income Tax Return, according to Deems.

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Identity Theft: Response Plan

  • Written by T. Steel Rose, CPA with Joshua Fluegel

rose steelIn this information age, identity theft is no longer something you merely hear about on the news in the evening. Most people know someone who has had either a credit card fraudulently opened in their name, checks stolen and used or a social security number compromised. Clearly identity theft is everywhere. I have a friend who had his 1040 stolen from his mailbox. Trust me, it did not make his tax season go any smoother. No one is safe.

As a CPA, you are a client’s trusted financial partner. Not only do you have a responsibility to protect all information a client gives you but you are also their consultant in many financial matters. Therefore it is likely that upon having their identity stolen a client will come to you asking what the next steps should be.

Step 1

Instruct your client to contact the companies or organizations where the fraud has occurred. As the thief used the identity to patronize these establishments already, putting the companies on high alert will disrupt the thief’s established patterns. This will also help stop the results of identity theft from growing systemically.

This step also involves changing passwords and PINS, refreshing cards and adjusting security measures.

Step 2

You will then need to contact, or have your client contact, the credit bureaus to activate a 90-day fraud alert. The three credit bureaus worth contacting are:

• Experian
www.Experian.com/fraudalert

• TransUnion
www.TransUnion.com/fraud

• Equifax
www.Equifax.com/CreditReport Assistance

A 90-day fraud alert is a free service offered by all of the credit bureaus. According to the Federal Trade Commission, once a 90-day fraud alert has been activated with one of the credit bureaus, protocol dictates that they contact the other two creating a web of caution.

Step 3

Your client will then want to go to www. IdentityTheft.gov to file a report with the Federal Trade Commission. Your client will be guided through several steps of creating an account and filling out the appropriate forms. Advise your client to provide as many details as possible.

Step 4

The next thing to do would be to file a police report. The police will need the following items to complete the report:

• A copy of the Federal Trade Commission Identity Theft Affidavit.

• A government-issued ID with that person’s picture on it.

• A proof of address. This can be an item such as a utility bill or mortgage statement.

• Any proof your client may have of the identity theft such as bills or notices.

• The Federal Trade Commission’s memo to law enforcement available at www.IdentityTheft.gov/steps.

Your client should also ask for a copy of the police report for their personal records.

Once the spread of financial damage has been stopped, you must then help your client pick up the pieces. This involves closing new accounts fraudulently opened in your client’s name, removing fraudulent charges and correcting the credit report. Steps detailing this process can be found at www.IdentityTheft.gov.

This information and more can be found at CPAMagazine.com as part of the Technology Minute. The Technology Minute is a video series produced by the staff of CPA Magazine covering technological issues CPAs encounter on a daily basis in their tax practices. The Technology Minute series also features interviews with some of the top minds in tax to elaborate on the current status of technology, where it is going and what it means for CPAs. If you would like to suggest topics for the Technology Minute or be featured in a video, contact CPA Magazine at This email address is being protected from spambots. You need JavaScript enabled to view it..

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