Tax Season '04 Takes the Cake
'Never worked harder,' says one CPA. 'Smoothest season in 36 years,' says another.
by Rick Telberg
At Large
Tax professionals may have turned in one of the most spectacular seasons on record, if the results at more than 700 firms are to be believed.
Last week, we reported that about 73 percent of tax practitioners were reporting measurable gains in revenue and profit. But the season wasn't over yet. Now, with results from a second wave of participants, it seems that 83 percent of At Large-reading tax practitioners posted revenue gains -- an astounding 18-point advance from last year's 65 percent level.
"I never worked harder in my life!" exclaimed a managing partner at small local firm, reporting gains in all the critical criteria for a successful season.
Some four in five or 81 percent of firms posted gains in net profits for Tax Season 2004, versus 69 percent in 2003.
"Felt like the hardest I've worked in 15 years," said another top partner, who is still trying to sort it all out. "I don't really know why. It was just a [pain] this season, no time off like in prior years, constantly working."
About 73 percent of firms posted gains in new clients, up from 59 percent in 2003.
"I had a 98-percent-plus retention rate for my tax clients," exulted CPA Dan Embody of Bristow, Va. "This in spite of a relocation of my practice in the middle of my busy tax season."
Half of all tax pros reported putting more clients on extension, partly due, no doubt, to increased workloads and late K1s and 1099s. In 2003, only 36 percent of practitioners reported putting more clients on extension.
"One of the smoothest seasons in my 36 years in this profession," said CPA Lewis M. Reyman, of Georgetown, Ind. And customers were happy, too, he added. "The tax cuts resulted in noticeable benefits to many of my clients."
Revenue per client advanced at 78 percent of firms this year, compared with 64 percent last year
New clients, for many CPAs, kept walking in the door. "Our new clients obtained this spring are the most ever in our 30 years!" according to J. Paul who practices in Mississippi.
Profit per client was up at 75 percent of locations, versus 58 percent in 2003.
Business was good for some brand new tax offices, as well. "This was our second year preparing taxes," said Dennis Regulinski, head of Mid-Atlantic Accounting Solutions LLC in Mount Airy, Md., who reported a 757 percent increase in traffic over last year. On the other hand, he paid out a lot in advertising for the business. "So net profit did not reflect the increased revenue. But, hopefully, we will cut back on advertising next year, now that we hooked our repeat business," he said.
Overall, few accountants can remember a busier or more rewarding tax season than 2004. It'll be one for the books.
Thursday, April 15, 2004
How NOT to Get Left Behind
CPAs put in long hours and they know it.
by Rick Telberg
for Career Insider
In this competitive economy, if CPAs aren't working more than the usual 40-hour-work week, they could get left behind.
An astounding 94 percent of CPAs in a new Career Insider study say they routinely put in more than 40 hours or more a week. Indeed, 40 percent work up to 59 hours and 14 percent work more than 60 hours per week.
And don't blame tax season. One managing partner of a local CPA firm says, not atypically, he averages "50 to 60 hours a week in non-tax-season, and from 70-to-100 hours a week during tax season."
As another managing partner griped: "Being a CPA pays pretty well, but it's not much better than working two jobs anywhere else."
And for members in industry, worldwide telecommunications has made the days even longer.
One middle manger at a relatively small company suffers through "frequent meetings in the early morning or late evening hours due to global meetings." Another commutes 2,000 miles every other week.
There are also indications that the CPA's work life is getting even tougher.
A similar study about the same time last year showed, for example, that 87 percent of participants were working more than 40 hours a week, a full 7 percentage points lower than this year.
This year's study also shows that 78 percent of participants spend time working out of the office or "off-the-clock," i.e.: working at home, commuting, or otherwise away from the primary workplace. Almost one in five, or 19 percent, work more than 10 hours on their own time.
When asked, "How often do you work on evenings, weekends or holidays?" fully three in four, or 75 percent sacrifice scheduled time-off on a regular basis. Some 38 percent do it "frequently" and 27 percent do it "sometimes."
Four in five, or 79 percent, for instance, say they work "somewhat" or "much" more than their colleagues. Last year, when the same question was asked, 11 percent fewer, or 68 percent, held that viewpoint.
CPAs know all too well how hard they work and they don't have to be reminded.
CPAs put in long hours and they know it.
by Rick Telberg
for Career Insider
In this competitive economy, if CPAs aren't working more than the usual 40-hour-work week, they could get left behind.
An astounding 94 percent of CPAs in a new Career Insider study say they routinely put in more than 40 hours or more a week. Indeed, 40 percent work up to 59 hours and 14 percent work more than 60 hours per week.
And don't blame tax season. One managing partner of a local CPA firm says, not atypically, he averages "50 to 60 hours a week in non-tax-season, and from 70-to-100 hours a week during tax season."
As another managing partner griped: "Being a CPA pays pretty well, but it's not much better than working two jobs anywhere else."
And for members in industry, worldwide telecommunications has made the days even longer.
One middle manger at a relatively small company suffers through "frequent meetings in the early morning or late evening hours due to global meetings." Another commutes 2,000 miles every other week.
There are also indications that the CPA's work life is getting even tougher.
A similar study about the same time last year showed, for example, that 87 percent of participants were working more than 40 hours a week, a full 7 percentage points lower than this year.
This year's study also shows that 78 percent of participants spend time working out of the office or "off-the-clock," i.e.: working at home, commuting, or otherwise away from the primary workplace. Almost one in five, or 19 percent, work more than 10 hours on their own time.
When asked, "How often do you work on evenings, weekends or holidays?" fully three in four, or 75 percent sacrifice scheduled time-off on a regular basis. Some 38 percent do it "frequently" and 27 percent do it "sometimes."
Four in five, or 79 percent, for instance, say they work "somewhat" or "much" more than their colleagues. Last year, when the same question was asked, 11 percent fewer, or 68 percent, held that viewpoint.
CPAs know all too well how hard they work and they don't have to be reminded.
Tuesday, April 13, 2004
The Price of Public Service
SEC chief accountant takes big pay cut
Donald Nicolaisen earned $3.1 million in his last 21 months at PricewaterhouseCoopers LLP, taking a 90 percent pay cut to become the U.S. Securities and Exchange Commission's chief accountant. Nicolaisen, 59, is paid about $180,000 a year to be the SEC's top accountant. That puts his monthly SEC salary at $15,000 compared with a $148,000 monthly average when he was at PWC.
SEC chief accountant takes big pay cut
Donald Nicolaisen earned $3.1 million in his last 21 months at PricewaterhouseCoopers LLP, taking a 90 percent pay cut to become the U.S. Securities and Exchange Commission's chief accountant. Nicolaisen, 59, is paid about $180,000 a year to be the SEC's top accountant. That puts his monthly SEC salary at $15,000 compared with a $148,000 monthly average when he was at PWC.
Friday, April 09, 2004
Tax Season Nears End: How Was It For You?
It may have been one of the smoothest in memory, but what will it mean at the voting polls in November?
by Rick Telberg
At Large for the AICPA
The countdown to April 15 enters its final hours this week.
From all indications, it may turnout to be one of the smoothest seasons in memory.
At last glance, electronic filing remained at record levels. The IRS reported more than 45.8 million tax returns were submitted through e-file through March 26, a 12 percent increase from last year.
"To avoid last-minute tax headaches, we urge people to use e-file," said IRS Commissioner Mark W. Everson. "E-filing is the fastest, easiest way to do taxes. There are fewer errors, and taxpayers get their refunds in less than half the time of paper returns."
Through March 26, e-filing continued to show strong growth in several areas:
-- e computer filers submitted nearly 10.5 million returns, an increase of 22.9 percent from last year.
-- professionals filed more than 32.2 million returns electronically, a 10.9 percent increase from last year.
-- Free File program topped 2.6 million returns, a 24 percent increase from last year.
The growth in e-filing continued as the IRS entered the busiest part of the filing season. Nearly one-third of all taxpayers file returns in the final weeks before the April 15 tax deadline.
The major controversies of the season centered around (1) questionable, possible even criminal, tax-shelter scams, and (2) offshoring, which became an election-year issue. Both, in the final analysis, will turn out to be non-issues. Tax scams come and go and offshoring is hardly different than the old days of working with outside service bureaus, but on a global scale.
The biggest headache for tax professionals may have been the dividend tax cut. CPA Bill Lazor in Kingston, Pa., reportedly went through three 1099's before giving up and putting his client on extension. The problem stems from brokerages which fell behind in reprogramming their computers. It was taking them three to five tries to get it right.
"There's a lot of people tearing their hair out," said Tom Ochsenschlager, the AICPA's new vice president in charge of tax issues told a reporter.
The top questions from taxpayers for the season come from Fiducial, one of the top ten largest accounting chains in the nation.
How many of these did you get...?
1. Whether to opt out of bonus depreciation for new property purchases;
2. Who must file amended returns for reporting dividend income;
3. Who should claim education tax credits - the parent or child;
4. Who must pay the Alternative Minimum Tax; and
5. How to maximize losses on the sale of securities.
But the lasting result of this tax season may be its effect on the presidential race. The Washington Post reports refunds "are turning out to be substantially below lofty predictions."
Through March 26, the average refund sent to nearly 63 million taxpayers was up just 7.1 percent over the same time a year ago. Although the Treasury Department says the final number may be higher, it still is a long way from the 20 percent to 25 percent increase some private forecasters had expected.
It's also lower than the average 8 percent annual gains of the last five years. This year's average refund, $2,113, is up just $140 from last year's comparable figure.
"The unexpectedly small refunds could have widespread ramifications -- not only for family budgets but for the 2004 presidential campaign," said the Post.
This season's federal tax refunds had been expected to give President Bush one last economic push from his three consecutive tax cuts; but, the Post said, last year's predictions of a $30 billion-plus refund stimulus appear to have been too bullish.
Comments? Pass along your rants, raves, ideas, or suggestions here.
It may have been one of the smoothest in memory, but what will it mean at the voting polls in November?
by Rick Telberg
At Large for the AICPA
The countdown to April 15 enters its final hours this week.
From all indications, it may turnout to be one of the smoothest seasons in memory.
At last glance, electronic filing remained at record levels. The IRS reported more than 45.8 million tax returns were submitted through e-file through March 26, a 12 percent increase from last year.
"To avoid last-minute tax headaches, we urge people to use e-file," said IRS Commissioner Mark W. Everson. "E-filing is the fastest, easiest way to do taxes. There are fewer errors, and taxpayers get their refunds in less than half the time of paper returns."
Through March 26, e-filing continued to show strong growth in several areas:
-- e computer filers submitted nearly 10.5 million returns, an increase of 22.9 percent from last year.
-- professionals filed more than 32.2 million returns electronically, a 10.9 percent increase from last year.
-- Free File program topped 2.6 million returns, a 24 percent increase from last year.
The growth in e-filing continued as the IRS entered the busiest part of the filing season. Nearly one-third of all taxpayers file returns in the final weeks before the April 15 tax deadline.
The major controversies of the season centered around (1) questionable, possible even criminal, tax-shelter scams, and (2) offshoring, which became an election-year issue. Both, in the final analysis, will turn out to be non-issues. Tax scams come and go and offshoring is hardly different than the old days of working with outside service bureaus, but on a global scale.
The biggest headache for tax professionals may have been the dividend tax cut. CPA Bill Lazor in Kingston, Pa., reportedly went through three 1099's before giving up and putting his client on extension. The problem stems from brokerages which fell behind in reprogramming their computers. It was taking them three to five tries to get it right.
"There's a lot of people tearing their hair out," said Tom Ochsenschlager, the AICPA's new vice president in charge of tax issues told a reporter.
The top questions from taxpayers for the season come from Fiducial, one of the top ten largest accounting chains in the nation.
How many of these did you get...?
1. Whether to opt out of bonus depreciation for new property purchases;
2. Who must file amended returns for reporting dividend income;
3. Who should claim education tax credits - the parent or child;
4. Who must pay the Alternative Minimum Tax; and
5. How to maximize losses on the sale of securities.
But the lasting result of this tax season may be its effect on the presidential race. The Washington Post reports refunds "are turning out to be substantially below lofty predictions."
Through March 26, the average refund sent to nearly 63 million taxpayers was up just 7.1 percent over the same time a year ago. Although the Treasury Department says the final number may be higher, it still is a long way from the 20 percent to 25 percent increase some private forecasters had expected.
It's also lower than the average 8 percent annual gains of the last five years. This year's average refund, $2,113, is up just $140 from last year's comparable figure.
"The unexpectedly small refunds could have widespread ramifications -- not only for family budgets but for the 2004 presidential campaign," said the Post.
This season's federal tax refunds had been expected to give President Bush one last economic push from his three consecutive tax cuts; but, the Post said, last year's predictions of a $30 billion-plus refund stimulus appear to have been too bullish.
Comments? Pass along your rants, raves, ideas, or suggestions here.
Friday, April 02, 2004
SOX Whistleblower Gets CPA Support
CPAs rally 'round CFO who was fired for raising accounting issues in first test of Sarbanes-Oxley powers.
Rick Telberg/At Large
for the AICPA Insider
CPA David Welch may not have realized he had so many friends in the profession.
But after we reported here that the bank that sacked Welch was ordered by a judge to reinstate him with back pay, interest and legal costs, CPAs from across the nation responded with messages of support and encouragement.
The Welch case may be the first test of the whistleblower provisions of the Sarbanes-Oxley Act.
'This is a great case because it goes to the heart of whistleblowing and why such laws need to be applied to professionals, like accountants and attorneys,' acceding to Art Berkowitz of Orange County, Calif. 'If there is anything we have learned from the corporate scandals, it is that there have usually been people at the companies who knew something improper was going on, but were unable to do anything about it.'
Welch v. Floyd involves the tiny Bank of Floyd in the farming community of Floyd, Va. The bank has barely 600 shareholders and the town has 432 residents. Of course, the final verdict isn't in; the bank's parent company, Cardinal Bancshares, is appealing, and it could take months or years for the last chapter to be written. Indeed, the bank denies all of Welch's charges.
The critical ingredient under SOX is that the case hinges not on whether Welch's allegations are correct, but on whether he "reasonably believed" that a violation of law or SEC regulations was taking place, and whether the bank had punished him for voicing those concerns.
"Sarbanes-Oxley was expressly enacted by Congress to foster the disclosure of corporate wrongdoing and to protect from retaliation those employees, officers and directors who make such disclosures," the judge wrote in his ruling.
"My hat is off to Mr. Welch," said Linda Maxwell, finance director at a Long island, N.Y., nonprofit. "It took a lot of guts to stand up for what he believed. Too often over the course of my career I witnessed board chairmen determining the earnings for a quarter and accounting departments creating journal entries to achieve the designated result. Maybe SOX will encourage CPA's to find their backbones. Until then, I remain in non-profit where the numbers are real."
"In my former employment with a multinational corporation," said one woman who asked to remain nameless, "I saw many things I questioned. I was an accounting student at the time and working as a lowly accounts receivable clerk. I too was intimidated by a superior, but I had no hope of confronting the 6-foot-2, 280-pound, blustering vice president of accounting. Now that I have a little auditing experience behind me, I know that I was correct in my analysis. I hope to see Sarbanes Oxley invoked successfully and often."
Some, like "Alan," wrote to say they too often see accounting rules bent, especially at smaller companies. "After working for a number of small private businesses, I'm no longer amazed at how many owners and managers think if no one is looking over their shoulder, then it's really o.k. to do the unethical and/or illegal. I feel for Mr. Welch. He was caught between the devil and the deep."
"Too many executives," added "John," "think they have the right to order variations from good 'proper' accounting. Maybe this occurrence in a small bank will get the attention of the larger company execs." In fact the Welch v. Floyd case is already reportedly becoming a subject of bank board meetings.
CPAs rally 'round CFO who was fired for raising accounting issues in first test of Sarbanes-Oxley powers.
Rick Telberg/At Large
for the AICPA Insider
CPA David Welch may not have realized he had so many friends in the profession.
But after we reported here that the bank that sacked Welch was ordered by a judge to reinstate him with back pay, interest and legal costs, CPAs from across the nation responded with messages of support and encouragement.
The Welch case may be the first test of the whistleblower provisions of the Sarbanes-Oxley Act.
'This is a great case because it goes to the heart of whistleblowing and why such laws need to be applied to professionals, like accountants and attorneys,' acceding to Art Berkowitz of Orange County, Calif. 'If there is anything we have learned from the corporate scandals, it is that there have usually been people at the companies who knew something improper was going on, but were unable to do anything about it.'
Welch v. Floyd involves the tiny Bank of Floyd in the farming community of Floyd, Va. The bank has barely 600 shareholders and the town has 432 residents. Of course, the final verdict isn't in; the bank's parent company, Cardinal Bancshares, is appealing, and it could take months or years for the last chapter to be written. Indeed, the bank denies all of Welch's charges.
The critical ingredient under SOX is that the case hinges not on whether Welch's allegations are correct, but on whether he "reasonably believed" that a violation of law or SEC regulations was taking place, and whether the bank had punished him for voicing those concerns.
"Sarbanes-Oxley was expressly enacted by Congress to foster the disclosure of corporate wrongdoing and to protect from retaliation those employees, officers and directors who make such disclosures," the judge wrote in his ruling.
"My hat is off to Mr. Welch," said Linda Maxwell, finance director at a Long island, N.Y., nonprofit. "It took a lot of guts to stand up for what he believed. Too often over the course of my career I witnessed board chairmen determining the earnings for a quarter and accounting departments creating journal entries to achieve the designated result. Maybe SOX will encourage CPA's to find their backbones. Until then, I remain in non-profit where the numbers are real."
"In my former employment with a multinational corporation," said one woman who asked to remain nameless, "I saw many things I questioned. I was an accounting student at the time and working as a lowly accounts receivable clerk. I too was intimidated by a superior, but I had no hope of confronting the 6-foot-2, 280-pound, blustering vice president of accounting. Now that I have a little auditing experience behind me, I know that I was correct in my analysis. I hope to see Sarbanes Oxley invoked successfully and often."
Some, like "Alan," wrote to say they too often see accounting rules bent, especially at smaller companies. "After working for a number of small private businesses, I'm no longer amazed at how many owners and managers think if no one is looking over their shoulder, then it's really o.k. to do the unethical and/or illegal. I feel for Mr. Welch. He was caught between the devil and the deep."
"Too many executives," added "John," "think they have the right to order variations from good 'proper' accounting. Maybe this occurrence in a small bank will get the attention of the larger company execs." In fact the Welch v. Floyd case is already reportedly becoming a subject of bank board meetings.
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