May « 2010 « Accounting, QuickBooks, and Taxes Written by the Barefoot Accountant

May 31, 2010

Why isn’t the Internal Revenue Code written in English? Have you read IRC Section 45R yet on the health care tax credit?

IRC Section 45d - as clear as mud Why does the Internal Revenue Code read as clear as mud? It must be deliberate. I’m not complaining, because it’s good for my business as a Certified Public Accountant. Let’s face it, if the average person could understand the tax code, why would they pay us $150/hour to do their taxes and resolve their tax issues?

But the FASBs, GASBs, APBs, SEC pronouncements, etc., don’t read any better. Leave it to attorneys and others on the FASB, AICPA, SEC, and in the Department of Treasury to muddy the waters always. Like Delphic oracles of antiquity, these supreme bodies of accounting and taxation have a reputation for issuing statements veiled in ambiguity and incomprehensibility to the uninitiated, keeping tax attorneys and certified public accountants—the high priestesses of the accounting and tax mysteries—gainfully employed. At times I feel that one has to be a biblical exegesis scholar in order to be able to interpret some of their esoteric pronouncements.

Need an example? Have you read Section 45R of the Code on the new health care tax credit enacted into law on March 23, 2010?

(a) General rule. For purposes of section 38 , in the case of an eligible small employer, the small employer health insurance credit determined under this section for any taxable year in the credit period is the amount determined under subsection (b) .
(b) Health insurance credit amount. Subject to subsection (c) , the amount determined under this subsection with respect to any eligible small employer is equal to 50 percent (35 percent in the case of a tax-exempt eligible small employer) of the lesser
of—
(1) the aggregate amount of nonelective contributions the employer made on behalf of its employees during the taxable year under the arrangement described in subsection (d)(4) for premiums for qualified health plans offered by the employer to its employees through an Exchange, or
(2) the aggregate amount of nonelective contributions which the employer would have made during the taxable year under the arrangement if each employee taken into account under paragraph (1) had enrolled in a qualified health plan which had a premium equal to the average premium (as determined by the Secretary of Health and Human Services) for the small group market in the
rating area in which the employee enrolls for coverage.
(c) Phaseout of credit amount based on number of employees and average wages. The amount of the credit determined under subsection (b) without regard to this subsection shall be reduced (but not below zero) by the sum of the following amounts:
(1) Such amount multiplied by a fraction the numerator of which is the total number of full-time equivalent employees of the employer in excess of 10 and the denominator of which is 15.
(2) Such amount multiplied by a fraction the numerator of which is the average annual wages of the employer in excess of the dollar amount in effect under subsection (d)(3)(B) and the denominator of which is such dollar amount.

Don’t you just love it when these pronouncements fail to complete a thought without referring the reader to another section (or subsection, or sub-subsection) to understand what it is saying? First the reader is informed that the credit is the amount determined under subsection (b). Then in (b), the reader discovers that it is subject to subsection (c). And then in (c), it is referred to subsection (d)(3)(B). I feel as a reader that I can never catch up to what the pronouncement is attempting to say. Perhaps it would make more sense by reading the Code from the end of the particular Section and working one’s way backwards.

My mother used to scold me in this fashion, always reprimanding me while referring to an earlier incident, and to another one before that one, and the one before the one before the earlier incident, and so on, until I had no idea why she was scolding me in the first place! Don’t you just hate that?!

Incidentally, for anyone interested in understanding Section 45R on the health care tax credit—which is why I ruined my Memorial Day weekend in the first place—please see my article, How to Calculate the Health Care Tax Credit, so you don’t ruin your Memorial Day weekend, too.

This article is provided for informational purposes and is not intended to be construed as legal, accounting, or other professional advice. For further information, please consult appropriate professional advice from your attorney and certified public accountant.

Have a tax or an accounting question? Please feel free to submit it under “Comments” at Accounting, QuickBooks, and Taxes by the Barefoot Accountant. For information and assistance on any tax and accounting issue, please visit our website: Accountants CPA Hartford, LLC.

If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose. The above tax advice was written to support the promotion or marketing of the accounting practice of the publisher and any transaction described herein. The taxpayer recipients of this offering memorandum should seek tax advice based on their particular circumstances from an independent tax advisor.

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May 26, 2010

Ann “Curvy” Curry should have eaten her wheaties before delivering a commencement address at Wheaton College

Filed under: Accountants CPA Hartford, Articles — Tags: Ann Curry Wheaton College — William Brighenti @ 11:25 am

Ann “Curvy” Curry may have been “wearing a very fabulous blue and white outfit” underneath her robe, as she mentioned in her commencement address at Wheaton College the other day, but one can only wonder what was underneath her graduation cap.

As you all must know by now, in her commencement address to more than 400 graduates of Wheaton College in Norton, Massachusetts, in a feeble attempt to connect with the graduating students, she mentioned famous alumni of Wheaton College, including Billy Graham, Wes Craven, Todd Beamer, and Dennis Hastert. Oh, Oh, Ann. Oops, major faux pas! ”Holy Crap!”, as Frank Barrone would say. None of these gentlemen graduated nor even attended that College. They attended the private Evangelical Protestant, coeducational, liberal arts college in Wheaton, Illinois, also named Wheaton College. Would someone please show Annie how to google! Has she been hanging out with Sarah Palin?

What should have been so obvious about her gaffe, making it even more embarrassing, was that when Graham and Hastert were students, Wheaton College was strictly a female college. Oh boy! She not only confused the two colleges, but apparently she may not even have known that Wheaton College had been a leading college for women and only became co-educational in 1988. Is it conceivable that the female recipient of an honorary doctorate from Wheaton, a leading woman in journalism, was oblivious to these facts before making a commencement address to this very prestigious College, formerly regarded as one of the top liberal arts colleges for women?! Maybe Annie should have paid more attention to the content of her speech and less to that fabulous blue and white outfit underneath her robe. Did I mention that her eyeliner and makeup were flawless at the commencement?

What makes this incident funnier is that Annie gave an almost identical commencement speech a week before in Providence, Rhode Island, where she was awarded yet another honorary degree for her success in journalism, using the same mommie-dearest jokes, etc.; here, however, she did have enough smarts not to confuse this college with Wheaton, appropriately substituting the name “Providence” for “Wheaton” in perfect mail merge synchronicity, and instead of wearing a blue and white outfit underneath her robe, she wore a black and white dress underneath her gown in stylish color coordination to the school’s colors. Always the woman of Vogue! Did I mention that her eyeliner and makeup were flawless at this commencement as well?

Equally as amusing as Annie’s gaffe was the fact that all of the graduates appeared oblivious to her faux pas: there was not an “ah” or “oops” or “snicker” audible after her litany of the Illinois college alumni. One can only wonder if they had all sobered up for commencement?! So much for the $200,000 price tag for a college education at Wheaton.

Finally, crescendoing this entire commencement address into a hilarious farce was Wheaton College’s subsequent attempt of a Curry-Gate cover up, editing the video and text of Annie’s commencement address by removing the gaffe and scrubbing it off the internet (it can be found, by the way, at http://www1.whdh.com/video/player/?clipId=4809762). Now let me ask you, is that intellectual honesty? Is that journalism at its best, reporting what truthfully occurred, after awarding this television icon in journalism an honorary doctorate for her achievements in that field? LOL! The irony is precious. I couldn’t make this stuff up! I would have awarded her an honorary doctorate in flawless eyeliner and makeup techniques, for sure.

NBC hired an attractive, very leggy news woman, currently paying her a reported $3,000,000 per year salary. I’m fat and balding, and AccountingWEB doesn’t pay me a shekel. Maybe if I had her legs…?

I did enjoy her speech, though. There were memorable phrases as, “The key is to be ready”….yeah, Ann, as you were the other day!

And let us not forget the unforgettable boast, bursting with bravado: “And to everyone who says to you along the way that you cannot do something…, the thing you should have in your mind is, ‘Oh, yeah? Watch me.’” We watched you, Ann. And you sure did it!

I also relish these lines: “More than luck, talent, or even brainpower, determination is the trait…And the best part is that unlike talent and luck and brainpower, determination is what you can choose to have.” But doesn’t brainpower help, Ann. It certainly would have helped you the other day. You quoted your mother as saying, ”college is stupid”. No, Annie, college is not stupid; people are stupid. Hello?

And last but not least, here are lines that I will take with me to my grave: “To you I say, it is only with adversity that we even have a chance at greatness. Adversity is your opportunity.” Did you mean “controversy” here instead of “adversity”, Annie? They do sound similar, and they rhyme! Hmmm. Perhaps Wheaton edited this line, too.

And if, as you claim, Annie, “adversity is your opportunity”, you certainly have plenty of opportunities ahead. Perhaps you could return to being a cocktail waitress? Or marry a rich guy, as your mother advised you. You do have great legs, Ann. (As if we haven’t noticed by now, Annie.)

If you really want to turn all of this adversity about Wheaton into an opportunity, here’s a suggestion (better do it before Tina Fey beats you to it!): call up your sister show, SNL – Saturday Night Live, appear on the show as Ann Curvy Curry, wear a micro mini, or–better yet–a fabulous blue and white outfit purchased at Victoria’s Secret, apply the “racoonish” eyeliner your mommie accused you of wearing, and give the commencement speech all over again, but this time include, among its famous alumni, Alvin and the Chipmunks, and Rin Tin Tin….Please don’t be mortified….I screw up everyday, Annie. But I just laugh it off. It’s all about recognizing that we are only human, not gods and goddesses, Annie.

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May 16, 2010

How to Stand Out from the Herd of Other CPAs: Are You a Ram Ahead of the Herd or a Ewe Behind?

Filed under: Accountants CPA Hartford — Tags: How to Stand Out from the Herd of Other Chartered Accountants: Are You a Ram Ahead of the Herd or a Ewe Behind?, how to stand out from the herd of other CPAs, marketing cpa firm — William Brighenti @ 10:11 pm

Do you ever wonder why clients are not beating down your doors for your accounting, auditing, and tax services? Have you even tried lowering your fees with little, if any, success? Perhaps you need to develop a new marketing plan, assuming you ever had one in the first place, like most CPAs.

We accountants are good at bean counting but, quite frankly, we are deplorable when it comes to marketing. Marketing is the most critical function of any public accounting firm. You can be the most astute tax accountant in the entire Milky Way, but unless you develop a significant client base, you’ll be closing your doors and returning to work as a grunt slave for another public accounting firm before you can say, “Bialystock & Bloom”.

Many partners who are convivial and born raconteurs, who have a great sense of humor, and who love to guzzle and gobble, ironically dread wining and dining potential clients even though such entertainment is tax deductible. Go figure. They prefer crunching the numbers and banging out the tax returns and the financials. Does our aversion to marketing stem from all of those detestable case studies we were obligated to write in those required marketing courses that we struggled through in college? Or does it originate from our myopic belief that marketing is essentially selling, which we equate erroneously to bsing. We all know that accountants hate bsing. Accountants prefer dealing in the Platonic realm of numbers: that is, we are more comfortable with facts—dollars and cents—than words or talk.

But for a moment let’s be real: individuals who enjoy numbers are as common as the Javan rhino. Most people hate working with numbers and would rather undergo the primitive puberty rites of Mandan hook hanging than crunch numbers all day. It’s sad, but we accountants are an unappreciative lot, only sought after when every shekel in our client’s bank account has been seized by the IRS and the worse is yet to come, looming on the horizon. Consequently, we are associated with lots of negative imagery; feelings of pain, panic, and angst; and thoughts of revenge, murder, and suicide; and it is quite understandable that we are not as liked or appreciated as much as physicians, teachers, or chefs. Let’s face it, we’ll never live to see the day when there’s a cable show featuring “Iron Accountants”, where three accountants square off and duel an up-and-coming guest accountant specializing in trust taxation. Who would sponsor such a show? Better yet, who in their right mind would watch it?

Is there anything that we as public accountants can do to change the negative and distasteful impression that the entire population on our planet has about us in general? Quite frankly, yes; however, it will require drastic action on the part of a public accounting firm to stand out and define itself apart from the herd of sheepish certified public accountants and establish a uniquely positive identity and persona. And it will require a bold marketing strategy. And here are some ideas to get you started today!

For instance, why do accountants insist on dressing like morticians? Doesn’t that suggest something grave in and of itself? We have not come to bury Caesar but merely to render to Caesar what is Caesar’s. So doff the grim reaper attire for something more gay and delightful!

We all know that accounting is an ancient language, as dead as latin, but why make it even deadlier than it need be. Perhaps we could attach dignity to the profession of accounting by sporting attire associating, if not even capitalizing on, its origins in antiquity: for instance, perhaps instead of having your accounting staff dressing in conventional suits, they could instead wear Roman togas! Why not! Think how fetching some of your new male and female recruits would appear dressed (er, undressed, depending on how you look at it…a glass half empty or half filled) in Roman togas, and how regal and august the partners would look, topped off with laurel leaf crowns. Such classical garb would add just the right touch of class to your firm. Needless to say, this clothing would certainly set you apart from all of those other drearily dressed certified public accountants whose attire would be better suited for characters in an Edgar Allan Poe poem for evermore. And on up-and-coming female staff members, those togas might lead to a surge in your services, particularly among your contractor clients. However, it may be advisable to increase your policy coverage on sexual harassment insurance; please contact your insurance agent for details.

And instead of publishing the same old looking audit, review, and compilation reports that every other certified public accountant publishes, why not print your report—representing the fruits of all of your labors—in a new, novel, different, unique, eye-catching format: for example, why not print them on parchment in latin! That would certainly capture the attention of the readers. Can you imagine the reaction of your client opening up the financial statements and seeing your audit report reading as follows:

Tabula of Presul, Proprietas , quod / vel Procuratio
Roman Res publica
I Pelagus Via
Rome , Romanorum Empire

Nos have celebratio accompanying pondera ovis of Romanorum Res publica ( “Republic” ) ut of December XXXI, MMX, quod commemoro editio of reditus retained earnings , quod cash flows pro annus tunc nisus. Illa financial editio es officium of Res publica procuratio.

Nostrum officium est ut effor an sententia in illa financial editio substructio in nostrum audit.We se gero nostrum celebratio in conveniens per auditing vexillum universe recipero in Romanorum Empire. Illud vexillum postulo ut nos intentio quod tractare celebratio usurpo oportet fides super utrum financial editio es solvo of materia misstatement. An celebratio comprehendo probatur , in a expertus basis , testimonium suscipio amounts quod disclosures in financial editio. An celebratio quoque comprehendo censeo ratio potissimus adsuesco assuesco quod significant censeo no per procuratio , pariter ut censeo super financial editio presentation.

Nos puto ut nostrum celebratio suggero a oportet basis pro nostrum sententia nostrum sententia , financial editio relatum ut supremus tendo iuste , in totus materia veneratio , financial positus of Res publica ut of December XXXI, MMX, quod praecessi of suus operations quod suus cash flows pro annus tunc nisus in conveniens per ratio potissimus universe recipero in Romanorum Empire.

Guido, Meretricis, et Mafooch
Licentia Publicus Occurro

I bet he or she would do more than give it a cursory glance. In fact, they may even attempt to read it for a change. And if they request a translation, you can charge them extra for that service.

Does FASB prohibit your audit, review, or compilation reports in latin on parchment? Of course not. Neither the pronouncements of the AICPA nor those of FASB prohibit such a classical rendition to your financial reporting. Grant you, these are bold marketing techniques, but they are guaranteed to set your firm apart from all other firms and to have people banging down your doors.

Here’s another novel idea that might be especially appealing during tax season for you to consider. Since you are living in the electronic age of laptops, cell phones, and wireless internet, if you are located in a temperate climate, why not consider hosting your office in a sensuously appealing environment instead of on the conventional 26th floor of a high rise building or in that stuffy, damp home office, which was previously your garage? For instance, why not have an office largely outdoors, with your staff basking in sunlight and cultivating a healthy and invigorating tan, surrounded by landscape grounds, fountains, palm trees, or in a thatched-roof hut at the end of a wooden pier extending out into the ocean. Think of the savings on electricity and utilities alone. And your clients and staff would certainly appreciate its decor, particularly your clients in the fishing, ranching, landscaping, farming, and veterinary industries. Of course, togas could still be worn; however, bikinis and wetsuits would even be more appealing to your clientele, particularly your contractor clients. Imagine allowing your clients the luxury of a bit of fishing, snorkeling, scuba diving, and kitesurfing, followed by a slew of pina coladas before getting down to business and presenting them with your nice, exorbitant tab.

Or perhaps you could open an office in a casino complex, where many of your clients spend their leisure time anyway. You could stylishly accent your office with slot machines, roulette wheels, and blackjack tables, and your staff could don the conventional and attractive attire of a blackjack dealer or a roulette wheeler. Imagine the fun. And let us not overlook the many, many possible benefits of wheeling and dealing in a gambling casino: if your clients hit the jackpot on route to an office visit to you, think how more likely it would be for you to collect on all of those receivables that they have owed you over the years but have been reluctant and unable to settle up with you on. Contrary to what one is led to believe from the writings of Aristotle, Plato, and Arthur Andersen, people are much more likely to find their wallet for entertainment than for tax liabilities and related tax services.

The possibilities are endless, awaiting the imaginative entrepreneur to seize the opportunity to distinguish oneself from the rest of the sheepish herd. Let’s face it: we certified public accountants all do the same old thing day after day after day…we audit, review, compile, prepare tax returns, and add, and foot, and cross-foot, and vouch and tick and cross tick. For you to distinguish yourself from the other bean counters you must create a unique image, labeling yourself as truly distinctive, different, and likeable. If you truly want clients beating down your public accounting doors, try appealing to their senses, their humanity, their depravity. You have everything to gain and nothing to lose. Go for it before your competitors do. And besides, your staff will love you for it, since they probably feel as negatively about you as your clients presently do.

And in the immortal words of John “Bluto” Blutarsky….

Toga! Toga!! TOGA!!!

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May 7, 2010

Monty Python on Auditors, Accountants, and Embezzlement

Filed under: Accountants CPA Hartford — Tags: Monty Python on Certified Public Accountants and Auditors — William Brighenti @ 8:08 pm

If you love John Cleese, Michael Palin, and the rest of the gang from Monty Python as I do, and you are a Certified Public Accountant, Chartered Accountant, auditor, controller, accounting manager, or bookkeeper, then you will love this video and especially appreciate the amusing exchanges between the board of directors, which includes a member of the clergy, no less. LOL! In case you have difficulty understanding “British”, I include the script below:

(A small board meeting. An Accountant stands up and reads…)
Accountant: Lady Chairman, sir, shareholders, ladies and gentlemen. I have great pleasure in announcing that owing to a cutback on surplus expenditure of twelve million Canadian dollars, plus a refund of seven and a half million Deutschmarks from the Swiss branch, and in addition adding the debenture preference stock of the three and three quarter million to the directors’ reserve currency account of seven and a half million, plus an upward expenditure margin of eleven and a half thousand lira, due to a rise in capital investment of ten million pounds, this firm last year made a complete profit of a shilling.

Chairman: A shilling Wilkins?

Accountant: Er, roughly, yes sir.

Chairman: Wilkins, I am the Chairman of a multi-million pound corporation and you are a very new chartered Accountant. Isn’t it possible there may have been some mistake?

Accountant: Well that’s very kind of you sir, but I don’t think I’m ready to be Chairman yet.

Board Member: Wilkins, Wilkins. This shilling, is it net or gross?

Accountant: It’s British sir.

Chairman: Yes, has tax been paid on it?

Accountant: Yes, this is after tax. Owing to the rigorous bite of the income tax five pence of a further sixpence was swallowed up in tax.

Board Member: Five pence of a further sixpence?

Accountant: (eagerly) Yes sir.

Chairman: Five pence of a further sixpence?

Accountant: That’s right sir.

Chairman: Then where is the other penny?

Accountant: … Er.

Board Member: That makes you a penny short Wilkins. Where is it?

Accountant: … Erm.

Chairman: Wilkins?

Accountant: (in tears) I embezzled it sir.

Chairman: What all of it?

Accountant: Yes all of it.

Board Member: You naughty person.

Accountant: It’s my first. Please be gentle with me.

Chairman: I’m afraid it’s my unpleasant duty to inform you that you’re fired.

Accountant: Oh please, please.

Chairman: No, out!

Accountant: (crying) Oh … (he leaves)

Chairman: Yes, there’s no place for sentiment in big business.

I love it! But do we CPAs understand the British math here? Recall the English coinage system from the days of public accounting before the American Revolution:

Crown=5 pounds
20 shillings/pound
12 pence/shilling
6 pence=1/40th of a pound
5 pence=shilling
penny=1/100th of a pound

What makes this somewhat confusing is that a 5 pence was for a time equal in value to a shilling, even though a shilling was worth 12 pence and a penny is not equivalent to a pence. Leave it to the English to make coinage more complicated than it need be, even though they have been known to write simple songs and nursery rhymes, as “Sing a Song of Sixpence”. Imagine sitting for the CPA exam where all the questions are stated in English coinage.

Monty Python spoofs to the nth degree of absurdity the obsessive compulsiveness of accountants to detail, of which we as public accountants are so often guilty, in addition to everything else in life. What is so delightful about their sketches is that nothing is sacred from their satire. (Do you remember “The Life of Brian”?) So for at least one nano second of your life, be a free spirit, lighten up, laugh at yourself, and remove those myopic glasses that we customarily wear in order to see the forest from the trees! And for God’s sake never steal pennies! If you must be a crook and are determined to steal from your clients, company, family members, or the not-for-profit organization for which you serve as treasurer, then for heaven’s sake, don’t be a moron on top of being a scoundrel….Make it worth your while and steal big!

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May 3, 2010

Do you remember the accounting days of old?

Filed under: Accountants CPA Hartford, Articles — Tags: accounting days of old, do you remember the accounting days of old, history of public accounting — William Brighenti @ 6:00 am

I started my career in public accounting in the 1970s. Our profession then was virtually non-electronic. I can remember paying $300 for my first pocket calculator, which today would sell for $1.

One-write systems were the norm. QuickBooks had not yet been born. Not too many of our clients utilized the NCR 4400 workhorse, capable of producing a so-called “trial balance”. Seventeen column worksheets were used to summarize cash disbursements and cash receipts in order to compile an adjusted trial balance. There was endless footing and cross-footing to arrive at correct totals. We cranked out numbers all day long.

In the late 70s we witnessed major innovations in electronic equipment for accountants. Texas Instruments introduced the TI-58 and TI-59, allowing us to program calculations on a hand-held calculator. The TI-58 sold for ~$100; the TI-59 sold for ~$200. For the life of me, I cannot recall the difference between the two except for the price. I was gooney enough to part with the $100 for the TI-58. At about the same time appeared Tandy’s Z-80 computer, featuring a RAM of 4k for the ~$800 model, and 12k for the ~$1,200 model, utilizing a small casette recorder for storing written programs and data. Of course, you had to write programs in Basic to have the computer process anything at all. Back in the 1970s, many of us were required to take classes in Basic, Fortran, and COBOL in anticipation of the emergence of computer processing in the small business environment. Needless to say, that was a waste of time and money.

Then in the 1980s appeared the IBM-PCs and clones, selling for between $3,000 to $5,500, offering wordprocessing and spreadsheet applications, including Lotus and WordPerfect. Cut-and-pasting, thank God, was virtually eliminated by these innovations. Prior to their advent, all financials were typed. Drafts for the current year were prepared by penciling in the changes on copies of last year’s financials. White, sticky, adhesive, rolled strips were typically used to make final revisions on the typed financials after proofing in order to avoid endless re-typings of entire pages. For major changes, an amended paragraph or section of a footnote or a table was typed on a clean sheet, cut out, and then superimposed with transparent tape over the applicable section of the modified page, after which a “xerox” was made, producing a nearly perfect result: hence, the term, cut-and-paste. Since Xerox was the predominant maker of copiers for small businesses back then, we substituted the term “xerox” for a copy produced by a copier.

We still, however, processed all tax returns manually, computing all tax return schedules and worksheets in pencil, then “xeroxing” our finished work for submission to the tax authorities. Other tax accountants used an outside computer processing service to generate the finished tax returns; however, that was a luxury many small practitioners could not afford.

Soon we all learned DOS (“Disk Operating System”), and read every book ever written by Peter Norton, trying to master its commands. I lost track after DOS 5 or DOS 6 of the number of sequential versions of DOS. In any event, Windows ultimately followed, changing the landscape of the accounting office entirely and ushering in the present generation of computers and users.

It is my understanding that women were not allowed in the Big Eight public accounting world prior to the 1960s; and that certain nationalities, races, and creeds (including Italians) were not employed by them until the 1950s, if not later. I was informed by my professors that phone books had been distributed to them when they were students of accounting in order to hone their skills in adding long columns of numbers since portable calculators were non-existent.

A lot has changed over my lifetime in accounting. I welcome, embrace, and love the technology. But I respect those old timers in accounting. They did it all without Excel, Word, QuickBooks, ProSeries, Lacerte, ProSystems, etc. And they did it very well, indeed. For instance, I worked for a gentleman named James Q. Rice (the “Q” standing for Quackenbush) of Rhodes, Rice and Company, on Lewis Street in Hartford, Connecticut. Lewis Street was the original financial center in Hartford, Connecticut back in the early 1800s. In one building where I had worked on Lewis Street, there was still a glass roof, where the “scribes” worked under natural sunlight, there being, of course, no electric lighting then. I couldn’t imagine working under sunlight from glass above, no less without air conditioning.

Jim Rice was a perfect gentleman, sporting a bow tie to work everyday. He was very kind and respectful to all members of his staff. I shall always remember him smiling with a twinkle in his eye, making accounting as fun as it could be. Jim taught me how to audit, prepare tax returns, compile and review financial statements, and conduct industry analyses for our many small business clients using annual comparatives from Robert Morris Associates. At the end of each review or audit, Jim had me sitting down with the many owners of these businesses, comparing the results of their operations with those of their competitors in the same industry. They all appreciated this service; it was a fantastic marketing tool. Those old time, New England Yankees were always sharp businessmen!

Jim was an avid sailor; in fact, during World War II, he served on a large wooden sailboat in the Coast Guard, patrolling the New England coastline, where he would often hear German submarines going directly underneath his boat. His first love, I suspect, was not accounting but sailing; and his maritime stories filled many a boring, number-crunching afternoon with adventures I only had read about in Melville novels as a youth. Naturally, our accounting firm had an auxilliary office down by the shore in Essex, Connecticut, an old sailing town retaining its Federal era architecture. Every year I had the honor of sending receivable confirmations to noted celebrities belonging to the Essex Yacht Club. What a thrill it was addressing the confirms and receiving replies to and from an assortment of famous people.

I owe much to Jim, and I thank him heartily. I also wish to thank Jim’s two children–Jamie and Prudence–for sending me the above photograph of Jim, taken a number of years after his retirement from public accounting. Jim’s wife, Norma, worked in the office alongside of him as the office manager and was an invaluable member of the firm.

When I became a public accountant, there were three vacancies for every applicant. Consequently, our beginning salaries were twice that of teachers. So I left academia to rake in the shekels. Alas, what a fool I was. I could have spent my forty years drawing Cartesian planes on chalk-dust blackboards to half-asleep high school students, working 183 days per year, leaving tire marks in the parking lot at 2:30 PM every afternoon, while earning a livable salary of $80,000 plus (in today’s dollars) and generous benefits, including the best full medical insurance plan for an entire family, and days off for every possible holiday, and then some.

I guess I am now an old timer, too. And it is almost time for me to pass the baton onto the next generation. But I sometimes wonder what future our country holds for our accounting youth. Will much of our tax and public accounting work be outsourced to India, China, or the Philippines with remote access, VPN, webconference rooms, Skype, computer imaging and processing, and the like? Will there be another breakthrough in technology further reducing the need for human involvement in accounting or, at least, changing the nature of its involvement? But, perhaps, you are in a better position to answer these questions than I am, since you are the present and the future in accounting and I, the past.

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May 2, 2010

Is the IRS Today’s Mafia? The Confessions of a Consigliere to Goombas

Filed under: Accountants CPA Hartford, Articles — Tags: Consigliere to Goombas, IRS Mafia, is the irs today's mafia — William Brighenti @ 3:22 pm

Is the IRS Today’s Mafia?

The IRS has many similarities to the Mafia:

1. Though they are rarely seen in public, they are everywhere.
2. If you try to hide something from them, they will find it.
3. If you lie to them, you will regret it.
4. If you do not pay them, you will pay dearly.
5. If you do not play by their rules, you will lose everything.
6. If you fight them, you will lose.
7. If you run from them, they will find you.
8. When they catch you, make a good act of contrition because the consequences are deadly.

Recall the fates of Al Capone and Luca Brasi.

You do not want to insult either the IRS or the Mafia, unless you have a death wish and require the thrill of living on the edge for excitement in an otherwise dreary life. Consequently, when making an offer in compromise or partial payment installment agreement with the IRS, first do the math to determine the reasonable collection potential substantiating your offer. Don’t just low ball any amount. About 90% of the offers in compromise are rejected because the offers are simply ridiculous, lacking any credibility. And you know what happens to those who insult the Don: they are found hanging on a meat hook in some remote, abandoned warehouse or enshrined in concrete in some bridge abutment. Neither is a very pleasant prospect.

In addition, when dealing with the Mafooch, bear in mind that offers in compromise consisting of a lump sum payment of cash ordinarily require an upfront, 20% payment of the offer in addition to the $150 processing fee along with the submission of the offer. Similarly, an offer in compromise consisting of monthly installment payments require the first month’s installment payment plus the $150 processing fee along with the submission of the offer. Moreover, although it often takes two years to receive an acceptance of the offer, the taxpayer is, nevertheless, required to continue the proposed monthly payments of the pending installment settlement to keep the offer open. Of course, under either scenario, neither the 20% cash lump sum payment or the two years of monthly installment payments, nor the $150 processing fee, are refundable in the event that the offer is rejected. The IRS adopts a very hard bargaining posture with the offerers, not unlike that of Don Corleone with his business associates.

When considered altogether—a 10% acceptance history, a two year waiting period, a 20% non-refundable down payment of the total offer or as many as twenty-four non-refundable monthly installments, plus an expensive accounting or legal bill—the offer in compromise may not be an offer that you wish to make at all. After dragging its heels for two years before making a decision and requiring you to shell out 20% of your total offer upfront, the IRS can deny your offer and keep your money in true Mafioso fashion. When dealing with the IRS, you’re dealing with an all powerful mob, insensitive to your personal concerns, wishes, problems, and reasons. Either you pay up or you swim with the fishes. So proceed with caution.