Good old stereotypes

Last night, I got a really good laugh out of last week's episode of Parks and Recreation, especially the part where a stereotypical accountant discusses taxes and Quickbooks.

The premise is the town of Pawnee, Indiana holding an all-night telethon. When the scheduled star doesn't show, they get really desperate, and the tax guy in front of the camera is evidence of their desperation. As the accountant drones on: "When it comes to preparing taxes..." the main character then observes: "This is a disaster."

What, people don't think accountants teaching how to prepare taxes makes for entertaining television?

TV really has fun with the accountant stereotype. Kay Bell has blogged about a comedy in the works about IRS agents. I'm guessing they won't all be perky and engaging.

This clip below has the second bit with the CPA, starting at around :50 seconds, as he concludes his "Quick look at Quickbooks." Classic! I just wish I could get both clips of him. (The first clip of him is at around 13:15 of the full episode here.)

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Under Pressure

Dan Meyer of TickMarks pays me a huge honor in yesterday's post: Too Long Between Posts--Apologies ..

I look forward to seeing the posts of Robert Flach (Wandering Tax Pro), Monica Lavwer (Confessions of a CPA and the Tax CPA)and others as they return to blogging after their working hiatus. Major applause to Joe Kristan, Russ Fox and other working tax accountants (yes, and Peter Pappas, Kelly Erb and tax lawyers too) who were able to post in the midst of the maelstrom.

First off, I've got to agree 100% that the practitioners who blogged through the season quite simply rock. They are definitely in a league of their own. And in this league we can't forget Trish McIntire, who's April 14 "A Little Rant" made me smile. Stacie Clifford also managed to keep posting throughout, though she admits most were borrowed from the IRS.

Second, I must say I am pleasantly surprised that Dan would look forward to my writing. Few things feel as marvelous as respect from one's mentors and peers.

Last, but not least, to have my name even listed in such an impressive group, I feel like I better step up my game! It would sure be a shame if, a year from now, bloggers wrote: "Remember that blog that seemed to have good stuff, then completely choked?"

So with that classic CPA perfectionist thought in mind, I thought I'd share one of my favorite songs.

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Tax in real life

We signed the papers to sell our house on Monday, April 19, to our tremendous relief. They had talked about closing on April 15, but fortunately we got an extra couple of days.

While going through the papers, I of course perked up at the tax related stuff, whereas my husband's eyes glazed over. On the form related to the 1099-S (which reports the proceeds), we had to indicate whether we met the qualifications for exclusion of gain on the sale of a principal residence. I admit, I felt very smart when I said to my husband, "This is to determine whether gain qualifies for exclusion under section 121."

I like that, having seen hundreds of escrow statements over the years, I know exactly what I'm looking at when it's my escrow statement. This was one of the many times I'm grateful to know what I do.

The world, especially the world of tax and finance, is a complicated place. Last night, I taught a group of Boy Scouts a little about finance and tax. It was fun, and the kids really responded to it. As many leading thinkers have said before, most young people are not taught about tax and finance. (See James Maule, Marjorie Kornhauser, Taxgirl to name just a few.)

I believe that technology is helping with education, though I don't know if we'll see real progress until society as a whole makes financial education a priority. For my part, I'll just keep teaching small groups where I can, and hopefully spread some financial know-how along the way.

In the end, I think Schoolhouse Rock said it best. Knowledge is power.

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I'm not dead

In the midst of tax season, loved ones may start to worry when they don't hear from us for days on end. Blog readers may also start to wonder where we've disappeared to.

Rest assured, as said in the oh-so-high-class Monty Python and the Holy Grail: "I'm not dead."

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The Three Rules

In (what I'm guessing is) an effort to scare practitioners away from cheating, the IRS announced last Friday that a "Certified Public Accountant has been suspended for twelve months from practice before the Internal Revenue Service by the Office of Professional Responsibility for providing false or misleading information in connection with the preparation of his clients’ tax returns."

Unscrupulous tax preparers come in all kinds: tax attorneys, CPAs, Enrolled Agents (EAs), unlicensed preparers. Everyone should try and avoid a preparer who lacks integrity. Tax bloggers provide good advice for choosing a preparer, including Joe Kristan, Trich McIntire, Bruce The Tax Guy, Robert Flach, Peter Pappas, the IRS Hitman, and many others.

Upon reading the news of this suspended CPA, I thought this might perhaps lead to more debate on the topic of whether a CPA is more qualified to prepare a tax return than an unlicensed preparer. There's been so much written on the topic in the past few months, that I'm honestly not sure where the discussion left off. (One post that includes links to many others can be found at The Missouri Taxguy.)

I posted my thoughts on tax preparer regulation a few months back, and find my opinion has not changed much since then. I do, however, have some new thoughts on the matter of how such a topic is debated.

When reading about this CPA who was suspended, I thought: "Oh dear, I hope people don't start thinking he is representative of all CPAs."

I think most people agree that one bad apple is not representative of the entire bunch. But when in the throws of an argument, we often give undue attention to the one bad apple in an effort to make a point. This happens in debates about matters ranging from types of tax preparer, gender, race, nationality, and perhaps most of all religion. Since people tend to disagree in all such matters, I suggest we can learn from how others address the challenge of engaging in productive debate. Perhaps the most debated topic of all: religion.

The world reknowned theological and scholar Dr. Krister Stendahl is credited with creating Stendahl's three rules of religious understanding, which are:

1. When you are trying to understand another religion, you should ask the adherents of that religion and not its enemies.
2. Don't compare your best to their worst.
3. Leave room for "holy envy." (By this Stendahl meant that you should be willing to recognize elements in the other religious tradition or faith that you admire and wish could, in some way, be reflected in your own religious tradition or faith.)

When considering the strengths and weaknesses of a group of tax professionals, I try to learn about the group from its members, try not to compare the best of one group to the worst of another, and try to stay open to the possibility that another group has aspects that are better than mine.

This may seem to you completely unrelated to the topic at hand, and that is quite all right. I have a tendency to see connections everywhere, and perhaps may even imagine them. I like connecting the dots, even if I'm the only one who sees the line!

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Tax is cool

Now that it's gone away, the estate tax is getting a lot of attention.

Tax experts sharing their thoughts on the estate tax include Joe Kristan, Kay Bell, Linda Beale, James Maule, TaxProf Paul Caron, and I'm sure many others I've missed in my latest search.

But the talk isn't limited to us talk folk. Last week, Stephen Colbert did a bit on the estate tax.

"As of January 1, 2010, the 45% tax on massive inheritances is gone. But it will come back in 2011. So wouldn't this be a great year to visit your lonely, frail, unhealthy uncle? And just be by his side to make sure no one coats his banister with teflon, or hides a rabid badger in his applesauce, or replaces his Werther's Originals with Werther's Explodables."

That's right people, tax is cool.

Here's the clip from The Colbert Report last week. The estate tax bit starts at around 48 seconds in.

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
Colbert Platinum - Estate Tax & Skull Ballot Box
www.colbertnation.com
Colbert Report Full Episodes Political Humor Economy

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The tough choices

(For those who also read Confessions of a CPA, I apologize for the duplicate post!)

As I often observe, time is the most scarce of a person's resources. (Rita Keller shared an interesting post on this topic last month.)

Over the past few weeks, I have fallen behind in even skimming the headlines of the 1000+ contents from my of my 168 subscriptions in Google Reader. With tax season barreling down on me, I've finally admitted to myself that I won't be able to keep up. So much interesting content, so little time!

Today, I created a separate folder in Reader for "Daily Reads," which also shows up as its own list on the right of this blog. It was very hard to come up with such a short list.

Some blogs not on the list are fantastic reads that require a lot of my mental horsepower to follow, and I hope to make more time this summer to summon the brainpower to read them daily. These include the tax and legal experts at such blogs as ataxingmatter, Mauled Again, and TaxProf.

Other blogs not on the list are great reads about the world of finance and accounting, which I hope to revisit with a vengeance after April 15 when I am not required to only live and breathe tax. Some of these include BookMarkLee, The Exuberant Accountant, Jr Deputy Accountant, and many, many others.

So my "Daily Reads" are not a review (though of course I recommend them all), but simply the list of what I think a tax manager like me will religiously follow when time is short.

What are your "can't miss" blogs?

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A recent surprise

After delivering several bags of clothes and household goods to my local Goodwill (in December, not January, of course!), I was surprised when the attendant handed me a pamphlet along with my receipt. The pamphlet, titled Goodwill Stores Donation Information, includes a list of "Suggested Donation Deductions."

I was surprised they provided amounts, as my experience has always been that non-profits avoid providing definitive recommendations for deductions when it comes to non-cash donations. I suppose what surprised me most was that they would actually use the term "suggested." Quite daring!

The additional description was more in line with my expectations of a non-profit: "The Internal Revenue Service allows a deduction based on the fair market value (what a buyer would pay for the goods in a thrift or consignment shop). The better an item's condition, the greater its value... Listed below are resale values of items in area Goodwill stores that you may use to itemize your deductions."

(Just to be difficult, I might argue that it technically isn't the IRS that "allows" a deduction, as the IRS does not make the rules, only enforces them. I know, I'm a pain.)

This description made sense to me, as it seems to be saying only that these non-cash items sell for the prices listed. It's like saying: "This is the information about us, and you can do with it what you choose." To me, that is quite different from providing a "suggestion." But I guess since they included the word "suggested" in the title, they are really doing both: stating facts about their prices and suggesting we use those amounts. I'm splitting hairs, aren't I?

I wish we could get this kind of guidance from the IRS. Or is it available, and I've simply missed it? Everything I've read from the IRS uses vague terms, never providing concrete numbers. And I like numbers.

I wonder if other non-profits are providing "suggested" deduction amounts, and how the IRS will factor that information into its efforts (if at all).

Finally, is it odd that I found so much to think about from a basic pamphlet from the Goodwill?

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You know you're addicted to Twitter when...

You're checking Twitter while sitting in the Orpheum Theater in San Francisco waiting for Wicked to begin.

In my defense, I had not been on Twitter for two weeks. That's a lifetime in tweets.

While waiting for the show to begin, I stumbled upon an update from favorite @taxtweet with a link to her post Another top 12 holiday tax countdown. As she notes, I was lucky enough to make Dan Meyer's Twelve Blogs of Christmas. What a pleasant surprise!

Dan is a blogging veteran at Tick Marks. I'm honored to be included in his list. In all honesty, I fear that it won't be long before top bloggers like Dan and Kay discover my secret: I really don't know what I'm doing out here in the blogosphere.

I owe a few more thanks to people smarter than me who take the time to converse with this blogging novice...

Thank you to Stacie Clifford Kitts at Stacie's Tax Tips for saying I have wit. What a lovely compliment! So much nicer than some of the things my 6 year old says to me.

Thank you to Wandering Tax Pro Robert Flach for giving this "new girl on the block" such a warm welcome. I can even forgive him often calling me Marilyn instead of Monica. :)

Thanks to Joe Kristan for saying my blog is worthy of making Dan's Top 12. I'll take "worthy!"

Happy New Year, everyone!

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Patience is a virtue, right?

I've often commented that patience is a virtue with which I have not been blessed. Perhaps this will be one of those things that's supposed to teach me patience.

I refer, of course, to the ever elusive goal of tax simplification.

The cost of tax compliance and enforcement is mind boggling. I believe the cost of inaction in reform is much more significant than the potential costs of actual reform. Clearly, it's going to take more than the White House's panel on "tax simplification without significant reform" to make real progress. As many tax bloggers posted, the President's tax reform panel has delayed reporting on its findings (coverage includes posts from Joe Kristan, Professor Nellen, Robert Flach, Kay Bell, Howard Gleckman).

The Wandering Tax Pro directs us to a Business Week article titled Fight the Deficit Monster with Tax Reform. I wonder if perhaps things have to get really, really bad before they can get better. If so, are we just maybe getting to that point where it's bad enough for the public to harass Congress until reform happens?

I realize it's going to take awhile. I've got another 30+ years to retirement, and I like to think we'll make some progress in that time. I'm up for the marathon. I may not be the most patient participant in the race, but I've got the grit.

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Just to make a point

I wonder if there was a time when tax law wasn't used as a policy tool. If so, it was most definitely before my time.

TaxProf, Joe Kristan, and Kay Bell, provide coverage on the proposed "pay as you fight" war surtax.

I'm all for fiscal responsibility, including making sure we can actually afford our expenditures before we commit to them. (Novel concept, I know.) But this is not the way to go about achieving that. We didn't add a surtax for TARP, stimulus checks, the blasted "Making Word Pay" credit, or any number of other spending bills.

The purpose of this bill is to make a point, and I would rather not spend our limited government resources going through the motions of a bill just to make a point. I'd hope we have another means of engaging in debate about the issues, and that we would stop using taxes as a primary tool for affecting public policy.

Well, it's a nice dream anyway.

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Maybe next year...

TaxVox reports that the results of the President's Economic Recovery Advisory Board are likely to be less than stellar. Included in the post is the following observation:

From its earliest days, the group was forced to work under impossible constraints. Chief among them: Obama’s insistence that no one earning less than $250,000 should pay higher taxes. Exempting more than 95 percent of families and individuals from tax hikes of any kind essentially shut the door on any serious discussion of reform, which inevitably creates winners and, yes, losers.

This, sadly, is similar to my observations on the matter. It looks like we won't see any significant reform in the near future. No end in sight to massive AMT, endless credits, and a brand new Schedule L, too! Oh goody.

(Hat tip: Tax Update's Joe Kristan)

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Who can you trust?

The world is a scary place, and Congress makes it even scarier for taxpayers with the insanity called the tax code.

And of course, there is much more to life than tax. (Many are likely shocked to hear me say it.) To function with so much variety in life, our modern economy relies on specialization of labor, so that different people become educated and trained in different things, and we trade.

Each day, we decide what to trade for. Perhaps the most important decisions we make are related to choosing service providers: doctors, dentists, lawyers, accountants, and so forth. These can also be the most challenging decisions because human beings are much more variable and unpredictable than a simple widget.

When you choose a service provider, you do your best to find the right person, and hope you choose wisely.

The more time I spend in our profession, the more I come to realize that clients are looking for someone to trust. That's why referrals are usually the most successful way to generate new business. Stacie Clifford Kitts has a good post on the topic of referrals.

Of course, the biggest hurdle most people face is that they cannot afford the best service providers. And some people who can afford them are just too cheap. And so, for everything from medicine to tax, people turn to the Internet.

Robert Flach provides and interesting discussion on the issue of tax advice online in his post: Who can you believe? Jim Maule also provides a great discussion in Tax Illiteracy as a Threat.

Alas, I do not have the answer for how to ensure people get access to credible tax information. Robert provides some good tips for people to use in evaluating whether a person espousing tax advice is trustworthy. If I didn't need to earn a living by charging for the value of my services, I could spend all of my time combating tax illiteracy. Instead, I'll need to settle for doing what I can to educate in my own communities while working around "my day job."

I do hope that people can start to do a better job of simply using good judgment. It's amazing how much trouble can be avoided by making good decisions.

In a barely related note, often when I think about choosing wisely or poorly, I remember the line at the end of this gruesome scene from Indiana Jones and the Last Crusade. "He chose poorly." Gotta love the understatement.

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Do something

Several years ago, Congress passed a law that completely eliminated the estate tax starting January 1, 2010. I remember thinking: "Oh, but that will never happen. Congress will act way before then."

So young. So naive.

Regarding this and many areas of tax law, I just want to shout: "Do something!" In the words of Seth Godin:

Make a decision. It doesn't have to be a wise decision or a perfect one. Just make one. In fact, make several. Make more decisions could be your three word mantra. No decision is a decision as well, the decision not to decide. Not deciding is usually the wrong decision. If you are the go-to person, the one who can decide, you'll make more of a difference. It doesn't matter so much that you're right, it matters that you decided. Of course it's risky and painful. That's why it's a rare and valuable skill.

Sadly, it appears Congress is not made up of people with this rare and valuable skill. And it doesn't look like the current administration is in a big rush either. Kay Bell recently wrote about Treasury Secretary Timothy Geithner's comments at an economic conference last week in New York City:

Asked about the prospects for tax reform, Sheppard reports that Geithner dodged the question and indicated that it would be far down the line. Economic growth and public confidence about the economy's future take precedence, he said, followed by deficit reduction, which would require tough political choices.

With those items before it on the policy to-do list, it's probably safe to say that Obama's stab at tax reform is going to suffer the same sad fate as did Dubya's tax revamp effort.

We've got our work cut out for us. Still, I like to think that if we keep telling Congress to "Do something", we just might get somewhere... someday.

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I got the part!

I finally got the part I've always wanted. Peter Pappas has cast me as Glinda "the good witch" in Professionalism: A Love Story. As I commented on his blog -- if I seem as nice as Glinda, then I must have an incredible hidden talent for public relations.

There has been much debate in the tax blogosphere about the issues of professionalism, rules of conduct, and so forth. Spineless though it may seem, I am opting to abstain from this discussion, primarily due to my inability to articulate coherent thoughts on the matter.

In general, my writing has been sadly lacking of late, due to an unexplained lack of ideas. Yesterday, I commented on this writer's block to my husband, and added: "I figure quality over quantity, so I'll wait until inspiration strikes."

I guess I can't keep my mouth shut, even if I'm lacking inspiration. These days, the issue of tax reform remains on my mind. On my "to do" list is to read ideas on simplification from top blogger Robert Flach, along with the AICPA's Tax Reform Alternatives.

Have you been reading any other good simplification ideas lately?

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Principles vs. rules

I finally finished my CPE course on IFRS, which wasn't nearly as painful as one might expect. As Joe Kristan put it: "We're tax! We don't need no stinkin' AA!" (For those new to public accounting, "AA" refers to Accounting & Auditing.)

As a tax practitioner, I could opt to renew my license under the non-attestation category. I take the AA courses because I want to keep the "full fledged" license as long as I can. I keep wrestling up 24 AA education hours every two years, since I figure the hard part's over, which was getting the field work hours for initial licensure.

Based on my limited AA education, I understand that IFRS is a principles-based framework, compared to the rules-based U.S. GAAP. This is an interesting experiment in human behavior, and I look forward to seeing how it unfolds. Can a system based on trust in people to use sound judgment and act ethically be successful? I hope so, though I admit to some skepticism.

I've said before that we cannot regulate human behavior, and so should not over-regulate society; and at the same time we still must have some semblance of law and order. The challenge, of course lies in finding where to land on the spectrum between trusting everyone do just do what's right and forcing them to.

Will we start to see a corresponding move in tax policy toward a system of principles rather than rules? I doubt it. And although I do like Joe Kristan's suggestion to simply pass a "happy fun times tax credit" for everything to be wonderful, I'm thinking the path to getting people to behave morally may be a little harder than that.

But maybe I'm just being difficult.

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Broken record

There's lots of buzz these days about increased regulation of tax preparers, including recent posts from Joe Kristan, Peter Pappas, and Robert Flach.

My two cents on the matter of regulation is in an earlier post. I know I sound like a broken record, but I just keep coming back to what I believe to be the real problem: complexity.

As Mary O'Keefe says, "We need a tax code PEOPLE can understand."

The reason we haven't had significant reform is that people are not shouting for it. As Annette Nellen wrote, "one big roadblock (among many) is that the public is not crying out for simplification."

Why?

Because, as Mary O'Keefe puts it, "Americans are busy with their day to day lives. It's hard to get their attention on important long-term problems."

I hope the new movie "An Inconvenient Tax" will get the public's attention. Down the road, I'll be contacting the AICPA and the NATP to find out what they are doing on the issue. As I ponder ideas for a group of Tax Professionals for Simplification, I am inclined to think the group would need to agree on a plan for simplification. This, of course, presents a real challenge, but one I like to think we could overcome.

To all the tax gurus out there, what plan would you like to see tax professionals support?

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21st Century Taxation

I just discovered the 21st Century Taxation blog and related site about federal and California state tax reform. The site is the work of Annette Nellen, professor at San Jose State University.

She provides a great list of resources on tax reform, including the reports from President Bush's Advisory Panel.

Once I get to reading this, maybe there's a chance one will seem like real reform, and not just a band-aid. I will happily send that on to the White House for consideration!

What topics are you writing the White House about?

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How does that work?

As many tax bloggers have noted, the White House has requested ideas for the President's Economic Recovery Advisory Board to develop options for tax reform.

The blog includes this note:

The mandate to the PERAB is NOT to recommend a new tax system. They are to consider ideas on tax simplification, better enforcement of tax law, and reforming corporate taxes and to present the pros and cons of potential tax options... So be mindful of their constraints when submitting ideas.

I struggle to understand how we can get real tax simplification without recommending a new tax system. Maybe it's that my interpretation of the words "simplification" and "tax system" are not consistent with the government's. Because the way I see it, we can't get simplification without seriously revamping the system.

As often happens, I find myself comparing this situation to medicine (which just might have something to do with being married to a doctor). If we only change a code section here, or a regulation there, we're just treating symptoms and not the disease.

Just like when we keep adding new credits and deductions, we keep trying to cure our economic ailments with more and more medication. And from the stories I hear, more medication is not always the best answer! It often makes things worse.

In this stupor of mine, I cannot think of a recommendation to give the White House that would feel like anything more than treating a minor symptom of a dreadful disease. How depressing.

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An Inconvenient Tax

Recently, I posted about my concerns that those seeking tax simplification were not effectively represented in Washington.

I thought about starting Tax Professionals for Simplification, which may still become a project -- but I think this upcoming movie is going to be much more effective than any such organization led by me.

I can't wait to see it!

An Inconvenient Tax - Official Trailer from Life Is My Movie Entertainment on Vimeo.

Hat tip to Taxgirl for the clip, who I hear just may be in the film!

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