Via Wikipedia
Might the Iowa legislature lead on income tax reform? If it’s going to happen, they will have to, as Governor Branstad only wants to talk about property taxes this year. O. Kay Henderson reports:
During a recent interview with Radio Iowa, Governor Branstad made it clear he is focused on cutting property taxes.
“Sure, I’d like to see the income tax reduced, too, but in terms of my priority — and I’ve been working on this for a couple of years and we’re really trying to perfect it — our focus is going to be on significant property tax reduction and replacement,” Branstad said a month ago.
Some legislators are more ambitious, reports Henderson:
Representative Tom Sands, a Republican from Wapello, is the chairman of the House Ways and Means Committee that writes tax policy.
“I think there is some pressure building from Iowans to cut both income taxes — look at some reform as well as a cut to the individual income tax,” Sands says. “We’re hearing from corporations as well, on the income side.”
I doubt anything good will happen with income taxes this session. The Iowa Chamber Alliance even wants to to go the wrong way, pushing more tax credits for the well-connected. No organization seems to be pushing for the rest of us. But The Quick and Dirty Iowa Tax Reform Plan is ready to go if the legislature needs some ideas.
Russ Fox, Estimated Tax Payment Deadline Is January 15th. For 1040 and 1041 filers. Kay Bell has more.
Nick Kasprak, Monday Map: State Gasoline Tax Rates, 2013 (Tax Policy Blog):
Robert D. Flach, CHOOSING A TAX PREPARER. I suppose I should be upset by this:
Contrary to the popular “urban tax myth” perpetuated by uninformed journalists, just because a person has the initials “CPA” after his/her name does not mean that he/she knows his arse from a hole in the ground when it comes to preparing 1040s.
But I’m not. It’s true, if roughly stated.
Robert goes astray in his next paragraph:
Only those individuals who possess the “EA” (Enrolled Agent) or “RTRP” (Registered Tax Return Preparer) designations have demonstrated competency in 1040 preparation by taking an IRS-sponsored test, and are required to remain current in 1040 law by taking a minimum number of hours in continuing professional education (CPE) in federal income taxes each year.
False. The RTRP test is open book. It demonstrates that somebody can read. It’s a literacy test, an empty exercise to justify the IRS power grab over the preparer industry. It’s different with Enrolled Agents, like Jason Dinesen and Russ Fox, who have to meet much stricter standards than RTRPs. One of the underreported nasty consequences of the RTRP designation is that it damages the EA brand.
I also disagree with the implied conclusion that CPAs who prepare returns are less competent as a group than EAs or RTRPs. Some are incompetent, no doubt, but many tax CPAs are highly-skilled. I think the competency curve for non EA preparers vs. CPAs would look something like this:
Substitute “RTRP” for “unenrolled preparer.”
There are excellent non-CPAs and there are incompetent CPAs. Still, I think as a group the CPAs who do tax for a living will tend to be more competent.
My rule of thumb for choosing a preparer: buy as much preparer as you need, but no more. Many taxpayers who only have wage and investment income and routine itemized deductions will do fine with an RTRP (and would have done fine with an unenrolled preparer without the new IRS preparer regulations). If you have business income, a multistate return, or a complicated financial life, your needs go up; you need a high-end RTRP like Robert, or an EA, or a CPA. As your business gets bigger, you are more likely to want to hire a good CPA. And when Robert gets to the bottom line of his post, I think he agrees.
But be careful which one you hire: Lawyer, Accountant Implicated in Estate Fraud Case (Brian Mahany)
Trish McIntire, Preparer Conflict of Interest
Jack Townsend, The Big Boys Get Better Treatment in Our Tax System Than Do Minnows.
I speak again on the basic relative unfairness of the treatment of many, if not most, in the IRS’s offshore voluntary disclosure initiatives.
They have to shoot the jaywalkers so they can slap the real offenders on the wrist.
You pay more in taxes this year than last year. How do you like your tax cut? At Tax.com, Jeremy Scott tries to convince us that we just got a tax cut:
The income tax rates, the estate tax, and the alternative minimum tax patch are all here to stay. And, according to the Tax Policy Center’s (TPC’s) preliminary study on distributional effects, the act essentially provided a big tax cut for almost everyone.
Funny, everybody’s taking home less. How does that work? My emphasis:
Using the Congressional Budget Office’s old baseline (which assumed that the Bush tax cuts would expire for everyone) and looking at the effects of the tax cut in 2018, the TPC says that the average taxpayer will receive a $2,335 tax cut under ATRA.
I see. Because the tax increase could have been bigger, we got a tax cut. I’ll see if I can cut staff accountant pay and convince them they got a raise because we didn’t cut more.
Janet Novack, Obama Vows Republicans Won’t Collect ‘Ransom’ For Raising Debt Limit. No, they’ll ultimately let the President continue the insane spending pace.
Paul Neiffer, We Wonder What the Investment Income Tax Form Will Look Like
Avoiding Excess Credit Card Interest Should Not Be A Taxable Event. But it can be, if you get the bank to forgive unpaid interest that would be non-deductible.
IRS Releases Additional Inflation-Adjusted Figures for 2013
Robert Goulder, Taxes & Corruption: Another Greek Tragedy (Tax.com)
TaxGrrrl, Ask the taxgirl: IRS Delayed Tax Filing Season Applies To Everybody
Martin Sullivan, IRS: Women At Work (Tax.com):
According to the latest IRS Data Book 60,623 of the agency’s 104,402 employees in 2011 were women. That 66 percent is far more than the 44-percent figure for government’s total civilian labor force and the 47-percent figure for the overall US civilian workforce.
Ben Harris, Should Louisiana Dump Its Income Tax for a Bigger Sales Tax? (TaxVox)
News you can use. FYI: Attorneys Think Auditors’ Legal Confirmation Letters Are a Giant Waste of Time (Going Concern)
Tags: Ben Harris, Branstad tax policy, Brian Mahany, Going Concern, Jack Townsend, Janet Novack, Jeremy Scott, Kay Bell, Martin Sullivan, Nick Kasprak, O Kay Henderson, Paul Neiffer, Peter Reilly, Quick and Dirty Iowa Tax Reform Plan, Robert D Flach, Robert Goulder, RTRP. Enrolled Agents, Russ Fox, shooting jaywalkers, TaxGrrrl, Tom Sands, Trish McIntire, William Perez
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to
To be clear – I was not questioning the competency of CPAs as a group. I merely said that the mere existence of the initials CPA after one’s name is no indication of 1040 tax knowledge, and that a CPA is NOT automatically a tax expert, as much of the public, and many journalists, falsely believe.
While I agree that the RTRP competency test has nowhere near the value of the EA exam (I would support doing away with the test altogether) – the fact that RTRP’s are required to remain current by taking minimal annual CPE in federal taxation indicates that they have proven more 1040 tax knowledge than a CPA who, while required to take CPE, is not required to take any CPE in federal taxation.
My comment is only that passing the CPA exam by itself does not imply any indication of actual knowledge in 1040 preparation.
TWTP
“My comment is only that passing the CPA exam by itself does not imply any indication of actual knowledge in 1040 preparation.”
That is unquestionably true.
As far as the CPE: CPAs are generally required to get at least 40 hours of CPE. While it doesn’t have to be in tax, CPAs who do tax for a living will get most or all of their CPE in tax. That means as a practical matter, CPAs who practice full-time in tax usually get much more CPE than an RRTP, for what it’s worth.
JK-
I do agree that many CPAs, those with 1040s as a large part of their practice, do take CPE in federal 1040 taxation.
My goal in all of this is dispelling the “urban tax myth” that a CPA is automatically a 1040 tax expert by reason of his/her initials only. I am tired of uninformed journalists advising readers to “consult your CPA” when they should be saying “consult your tax professional”, who could very well be a CPA.
TWTP
I got my EA in May 2012, after having completed a grand total of 64 tax returns in my life. I learn lots from people who are actually dragging their feet about taking the RTRP exam.
While sitting in the St Louis Prometric center, waiting for my exam to begin, I struck up a conversation with a CPA candidate. She was in for one of the exams, I think it was BEC. I asked her if it’s true that you don’t have to study tax to be a CPA? “Oh, I had to take a class or two on it,” she said. “My friends tell me I should get into tax, because then you can work from home. By the way, what’s an Enrolled Agent?” I explained. “You mean you don’t have to do any public accounting? Lucky you.”
Well, I began studying in the CPA direction, but it started looking like a wrong direction if what I really wanted to do was tax.
“CPAs must know finances and probably know tax. EAs must know tax and might know finances.” Would you say that’s correct, Mr. Kristan?
Karlin, either must know enough to pass a test. It’s what they do afterwards that matters. Having a CPA gave me access to great training in a national firm (though I question whether national firm experience is that valuable anymore for tax, outside of a National Office). It also gave me a chance to work with businesses and to understand business accounting, which helps a lot doing business taxes. I think for the kind of work I do, the CPA provides better training. For a strictly individual practice, an EA might be more appropriate. I have a lot of respect for EAs, and a fair reading of my post will show that.