A roundup of the previous month’s news
The Senate Finance Committee narrowly
voted on party lines to confirm President Trump’s nomination of tax attorney Charles Rettig as the next commissioner of the Internal Revenue Service. The committee had held a confirmation hearing at the end of June where it heard testimony from Rettig, who was asked about Trump’s reluctance to release his tax returns. Rettig is a tax practitioner at the Beverly Hills law firm Hochman, Salkin, Rettig, Toscher & Perez PC, who has spent most of his career representing clients before the IRS.
Published reports said that Deloitte CEO
Cathy Engelbert hasn’t been nominated for a second four-year term — though it is too early in the process to say that she won’t be able to serve again, according to the Big Four firm. An email sent to partners at the firm informed them Engelbert hadn’t been renominated by the board, according to The Wall Street Journal. Engelbert was elected to lead the firm in 2015, making her the first female CEO of a Big Four firm in the U.S.
National Taxpayer Advocate Nina Olson
released her mid-year report to Congress, spotlighting her top areas of concern, particularly how the new tax overhaul will be implemented. She noted that the most significant challenge that the IRS faces in the year ahead is putting in place the Tax Cuts and Jobs Act of 2017, which requires programming an estimated 140 systems, writing or revising some 450 forms and publications, and issuing guidance on dozens of provisions in the new tax law. Olson is confident the IRS is up to the task — but she repeated her longstanding concern that IRS funding cuts have undermined its ability to provide high-quality taxpayer service and to modernize its aging computer infrastructure. She noted that IRS funding has been reduced by 20 percent since fiscal year 2010 on an inflation-adjusted basis. Olson also highlighted the IRS’S customer service problems, saying that the service uses narrow performance measures that suggest the agency is performing well but don’t reflect the taxpayer experience. For example, the IRS reports it achieved a “level of service” on its toll-free phone help lines of 80 percent during the 2018 filing season, which is generally interpreted to mean IRS telephone assistors responded to 80 percent of taxpayer calls. In fact, Olson’s report pointed out IRS telephone assistors answered only 29 percent of the calls the IRS received.
The IRS and the Treasury Department
unveiled a draft version of the postcard-size Form 1040 that was promised from last year’s tax reform effort. For the 2019 tax season, the shorter Form 1040 will replace the current Form 1040, along with the Form 1040A and the Form 1040EZ. The IRS plans to work with the professional tax community to finalize the streamlined Form 1040 over the summer. Although the form is postcard-size, it still asks for a taxpayer’s Social Security number, so it should still be mailed in an envelope to protect taxpayer privacy. Also, while the form itself has been shortened, it may not actually simplify the tax prep process, since it now requires attaching as many as five other schedules, in addition to Schedule A for taxpayers who choose to itemize.
Separately, the IRS issued a draft of a new Form W-4 that drew strong responses from both the American Institute of CPAS and the National Association of Enrolled Agents.
The Securities and Exchange Commission
decided to expand the number of companies that can qualify for scaledback disclosure requirements, with the commissioners voting to adopt amendments to the “smaller reporting company” definition, thereby increasing the number of companies that don’t need to meet the stiffer disclosure rules required of larger companies. The new smaller reporting company definition allows a company with less than $250 million of public float to provide scaled disclosures, compared to the $75 million threshold under the previous definition of the term. The final rules approved by the SEC also expand the definition to include companies with less than $100 million in annual revenues if they also have either no public float or a public float that is less than $700 million. For now, the SEC isn’t changing the threshold in the “accelerated filer” definition that requires, for example, that filers provide the auditor’s attestation of management’s assessment of internal control over financial reporting.
The commission also voted to allow Inline XBRL as an amendment to its requirements for companies and funds to file their financials in Extensible Business Reporting Language, aiming to improve the quality and accessibility of XBRL data. Inline XBRL involves embedding XBRL data directly into the filing so disclosure documents are easier to read by both computers and human beings. The SEC has been pilot testing IXBRL technology after proposing a rule over a year ago to require companies to use the technology in their operating company financial statement information and mutual fund risk/return summaries.
Correction In “Wealth Magnets: The Top 150 CPA
Firms by AUM,” ( June, page 11), we gave the wrong location for Siena Wealth Advisors; they are in Grand Ledge, Michigan.
All responses from a July 2018 survey of the Accounting Today Executive Research Council, an online panel of over 1,500 accounting professionals. The ACI was created in partnership with: ADP and the ADP logo are registered trademarks of ADP, Inc.