Fall 2022 - Florida CPA Today | Volume 38, Number 4

PRESIDENT & CEO Shelly Weir

EDITORIAL COMMITTEE

Lynda M. Dennis, CPA, Chair

Joel M. DiCicco, CPA

David J. Hochsprung, CPA, Jonathan S. Ingber, CPA

Douglas B. Keith, CPA

Michael S. Kridel, CPA

Ryan A. Myers, CPA Will Quilliam, CPA

FICPA STAFF

Nick Menta, Communications Manager and FCT Editor Alejandra D’Jermanos, Graphic Designer

All articles submitted to Florida CPA Today are subject to technical review, Editorial Committee review, space availability, and editing requirements and restrictions.

Statements expressed herein are those of the identified authors and not necessarily those of the Florida Institute of Certified Public Accountants, Inc. (FICPA), nor should statements be considered endorsements of products, procedures or otherwise.

The FICPA reserves the right to reject any editorial material or paid advertising that does not meet Florida CPA Today criteria or detracts from its ethical and professional standards.

Florida CPA Today is published quarterly by the Florida Institute of Certified Public Accountants, Inc., 250 South Orange Avenue, Suite 300P, Orlando, FL 32801. Telephone: (850) 224-2727 or (800) 342-3197. Visit our website at ficpa.org

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© 2022 by the Florida Institute of Certified Public Accountants, Inc. All rights reserved. Reproduction in whole or part is prohibited without the express written consent of the FICPA.

SHELLY WEIR

Our advocacy efforts mattered when it counted most, and the results are a testament to our members’ engagement and support.

FICPA’s Advocacy Efforts Help Secure Much-Needed Relief for Florida

Floridians and those in the CPA profession have faced many natural disasters, but nothing could have prepared many of our members for the devastation caused by Hurricane Ian. More than 6,000 FICPA members experienced a direct impact from the storm and are slowly beginning the process of recovery, including those who have been displaced from their homes and businesses.

As the storm approached the west coast of the state, we knew challenging times were ahead and began preparing to assist our members in any way we could. Our Governmental Affairs Team immediately began providing members with vital information needed before landfall and initiated requests to state and national agencies for deadline relief. Committed to providing the technical guidance our members needed, we enlisted the nation’s leading property and casualty loss expert, Jerry Schreiber, to deliver the most relevant information to practitioners. As new information became available, our members heard it from us first.

We also sent direct requests for relief to IRS Commissioner Charles Rettig, Florida Department of Revenue Executive Director Jim Zingale, and acting FinCEN Director Himamauli Das. Thanks to the swift response from Gov DeSantis and the federal government, the IRS granted relief to all 67 counties in record time and tax practitioners received an extension until Feb. 15. The Florida Department of Revenue responded with timely relief for business owners and practitioners. And FinCEN likewise granted FBAR relief through Feb. 15. A full accounting of our advocacy efforts can be found at ficpa.org/disaster-relief.

Our advocacy efforts mattered when it counted most, and the results are a testament to our members’ engagement and support. That’s why I encourage you to join us this January for our CPA Advocacy Days. It’s the relationships we build with lawmakers and state officials at each and every opportunity that put us in position to most effectively advocate on your behalf when the need arises.

Having recently traveled to Southwest Florida for our CPA Day of Service, I can tell you the devastation is unimaginable, and the needs are great. We are committed to standing with you, every step of the way, throughout the recovery process. There will be many opportunities for the rest of the membership to lend a hand. I’m extremely proud of and grateful for the response of our team and members during this time of need.

Please continue to keep your colleagues in your thoughts as they begin to rebuild their communities and lives. Join us as you can to provide them with the support and resources they will need. We are here for each other and we are stronger together.

JULIAN DOZIER CPA,

In Ian’s Aftermath, FICPA Members Pull Together

Hurricane Ian’s damaging impact is still being felt weeks after the storm moved across Florida in late September.

Just as the FICPA’s Governmental Affairs Team has been hard at work, successfully advocating on behalf of CPAs and their clients at the state and federal levels, the rest of our staff has been diligent in contacting our members and organizations located in the state’s declared disaster areas, performing status checks and assessing immediate needs.

Our members have also been busy supporting one another. I dedicate this space to thanking everyone who has already lent their support to the relief efforts and encouraging all of us to do what we can to help our fellow Floridians bounce back stronger than ever.

The FICPA’s Amazon Wishlist has brought in donations from around the country, amassing office supplies and cleaning products for members and their organizations whose workplaces were damaged by the storm.

For those of you who are displaced, please know that our Office Share Portal remains open and active. If you are a member looking for temporary office space – or a member with office space to spare – please visit www.ficpa.org/OfficeShare so that our FICPA team can match those in need with those who are eager and ready to help.

I also want to thank those of you who have made donations to the Volunteer Florida Disaster Relief Fund and/or the AICPA Benevolent Fund. If you are an AICPA member impacted by the storm, remember that you can apply to receive financial assistance through the Benevolent Fund.

Finally, I extend my gratitude to those of you who joined me, President & CEO Shelly Weir, and other FICPA staff for the CPA Day of Service event in Port Charlotte.

For three straight days, from Oct. 28-30, the FICPA partnered with Operation BBQ Relief to prepare hot meals for utility crews, relief organizations, and those directly impacted by the storm. Thank you to our Young CPAs Committee for finding this innovative way to help and to our whole membership for your generosity during this challenging time.

For many around the state, including our FICPA members in the hardest hit areas, the road to recovery will be a long one. Ian’s devastation will take months or even years to repair, as our members who have been affected by prior storms can attest. That’s why it is so important for us to support our colleagues in need in the months to come.

If you are an FICPA member still in need of assistance – or know one who is – please contact our Member Service Center at msc@ficpa.org or (850) 224-2727 and let us know how we can serve you.

I dedicate this space to thanking everyone who has already lent their support to the relief efforts and encouraging all of us to do what we can to help our fellow Floridians bounce back stronger than ever.

ABV, CFF, CFE

Shelly Weir with contributions to FICPA’s Amazon Wishlist

FICPA staff and volunteers at Operation BBQ Relief

Notice of Regular Council Meeting

FICPA OFFICIAL NOTICE

In compliance with Article XI, Section 6 of the FICPA Bylaws, be it known that a regular meeting of the FICPA Council will be held Saturday, Jan. 21, 2023, at 2 p.m. at the Hammock Beach Resort in Palm Coast, Florida.

FICPA NEWS

Bivona, Horton Named to CPA Practice Advisor’s “40 Under 40”

Congratulations to the FICPA’s Kristin Bivona and Kathryn Horton on being among CPA Practice Advisor’s 2022 “40 Under 40” list.

The 40 Under 40 Awards spotlight the top practicing public accountants, educators and thought leaders who are leading their profession by visibly and incrementally changing the accounting profession through their exemplary leadership, their innovative thinking, their collaborative efforts to provide unity to the profession across the generations, and their community outreach.

In Memoriam: Karen Nuzie and Ken Hart

We are deeply saddened to report the passing of former FICPA Governmental Affairs Coordinator Karen Nuzie, as well as FICPA General Counsel Kenneth R. Hart.

Karen passed away, along with her husband, Eric, on June 19, 2022. She was 66 years old. Karen served as the FICPA’s Governmental Affairs Coordinator for 23 years, from 1998 until she retired in 2021.

The oldest of five daughters, Karen was a caretaker and nurturer by nature. She tremendously enjoyed and excelled at her role as a mother and grandmother and was enjoying her first year of retirement. Karen made it her mission to improve the lives of others.

Ken, 76, passed away Aug. 19, 2022. He attended Florida State University on a football scholarship from 1964 to 1969, earning his bachelor’s and master’s degrees in ac counting during that time.

Ken was chair and CEO of Ausley McMullen where his primary area of practice was litigation. In recent years, Ken’s litigation practice mainly focused on commercial litigation, products liability, regulatory and constitutional issues. He formerly was a CPA with Price Waterhouse in Miami.

Bivona is the Managing Partner at GellerRagans, Central Florida’s oldest accounting firm. She is the immediate Past Chair of the FICPA’s Board of Directors. She currently serves on the FICPA Council, the AICPA Council, and as Vice Chair of the Florida CPA/PAC - Central.

Horton is the President at Kathryn K. Horton CPA PA and currently serves on the FICPA Board of Directors, FICPA Council and the AICPA Council as a Florida delegate. She is a Past Chair of the FICPA’s Young CPAs Committee and was the 2020 recipient of the FICPA’s Women to WatchEmerging Leader Award.

FICPA NEWS

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Bernau Appointed to Board of Pilot Commissioners

On July 22, Gov. Ron DeSantis announced several appointments to the Florida Board of Pilot Commissioners. Among them is FICPA Member Sheldon Bernau, CPA, CGMA, CDF.

Bernau, of Pensacola, is Vice President and Senior Relationship Manager at Synovus Trust Company. He is a member of the AICPA and the Northwest Florida Bar Association Foundation. He has served on the FICPA Nominations Committee and as chair of our West Florida Chapter, and currently serves as a Director of the Florida CPA/PAC.

Bernau earned his bachelor’s degree in business administration and accounting from Pensacola Christian College and his master’s degree in accountancy from the University of West Florida. The FICPA warmly congratulates Bernau on his appointment to the board of this high-profile division of the Florida Department of Business and Professional Regulation. His appointment is subject to confirmation by the Florida Senate.

FICPA NEWS

Rojas Named to AICPA Leadership Academy

Heber Rojas was one of only 36 CPAs selected by the AICPA to participate in the 14th graduating class of the AICPA Leadership Academy, a four-day immersive leadership program. Heber was selected for this honor based on his exceptional leadership skills and professional experience.

The AICPA Leadership Academy was designed to strengthen and expand the leadership skills of promising young professionals while they network with a peer group of talented and motivated CPAs.

The 2022 Leadership Academy attendees were recommended by their employers, state CPA societies, and/or volunteer organizations. Candidates submitted resumes and a statement explaining how participating in the Leadership Academy would impact them personally and professionally.

Rojas, a partner at Tapia, Rojas & Associates, is an active member of the FICPA’s Young CPAs Committee and CIRA Committee.

Jennifer Allen Named Director of FICPA Scholarship Foundation

The FICPA is pleased to announce that Jennifer Allen has been named Director of the FICPA Scholarship Foundation.

“I am thrilled to have this opportunity to take the Foundation to the next level,” Allen said.

“I believe my relationships with educators, students, and young CPAs will help the Foundation execute its new mission and vision, as we develop a complete career journey for accounting professionals.”

Allen first joined the FICPA in 2015. In seven years, she has consistently expanded her role working with the FICPA’s student and educator members, progressing from Student Initiatives Manager to Emerging Professionals Manager to the Institute’s Director of Career Development.

Prior to joining the FICPA, Allen worked in the Student Activities and Leadership departments at Jacksonville State University, where she earned both her bachelor’s and master’s degrees, and at the University of Alabama at Birmingham.

“Jennifer is the perfect person to lead the Foundation at this time, given our expanded mission to support current and future CPAs along the entire career pathway,” FICPA President & CEO Shelly Weir said. “Her rich expertise in student affairs and career development will help to position the Foundation for the future.”

Allen will now help execute the Scholarship Foundation’s vision of “attracting talent and strengthening the accounting profession in Florida” and its mission “to provide support and foster success for current and future CPAs.”

Under her leadership and the guidance of its Board of Trustees, the Foundation aims to provide scholarships to Florida’s accounting students; help create career advancement opportunities for current CPAs; encourage, support and promote diversity to create a more inclusive

profession; provide a bridge between students, academia and the business community; and develop students and Young CPAs as future leaders within the profession and their communities.

“We are thrilled to welcome Jennifer Allen as our new Director,” said Foundation Chair Carshena Allison. “Jennifer is an innovative, forward-thinking leader who’s already forged strong relationships with students, educators and young CPAs throughout the state. We are excited to realize the Foundation’s expanded mission and vision with Jennifer guiding us forward.”

Since its inception in 1959, the FICPA Scholarship Foundation has disbursed more than $4 million in scholarship funds to help reduce the burden of entry into the CPA profession. The Foundation recently named its Class of 2022, awarding scholarships to 74 accounting students across the state. The window to apply for a Class of 2023 scholarship opens Jan. 1.

DONATE TO THE FICPA SCHOLARSHIP FOUNDATION

As we close in on the end of 2022, we once again encourage you to consider a donation to the FICPA Scholarship Foundation as part of your year-end gift giving!

The Foundation is a 501(c)(3) non-profit, which makes the end of the year the perfect time to make an investment in the future of our profession.

It’s up to all of us to strengthen the CPA pipeline, and it’s your generosity today that will pay dividends in the years to come.

Ready to contribute?

Visit www.ficpascholarshipfoundation.org/donate

CPACharge has made it easy and inexpensive to accept payments via credit card. I’m getting paid faster, and clients are able to pay their bills with no hassles.

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Member Benefit Provider

HURRICANE IAN Filing Deadlines and Practice Management

By Gerard H. Schreiber Jr., CPA

Florida CPAs affected by Hurricane Ian have a challenging road ahead. Many agencies are working to assist with IRS issues and other items affecting CPAs’ lives and practices. The most important issue is how CPA practices will be affected by IRS and state filing relief and practice management issues.

IRS Filing Deadlines

The authority for the IRS to grant disaster filing relief is found in 26 U.S.C. § 7508A – Authority to postpone certain deadlines by reason of Presidentially declared disaster or terroristic or military actions. Also, 26 U.S.C. § 165(i)(5)(A)

– Losses defines a federally declared disaster as “any disaster subsequently determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.”

After the president authorizes disaster assistance, the Federal Emergency Management Agency (FEMA) identifies counties as qualifying for Individual or Public Assistance. Individual Assistance allows individuals and businesses to request financial assistance from FEMA. Public Assistance allows for a partial reimbursement from FEMA to a government entity for expenses incurred because of a disaster but does not provide direct assistance to the general public.

Previous disasters occurring near filing deadlines caused much anxiety amongst tax practitioners. Congress finally addressed it in 2019 in H.R. 1865, the Further Consolidated Appropriations Act, providing an automatic 60-day delay when there is major disaster declaration.

H.R. 1865 – Further Consolidated Appropriations Act, signed into law by the president on Dec. 20, 2019, added Code Section 7508A(d) to provide for a “mandatory 60-day extension.” The language of this addition to Code Section 7508A is as follows:

(d) MANDATORY 60-DAY EXTENSION. —

(1) IN GENERAL. — In the case of any qualified taxpayer, the period—

(A) beginning on the earliest incident date specified in the declaration to which the disaster area referred to in paragraph (2) relates, and

(B) ending on the date which is 60 days after the latest incident date so specified, shall be disregarded in the same manner as a period specified under subsection (a).

(2) QUALIFIED TAXPAYER. — For purposes of this subsection, the term ‘qualified taxpayer’ means—

(A) any individual whose principal residence (for purposes of section 1033(h)(4)) is located in a disaster area,

(B) any taxpayer if the taxpayer’s principal place of business (other than the business of performing services as an employee) is located in a disaster area, (C) any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a disaster area, (D) any taxpayer whose records necessary to meet a deadline for an act described in section 7508(a)(1) are maintained in a disaster area, (E) any individual visiting a disaster area who was killed or injured as a result of the disaster, and (F) solely with respect to a joint return, any spouse of an individual described in any preceding subparagraph

of this paragraph.

(3) DISASTER AREA. — For purposes of this subsection, the term ‘disaster area’ has the meaning given such term under subparagraph (B) of section 165(i)(5) with respect to a Federally declared disaster (as defined in subparagraph (A) of such section).

(4) APPLICATION TO RULES REGARDING PENSIONS. — In the case of any person described in subsection (b), a rule similar to the rule of paragraph (1) shall apply for purposes of subsection (b) with respect to —

(A) making contributions to a qualified retirement plan (within the meaning of section 4974(c)) under section 219(f)(3), 404(a)(6), 404(h)(1)(B), or 404(m)(2), (B) making distributions under section 408(d)(4), (C) recharacterizing contributions under section 408A(d) (6), and (D) making a rollover under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3).

(5)

COORDINATION WITH PERIODS SPECIFIED BY THE SECRETARY. —

Any period described in paragraph (1) with respect to any person (including by reason of the application of paragraph (4)) shall be in addition to (or concurrent with, as the case may be) any period specified under subsection (a) or (b) with respect to such person.

The IRS issued SBSE Memorandum SBSE-25-1120-0093 to implement the 7508A(d) change. In addition to the mandatory “60day extension” in Code Section 7508A(d), the IRS will generally issue a news release indicating additional filing relief available and listing the counties covered by the filing delay. The IRS notes the filing delay with an “O freeze” described below on the taxpayer’s Individual Master File or Business Master File, depending on the type of taxpayer. The applicable zip codes in the affected counties are used to identify the taxpayers covered.

However, as IRM 25.16.1.5.2, Determining the Appropriate Level of IRS Disaster Tax Relief Under IRC 7508A, states: The IRS has considerable discretion and flexibility in providing disaster relief under IRC 7508A. Therefore, when determining if systemic tax relief is appropriate, the IRS evaluates factors such as:

• Nature of the event/expected impact

• Number of states affected

• Time of year when the disaster occurred

• Imminent major filing dates

• Efficiency of FEMA’s declaration process

For taxpayers who experienced a disaster-related hardship and did not receive systemic disaster assistance, IRM 25.16.1.5, Disaster Tax Relief Options, provides:

• The IRS, under Internal Revenue Code sections 6081 and 6161, may abate failure to file or failure to pay penalties for up to six months based on reasonable cause criteria. To receive the penalty abatement, a taxpayer must call the IRS at the toll-free number listed on their penalty notice and explain the situation to the assistor. If the taxpayer qualifies for the abatement, the assistor will manually adjust the tax account.

IRM 21.5.6.4.30 (04-22-2019)

The -O Freeze

The -O (Disaster Indicator) freeze will only be input

systemically by Information Technology Services (IT) at the request of the Disaster Program Office or on a case-by-case basis by Compliance personnel.

Employees outside of Compliance will no longer input the -O freeze.

Reminder: Taxpayers will no longer self-identify for disaster relief by writing a disaster designation in red at the top of their tax return.

The -O freeze allows for special penalty and interest calculations

The -O freeze suppresses some Master File and IDRS notices

The -O freeze does not freeze the module from refunding

The -O freeze may be systemically set on identified taxpayer accounts in presidentially declared disaster areas

The -O freeze is released when the current date is beyond the secondary date (disaster ending date) of the TC 971 AC 087

When performing account research, the -O freeze is seen on CC ENMOD, CC IMFOLE or CC BMFOLE. If a practitioner calls, is located in a covered disaster area and maintains records for several taxpayers located outside the disaster area, inform the practitioner to call the Special Service line at 866-562-5227.

“BE PATIENT. THINGS WILL BE SORTED OUT AND THERE’S LIGHT AT THE END OF THE TUNNEL!”

State Filing Relief

Many states will piggyback federal filing relief. Practitioners will have to check with the respective state revenue departments to determine what is applicable in the particular jurisdiction.

Practice Management Issues

The filing delay for Hurricane Ian to Feb. 15, 2023 provides challenging practice management issues. A multitude of filing deadlines will come back to back in 2023, including the Jan. 31, 2023, deadline for information returns; Feb. 15, 2023, deadline for Ida-related returns; and March 15 and April 15, 2023, deadlines for 2022 returns.

Additional considerations include the inability to e-file returns while the e-file system is offline to update for 2022 returns. No one wants the experience of having to file a paper return unless absolutely necessary.

Those who print tax organizers in November, December or early January will find that prior year figures will print as zero if the 2021 return has not been filed.

READY, SET, GO: 2022 INDIVIDUAL FILING SEASON, HERE WE COME!

By Carol A. Vance CPA, J.D.

Time just flies. We are quickly moving into the holidays, and as CPAs we know yet another busy season is around the corner. While a major tax law change has not transpired in the past year, an individual tax update will be helpful as we move into the new tax season. This piece serves as a follow-up to the “Children, Conservation and Cryptocurrency” article than ran in the Winter 2022 issue of Florida CPA Today and offers helpful updates on what you need to know.

WHAT’S OLD IS NEW AGAIN WITH CHILD TAX CREDIT

IRC §24 Child Tax Credit reverts back to a potentially nonre fundable $2,000 credit per child under the age of 17 without the advanced child tax payments. The credit remains partially refund able up to $1,500 (as adjusted for inflation) for lower income taxpayers and will be reduced back to $1000 in 2026.

IRC §21 Child and Dependent Care Credit for 2022 non refundable again and limited to 35% of the first $3,000 in household and dependent care expenses per child for maximum of two children and begins to phase out (but not below 20%) at $15,000 adjusted gross income.

IRC §129 Employer Provided Dependent Care Assistance Programs also revert back from $10,500 to a limit of $5,000 to escape income inclusion.

CONSERVATION MAKES BIG INROADS

IRC §25C is renamed the “Energy Efficient Home Improvement Credit” for qualified expenditures made in 2023 through 2032 providing a maximum $1,200 annual credit (up from $500 lifetime limit) on 30% of the costs to replace windows, skylights, doors, and insulation on an existing residence. The credit increased to $2,000 a year for heat pumps, central air-conditioning, water heaters, natural gas, propane, furnaces or boilers approved as energy efficient. Starting in 2025, the product identification number must be disclosed on the return. For qualified energy property the U.S. residential property, must be a dwelling used as a residence originally placed in service by the taxpayer but is not now defined as the principal residence.

IRC §25D is renamed the “Residential Clean Energy Credit” and applies to solar, wind, geothermal, fuel cell (limited to a $500 credit per year) and biomass stove or boiler property expenditures in existing or new residential construction. The applicable percentage credit ranges from 30% of the cost in 2022 to 22% in 2034 when the credit is scheduled to expire. This is a nonrefundable credit that may be carried forward and may be applied on any U.S. property owned or used by the taxpayer.

IRC §30D is renamed the “Clean Vehicle Credit” and applies to new electric vehicles (EV) under a written binding contract after Aug. 16, 2022 and placed in service after Dec. 31, 2022. The maximum credit of $7,500 is now broken into two equal parts involving a critical minerals requirement and a battery component requirement. The criteria for these two parts will need to be satisfied by the “qualified manufacture” as certified by the government. Most of the qualifications involve some American source materials, labor or trading partners to meet the qualifications. This credit is limited to EV cars with a Manufacturer’s Suggested Retail Price under $55,000 and an MSRP under $80,000 for SUVs, pick-up trucks and vans. Two- and three-wheeled vehicles are no longer eligible for this credit. Put the brakes on! While there is no phase-out for credits based on the manufacturer’s volume of sales, there is now a modified

adjusted gross income (AGI) limit for the taxpayer. The credit is not allowed if modified AGI in the current or preceding year exceeds $300,000 for MFJ/Surviving Spouse, $225,000 for HOH, or $150,000 for all other individual taxpayers. The taxpayer may transfer the credit to the sales dealership and would be advised to do so in order to negotiate a lower price if the credit exceeds the taxpayer’s tax liability. Note that there is a recapture provision if the purchaser receives a payment in return for the credit transfer.

IRC §25E is the new “Previously-Owned Clean Vehicles Credit” of the lesser of $4,000 or 30% of the vehicle sales price. Taxpayers with modified AGI of half the new car limits are excluded from this credit ($150,000 for MFJ/ Surviving Spouse, $112,500 for HOH, $75,000 for all other individual taxpayers). The vehicle must be at least two model years old and purchased for $25,000 or less in a qualified sale from a dealership. Taxpayers will only qualify for this credit every three years. The dealership transfer rules under IRC §30D for the credit also apply to this new IRC §25E credit.

Get the show on the road but proceed with caution. CPAs should assist clients by carefully analyzing these AGI parameters, the cost of the vehicle, the age of the vehicle, battery replacement, and warranty terms. At this time, a typical EV battery is warrantied for eight years, but most used EVs under the $25,000 limit are already seven years old. The availability of an expanded electrical grid and convenient charging stations are additional considerations.

CRYPTOCURRENCY: OUT OF THE DARK COMES LIGHT

IR-2022-61. The IRS reminded taxpayers that they must check the box on Page 1 of the 2021 1040 to answer either yes or no: At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?

IR-2022-33. Form 14457, Voluntarily Disclosure Practice Preclearance Request and Application, has been revised to include virtual currency and is available to taxpayers for willfully failing to timely disclose virtual currency transactions.

Infrastructure Investment and Jobs Act, PL 117-58 and IRC §6045(c)(1)(D) and (g)(3)(B)(iv) will require 1099-Bs to be filed in broker-like transactions effective in 2024. Some larger crypto firms have already started providing this information to their clients. Cryptocurrency transactions involving digital assets in which a person is responsible for regularly providing a service effectuating transfers of digital assets on behalf of another person is the target of the 1099-B reporting requirements.

A HEALTHY EXTENSION

IRC §36B was extended to continue the Premium Tax Credit health insurance subsidy until 2026.

THE WORK NEVER ENDS FOR SMALL BUSINESSES OR THEIR ADVISORS!

The Corporate Transparency Act (CTA), PL 116-283 §6403, requires corporations, LLCs, LPs, LLPs, LLLPs, and statutory business trusts to provide information about the owners and beneficial ownership information to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Proposed regulations

(RIN 1506-AB49) seem to result in yet another full employment clause for CPAs and lawyers who advise small businesses since FinCEN has estimated that more than 30 million businesses in the U.S. will need to comply. The CTA does not apply to federally regulated and publicly traded companies (subject to SEC regulations). On Sept. 30, 2022, the Treasury released Federal Register 59498 Vol 87, No. 189, providing the enactment date of Jan. 1, 2024. Reporting companies created or registered before this date will have one year, or until Jan. 1, 2025, to file their initial reports while companies created or registered after Jan. 1, 2024, will have 30 days to file their initial reports. Once the initial report has been filed, the 30-day deadline shall apply to updating changes in the beneficial ownership.

HAPPY NEW YEAR 2023?

As we start our new tax season, CPAs should keep their ear to the ground for final regulations regarding the K-2, K-3 and Corporate Transparency Act compliance. The Taxpayer First Act of 2019 may blindside our clients with the nowproposed RIN 1545-BN36 e-file mandate with more than 10 information returns for 2022 filings due in 2023 – unless a reprieve is granted to make it effective in 2024.

Buckle up and remember we are fortunately guaranteed job security by ever-changing Congressional and regulatory whims.

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United States ESTATE TAX AVOIDANCE by Non-Resident Non-Citizens: THE FOREIGN CORPORATION

By Gary A. Forster, J.D., LL.M

CORPORATIONS

All United States situs assets held by a non-resident non-cit izen (“NRNC”), both tangible and intangible property (unless falling within a limited exemption), are subject to the U.S. estate tax. Those same assets held in a foreign cor poration are excluded from the estate tax.1

The foreign corporation is used to break the estate and gift tax ownership connection to U.S. situs assets. The offshore entity separates the NRNC individual or foreign trust from direct ownership of U.S. assets (removing any estate tax arising upon the death of the NRNC shareholder). Shares in a foreign corporation held by an NRNC are considered situated outside the U.S. and subject to neither gift nor estate tax.2

Treasury Regulations place “situs” of a corporation at the place of organization.3 The regulations further state that this test applies “irrespective of the location of the stock certif icates.”4 Shares of stock owned by an NRNC decedent in a U.S. entity are thus subject to estate tax.5 Conversely, NRNC equity in a foreign entity (taxed as a corporation) is not subject to estate tax.6

1. IRC §2104(a).

2. Treas. Reg. §20.2105-1(f).

3. Treas. Reg. §301.7701-5(a).

4. Treas. Reg. §20.2104-1 (a)(5); §20.2105-1(f) (shares of stock issued by a foreign corporation are not U.S. situs assets).

5. Id. (first citation).

6. This conclusion is reached because IRC §2104(a) states that shares of stock are treated as having a US “situs” “only if issued by a domestic corporation.”

TRUSTS

Foreign trusts (formed by an NRNC) should make U.S. investments through a foreign holding company. Using sep arate foreign companies to hold different trust assets both (i) avoids exposure to the estate tax on trust assets7 and (ii) segregates corporate assets thereby increasing liability pro tection. The holding company must carefully comply with applicable corporate formalities and be treated (for legal, financial, and operational purposes) as separate and distinct from its owner(s).

U.S. property transferred by an NRNC to a foreign trust during his or her life remains subject to estate tax if the grantor retains at his or her death the power “to alter, amend, revoke, or terminate” the rights of a trust beneficia ry.8 If the NRNC grantor may revoke or deplete a foreign trust which owns U.S. situs property, the Internal Revenue Service will include in the NRNC’s estate any trust assets considered to be located in the United States.9

The NRNC grantor of a foreign revocable (ignored) trust owning U.S. property must move the trust assets into a foreign holding company (itself owned by the trust) before death. The foreign corporation will generally break the estate tax connection to the NRNC.

7. See §2104(a).

8. §2104(b).

9. §2104(b); See Rev. Rul. 55-163, 1955-1 C.B. 674 (“The situs of an equitable interest in a conventional private trust is determined by reference to underlying assets”).

The NRNC grantor may otherwise reduce the risk of incurring estate tax by relinquishing control of (and benefit from) the trust. However, if the grantor dies within three years after relinquishing such rights, the estate tax will not be avoided.10

Foreign trust assets may subject an NRNC grantor to estate tax even if trust assets are foreign-situs (on the date of the grantor’s death).11 If U.S. property was initially in the trust but was later sold and replaced with foreign assets, such assets may be deemed U.S. property if the transfer occurred within three years of the NRNC’s death.12

INVERSIONS

NRNCs should initially acquire U.S. property in the foreign entity. Transferring stock in an existing U.S. corporation to a foreign holding company may cause a foreign holding company to be treated as a U.S. corporation for tax purpos es.13 Until 2018 (Tax Cuts and Jobs Act of 2017), the 35% U.S. corporate income tax rate was one of the highest on earth and applied to worldwide corporate income. Shifting ownership abroad though “inversion” typically reduced net income tax. The legislative intent of Code §7874(b) was to block the shift of such ownership to a low-income tax jurisdiction.

Anti-inversion regulations provide that, if at least 80% ownership of the new foreign corporation is retained, the offshore entity will be deemed a U.S. corporation and receive no tax benefits from the reorganization. Further more, the anti-inversion regulations, interpretating the statutory percentage provisions, provide that if the U.S. shareholders retain less than 80%, but at least 60%, of the new corporation, the new foreign entity is not deemed a U.S. corporation but loses certain tax benefits. The foreign entity is prohibited from using U.S. tax credits or net operating losses to offset gains from asset transfers to the new corporation.14

Deemed U.S. corporation status (of a foreign holding com pany) technically applies if: (i) the U.S. corporation becomes a subsidiary of a foreign corporation or otherwise transfers substantially all its assets to a foreign corporation; (ii) the former shareholders of the U.S. corporation hold at least 80% of the foreign corporation’s stock; and (iii) the foreign corporation does not have substantial business activities in the foreign country of incorporation.15

11. IRC §2104(b).

12. IRC §2104(b).

13. IRC §2104(b) (“any property of which the decedent has made a transfer, by trust or otherwise, within the meaning of sections 2035 to 2038, inclusive, shall be deemed to be situated in the United States, if so situated either at the time of the transfer or at the time of the decedent’s death.”

IRC §7874(b).

14.See TD 9834 Preamble Background

15. See H.R. Conf. Rep. No. 108-755, at 560–61 (2004).

REAL PROPERTY

Real estate has tax situs in the jurisdiction in which it is located. Consequently, U.S. real estate (a tangible asset) is included in the taxable estate of an NRNC.16 If real estate is instead owned by a foreign corporation (itself owned by the NRNC), the property is excluded from gift and estate tax exposure.

Acquisition by the NRNC of U.S. real estate through a foreign corporation avoids estate tax on the property. If U.S. real estate is initially purchased directly by the NRNC, the subsequent transfer of the property to an offshore corpora tion could have tax consequences or be treated as an inver sion. Appreciated U.S. real estate held by an NRNC may trigger taxable gain upon transfer to a foreign corporation.17

PARTNERSHIPS

Unlike the rules regarding corporate stock, the tax situs of foreign entities taxed as partnerships is ambiguous. The limited case law suggests that a factual examination of the partnership’s assets and business activities is necessary to determine situs.18 The IRS has not ruled on exactly how to determine the situs of foreign partnership interests in the hands of a NRNC.19 Situs may be based on such factors as where the partnership does business or holds assets or where the equity holder resides.

IRS rulings suggest that the taxable U.S. estate of an NRNC will include the NRNC’s pro-rata share of U.S. assets held by a foreign partnership if either (i) the country of formation does not recognize the partnership as a legal entity or (ii) the partnership dissolves upon the death of a partner.20 In either case, the partnership entity is disregarded and its U.S. assets are deemed owned by the partners (and situated in the United States).21 A U.S. federal appeals court confirmed that dissolution of a foreign entity upon the death of one of its owners causes its U.S. assets to be included in the NRNC owner’s estate.22

If the country where the partnership was organized recog nizes the partnership as a legal entity (which survives the death of a partner), then equity in the partnership will likely be recognized by the IRS. Situs of equity in the partnership must then be determined.

16. Treas. Reg. §20.2104-1(a)(1).

17. IRC §897(j).

18. See Blodgett v. Silberman, 277 U.S. 1 (1928).

19. Rev. Proc. 2015-7.

20. C.f. Sanchez v. Bowers, 70 F. 2d 715 (2d. Cir. 1934) (reasoning that where the marriage partnership entity in Cuba dissolved upon the death of the husband, it substantially changed the entity such that it would necessarily terminate upon liquidation, and the dissolution of the entity was enough basis to levy an excise tax upon the decedent’s share of assets).

21. Sanchez v. Bowers, 70 F. 2d 715 (2d Cir.1934).

22. Id.

One court ruled that, if equity in a foreign partnership is intangible property, situs is the domicile of the decedent.23 Treaties (if applicable) typically follow the same logic.

One IRS position is that equity has situs at the business location of the partnership. In any case, the situs of an IRS recognized partnership seems unrelated to the location of partnership property.24

If the entity is recognized by the IRS, avoidance of U.S. situs may be established by, for example, either avoiding U.S. operations or holding partnership equity in a foreign corporation. Foreign situs will keep the value of partnership equity outside the taxable U.S. estate of the NRNC partner.

THE LIMITED LIABILITY COMPANY

The clarity of U.S. law establishing the country of organiza tion as the situs of “corporate” stock, makes foreign limited liability companies an attractive option. The LLC is gener ally more protective of owner equity than the corporation, because of the special nature of a “charging order.” Although LLC membership interests are not identical to corporate stock, Treasury Regulations treat foreign LLCs as corpora tions for tax purposes (unless the LLC elects otherwise), if all members have limited liability.25 If any of the members do not have limited liability, the LLC is treated as a tax partnership.26 Establishing limited liability in a foreign LLC is typically not difficult.

If a foreign LLC is treated as a corporation for tax purposes, ownership interests in the LLC are not U.S. situs property and may be transferred tax-free by NRNCs (during life or at death).27 One planning technique is to own U.S. real estate (or a U.S. real estate holding company) through a foreign LLC (itself owned by the NRNC or a foreign entity).

23. See Blodgett v. Silberman, 277 U.S. 1 (1928).

24. Revenue Ruling 55-701., 1955-2 C.B. 836

25. Treas. Reg. §301.7701-3(b)(2)(i)(B). Just the reverse of the default rule for domestic entities. Technically, this section classifies an entity as an “association,” but Treas. Reg. §301.7701-2(b)(2) makes clear that this designation is akin to being a corporation.

26. Treas. Reg. §301.7701-3(b)(2)(i)(A). Pierre v. Comm’r, 133 T.C. 24 (2009) (holding that although a single-member LLC is disregarded for income tax purposes, the entity must be respected for Gift Tax purposes when determining whether the assets gifted were the LLC’s assets or ownership in the LLC itself).

27. Pierre v. Comm’r, 133 T.C. 24 (2009) (holding that although a single-member LLC is disregarded for income tax purposes, the entity must be respected for Gift Tax purpos es when determining whether the assets gifted were the LLC’s assets or ownership in the LLC itself).

The structure moves situs offshore (to the LLC, typically taxed as a corporation) avoiding estate tax. In the case of appreciated real estate (subject to U.S. tax on gains from sale), no tax is payable on appreciation until the property itself is sold (irrespective of any transfer of equity in the foreign entity owner).

FLORIDA RESIDENTS WITH PROPERTY IN OTHER STATES

Although Florida imposes no estate or gift tax on its residents, several other U.S. states impose estate tax on non-residents owning property in the state. The tax is typically levied on tangible property. For instance, Massa chusetts imposes estate tax on tangible property in the state, to the extent of value exceeding $1 million (upon the death of the non-resident owner). Fortunately, Massachusetts (and states similarly taxing non-residents) allows for the avoid ance of the estate tax (on tangible property in the state). The non-resident need only own the property in an entity. The entity owned by a nonresident is considered intangible property held outside the state. This removes Massachusetts situs and eliminates the Massachusetts estate tax payable (upon the death of the owner/LLC member).

NRNCs incur U.S. estate tax on bequests of U.S. situs assets. If such U.S. assets are held in a foreign corporation, they are excluded from U.S. estate tax. The foreign corporation (or LLC taxed as a corporation) is used to break the U.S. estate and gift tax connection to U.S. situs assets. Equity in the for eign holding corporation is not U.S. situs property and may be transferred tax-free by NRNCs (during life or at death).28 NRNCs should own U.S. situs assets through a foreign cor poration (outside the U.S. estate tax net).

The same strategy applies to avoid estate tax imposed on tangible property imposed by some U.S. states. To avoid (for instance, Massachusetts) estate tax, non-residents should hold tangible property in an LLC.

28. Pierre v. Comm’r, 133 T.C. 24 (2009) (holding that although a single-member LLC is disregarded for income tax purposes, the entity must be respected for Gift Tax purpos es when determining whether the assets gifted were the LLC’s assets or ownership in the LLC itself).

MAKING FRAUD

BRAINSTORMING MORE PRODUCTIVE

By Sean A. Dennis and Karla M. Zehms

Note: This article describes findings originally published in an article titled “A natural field experiment examining the joint role of audit partner leadership and subordinates knowledge in fraud brainstorming,” which can be found in Accounting, Organizations and Society, Volume 66, pages 14-28.

Professional standards require auditors to conduct fraud brainstorming sessions for every audit (e.g., AS 2110; AU-C 240). These sessions inform fraudrelated judgments throughout the audit and establish reference points that teams later use to evaluate whether they have adequately addressed fraud risk. The importance of brainstorming recently led us and a Big 4 firm to ask: What can the partners leading these sessions do to make them better? Working with national leadership at this firm, we conducted a first-of-its kind live research study on a total of 77 actual audit engagements to investigate. The answer, it turned out, was both elusive and counterintuitive: Partners can reliably improve the engagement team’s consideration of fraud by focusing their leadership and mentoring efforts on senior associates rather than managers. Why? Because managers already have a sophisticated understanding and appreciation of fraud risk. Audit partners often engage more with managers than with seniors during fraud brainstorming since more experienced auditors can produce results more effectively and efficiently. However, our evidence shows that this approach may be counterproductive. Brainstorming

is a uniquely unstructured task with a loosely defined deliverable – innovative, yet plausible ideas about how management might be committing fraud (and procedures that can test whether this is actually happening). If seniors do not yet understand or appreciate the nuances of fraud risk the way managers do, then they may have more room to learn from partners in the context of an unstructured brainstorming session.

Against this backdrop, we set out to learn (1) whether partner leadership might help managers and seniors improve their appreciation and understanding of fraud risk during brainstorming sessions and (2) how this might improve the team’s response to fraud risk. We worked with national leadership at our sponsoring Big 4 firm to develop research materials that could be deployed in actual fraud brainstorming sessions on live audits. This allowed us to intervene with partner leadership behavior in the field and study naturally occurring differences in the reallife experience and knowledge of managers and seniors.

In collaboration with leadership at the firm, we developed a set of leadership cues that audit partners could use to help improve fraud brainstorming sessions. We designed

these cues to help partners (1) use the brainstorming sessions as professional development opportunities, (2) promote professional skepticism, and (3) guide productive effectiveness/efficiency tradeoffs. For each of these objectives, we included cues that were general in nature (e.g., “emphasize the session as a training opportunity”). We also included corresponding cues to initiate related targeted discussions (e.g., “discuss any relevant personal experience on engagements involving fraud”). For brevity, we refer to these as “general cues” and “targeted cues,” respectively.

Three audit firms provided a total of 77 engagement teams for the research. Business unit leaders in each of the firms helped us conduct the study. These individuals distributed memos to the lead partners on each of the engagements with basic information about the study. For partners assigned to our “treatment” condition, this memo also included our full set of leadership cues. Partners in the separate “control” condition did not receive any leadership cues and were simply told to conduct brainstorming as normal. For brevity, we refer to partner leadership in the treatment condition as “prompted leadership” to reflect how we prompted partners with leadership cues.

At the end of the fraud brainstorming sessions, one audit manager and one audit senior on each engagement received a survey from their respective business unit leader. This survey requested information about the client, the audit team, and the individual’s experience during the brainstorming session. We designed this process so that the manager and senior on each engagement independently answered the same questions about the same brainstorming session. We also undertook other measures to ensure experimental control and safeguard confidentiality.

Results from the experiment show that prompted leadership helped seniors appreciate and understand fraud risk significantly more than “normal” leadership (i.e., in the control condition). Additionally, managers did not show any systematic improvement in these measures, regardless of whether they were in the prompted leadership condition or the normal leadership condition. That is, managers appear to thrive in brainstorming sessions, regardless of how partners lead them. We also find that the improvements in seniors’ understanding and appreciation of fraud risk went on to subsequently influence the audit plan. That is, this improved understanding and appreciation among seniors resulted in engagement teams conducting more fraud-related procedures, more fraud-related procedures that had not been performed

in prior years, and more procedures that incorporate unpredictability. Collectively, these results suggest that leadership cues can be particularly effective in improving brainstorming outcomes when these cues are tailored to less-experienced subordinates.

We also conducted a follow-on survey to understand why prompted leadership mattered so much more for seniors than for managers and to determine which leadership cues drove the improvements we observed. In this survey, both managers and seniors reported that partners use the general leadership cues very often during fraud brainstorming sessions. However, when we asked how frequently partners use the targeted leadership cues, managers and senior provided very different responses. That is, managers reported significantly higher frequencies than seniors. Since managers and seniors generally attend the same brainstorming meetings, these findings suggest that seniors may be less aware of these targeted cues than managers (or, conversely, that managers naturally internalize these cues regardless of whether/how the partner explicitly delivers them). In any case, these results suggest that seniors find the targeted leadership cues to be novel, but managers do not. Our overall findings suggest that the novelty of targeted cues triggers more engagement among seniors, improving their appreciation and understanding of the client’s fraud risk. This ultimately leads to a more comprehensive engagement-level response to fraud risk.

CONCLUSIONS AND RECOMMENDATIONS

Our study yields two primary inferences. First, partners commonly use general leadership cues during brainstorming – emphasizing the session as a training opportunity, discussing the importance of effective and efficient brainstorming, and discussing the importance of professional skepticism in general. But targeted cues are the real drivers of improvements to brainstorming – discussing relevant personal experience on prior engagements involving fraud, emphasizing effectiveness and efficiency to promote an appropriately calibrated response to fraud risk, and discussing the importance of professional skepticism targeted at specific accounts with a potentially higher level of fraud risk. Targeted cues from partners that attract and retain the attention of seniors appear to be key to achieving high-quality leadership in this task.

Second, managers and seniors appear to approach brainstorming with different expectations of partner leadership. Because of this, seniors appear to respond very diligently to targeted leadership cues from partners,

even though those cues may already be second nature for managers. These diligent efforts from seniors are very strongly associated with meaningful and observable improvements in brainstorming outcomes.

We therefore encourage partners to consider the following recommendations when leading fraud brainstorming sessions:

• Develop specific discussion points for brainstorming meetings; do not simply fall back on general engagement management goals and priorities. Reallife examples and discussions of the client’s specific circumstances appear to be particularly helpful.

• Redirect conversations to the specific attributes of fraud that make it more difficult to detect than errors.

• Redirect attention from managers to seniors and encourage seniors to speak up and be actively involved.

• Encourage partners and managers to mentor seniors about targeted brainstorming cues before brainstorming sessions.

Our research shows that focused, high-quality partner leadership can be particularly effective in training and developing the least-experienced members of the team. While this finding may seem simple, these team members may be the easiest for partners to overlook. Partners may instead (instinctively) focus their leadership efforts on managers to add immediate value to the audit. In this way, our findings highlight an opportunity for enhanced compliance with auditing standards that address planning and supervision. Audit firms routinely make significant investments to create meaningful work and emphasize professional development for junior auditors. Our findings highlight the simple, yet powerful potential for partners to facilitate these efforts through their leadership.

Sean A. Dennis is an Assistant Professor of Accounting at the University of Central Florida Kenneth G. Dixon School of Accounting. Karla M. Zehms is the Ernst & Young Professor in Accounting and Associate Dean of Research & PhD Programs at the Wisconsin School of Business at the University of Wisconsin-Madison.

Your wealth deserves a thoughtful plan

BURNS NEVINS WEALTH MANAGEMENT GROUP

Robert Burns, CFP®, ChFC®, CPWA®

Executive Director

Wealth Partner

3825 PGA Boulevard, Floor 9 | Palm Beach Gardens, FL 33410 | 561.694.5666 robert.m.burns@jpmorgan.com | jpmorgan.com/burnsnevins

Certified Financial Planner Board of Standards Inc. owns the certification mark CFP®, ChFC® is a registered trademark owned by The American College of Financial Services and Investments & Wealth Institute is the owner of the certification marks CPWA®. J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment advisor, member FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

INVESTMENT AND INSURANCE PRODUCTS: • NOT A DEPOSIT

• NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NO BANK GUARANTEE • MAY LOSE VALUE

© 2021 JPMorgan Chase & Co. All rights reserved.

HOW CAN FIRMS IMPACT THEIR LOCAL COMMUNITIES

Over the years, the idea of a “local accounting firm” or a community’s “local accountant” has evolved. What once was a profession relied on for managing bookkeeping, payroll and taxes has grown into a field benefitting communities. Most firms now offer everything from litigation support and audit services to real-estate advisory and transactional support. With that, however, comes a larger responsibility.

As the profession has grown, so has the need for community involvement. Accounting firms have the opportunity (and, some would say, obligation) to be more than just local businesses. They now set examples for others as educators and advocates for the underserved, giving back through volunteer service, empathy and support.

In South Florida, Gerson Preston Klein Lips Eisenberg Gelber (Gerson Preston) has executed a simple philosophy: to champion individuals and businesses in South Florida. Since 1959, when founder Gary R. Gerson first opened his door to clients, Gerson Preston has made giving back a priority in everything they do. Their ongoing efforts focus on improving financial literacy throughout local communities, with a concentration on students of all ages, women, small business owners and more.

“Over the past 60 years, we’ve redefined what it means to be a local accounting firm. We see the ever-growing need for enhanced financial literacy in our communities and we’re proud to offer education and support to all the individuals and businesses that call South Florida home,” said Gary Gerson, founding senior partner of Gerson Preston.

For Partners Stuart Rohatiner, CPA, JD, and Melisse N. Burstein, CPA, ABV, CFF, financial- literacy has been a calling in the community.

Rohatiner has partnered with the Overtown Youth Center (Miami) for 10 years to present a series of financialliteracy classes providing young people with the tools to be successful and create a better future for themselves and their families. Rohatiner also works with Alonzo and Tracy Mourning Senior High School and Miami-Dade Academy to expand their financial programing. Through a series of online sessions, various community leaders touch on financial literacy topics such as budgeting, taxes, credit scores and more.

“The work that Rohatiner, and Gerson Preston, are doing at our local schools is incredible,” said Alonzo Mourning, vice president of player programs and development for

The team at Gerson Preston Klein Lips Eisenberg & Gelber PA

the Miami Heat and NBA Hall-of-Famer. “These courses aren’t just helping high-school students – they’re changing financial literacy in homes; educating parents, neighborhood partners and business associates; and expanding financialliteracy education throughout the community.”

As a wife, mother and partner in the accounting profession, Burstein has worked with organizations targeting women of all ages, demographics and backgrounds. Burstein helps members of these female-focused groups understand their financial situations and recognize available options. She also works with elementary-school programs that give young girls the opportunity to learn about various professions, including accounting. During Burstein’s last in-person visit (pre-COVID), 10- and 11-year-old girls interviewed her about what it means to be an accountant, what she does in her role and how they can enter the field. “People who are financially informed are better able to take control of their circumstances, improve the quality of their lives and ensure a more stable future for themselves and their families,” said Gerson Preston Managing Partner Steven Klein. “The recent passing of the Dorothy L. Hukill Financial Literacy Act in the State of Florida, requiring Florida high-school students to pass a financial literacy class to graduate, is a great achievement. It speaks to the importance of business leaders advocating for change in communities.”

FIND YOUR FIRM’S CAUSE

Much like the communities of South Florida, there are neighborhoods throughout the state – and the nation – that welcome the input and involvement of local accounting leaders in their community and civic activities. There is a drought of knowledge-sharing outside the accounting profession. This presents a great opportunity for us, as business leaders, to give back – sharing business and financial acumen so people can participate actively and confidently in the communities they call home. Plus, sharing time and knowledge to support a cause you’re passionate about is extremely fulfilling.

For Gerson Preston, the cause is financial literacy. For your firm, it can (and should) be whatever you’re passionate about: education, gender equality and women’s rights, poverty and food security, environmental issues...the list goes on. Community organizations and non-profits are short staffed and underfunded around the globe, so any assistance you and your firm can offer (volunteerism, food drives, fundraising etc.) is much appreciated.

Volunteerism also boosts internal moral. Encouraging your staff to give back and be part of your firm’s socially

conscious efforts results in greater job satisfaction and leads to higher productivity.

As the accounting profession has expanded, so has society’s reliance on it for guidance, advocacy and education. Accounting firms have so much to offer communities outside of client services. What Gerson Preston is doing for financial literacy is just one example of how firms can, and do, make a difference in their communities.

If you’re unsure how you or your firm can help, reach out to local civic associations and community partners. Talk to colleagues and your team and decide what you’re passionate about. The FICPA’s Young CPAs (YCPA) Committee leads the profession in annual, statewide CPA Day of Service. It’s the perfect way to get involved!

Your community has brought support and success to your firm, so whatever your cause, embrace it and give back to those who call it home.

To learn more about Gerson Preston and their financial literacy efforts, visit gpkleg.com and follow them on Facebook, LinkedIn and Twitter.

CPA Day of Service 2023

Mark your calendars for Saturday, May 20, 2023 Throughout the state, CPAs will gather to give back to their communities. In early 2023 there will be a call for service projects in which you and your peers can participate.

You can start a project or join in the fun, but don’t miss the opportunity to make a difference!

For more information about CPA Day of Service, visit FICPA .org/cpa-day-service.

Build custom tax plans in minutes for your clients, with this first-of-its-kind software that automatically mines data and insights from tax returns in Intuit Lacerte Tax or Intuit ProConnect Tax.

To explore more, visit IntuitAccountants.com/tax-advisor or scan this code with your phone:

Increase your advisory practice by developing your niche

By Randy Crabtree, CPA

As the old saying goes: “Do what you love, and the money will follow.”

Josh Lance, founder and managing director of the Chi cago-based Lance CPA Group, has taken that to a new level. Josh’s 19-person firm provides accounting and advisory services primarily to craft breweries and digital agencies. While those two industries appear to have little in common, they hold special affection for Josh and his team.

After stints in public accounting and family office management, Josh realized he didn’t want to be a road warrior or a slave to billable hours. One day, he asked himself, “What if I could build a CPA practice that focuses only on the industries I’m passionate about – and run it exactly the way I’d want to run a firm?”

Eight years after Josh had that heart-to-heart conversation with himself, he hasn’t looked back.

While most large firms develop industry specializations, smaller firms tend to serve a wide range of clients that come to them via referrals, primarily from their immediate geographic area. Lance CPA Group is among the new breed of small, nimble firms that serve just one or two niche industries – and they attract a national, and even international, client base.

The key to making the virtual model work is having great talent across the country, a strong culture, flexible work schedules, and best-in-breed cloud-based technology.

EMPHASIS ON INDUSTRY NICHES

When deciding which industries to focus on during his firm’s early days, Josh knew the craft brewery industry was a natural fit. Like me, Josh is a longtime home brewer and craft beer enthusiast with many friends who share his passion. One friend, a very serious home brewer at the time, asked for Josh’s help starting a brewery. That assignment gave Josh specialized expertise and deep industry knowledge that he was able to leverage into advising many other craft brewers. He added digital agencies to his client roster after to getting to know many of those firms when he vetted them to work on the launch of Lance CPA Group.

Another reason Josh is drawn to craft brewers and digital agencies is because he loves working with creative people

who are passionate about what they do. He believes that energy rubs off on him and his team, which makes them more innovative and productive.

MY STORY

Like Josh, I was a well-rounded generalist when I started my career in public accounting. But when I co-founded Tri-Merit about 15 years ago, I knew we had to focus on a few specific areas of the tax code, specifically R&D tax credits, to win business. I didn’t realize at the time how much more fun being a specialist was. By concentrating on just one or two industries, you can dig deeper into that industry and become the go-to expert for companies in that space. I only wish we had realized that sooner.

By showing clients you understand the trends within their industry, as well as their unique challenges and opportunities, you become significantly more referable.

“Lots of breweries come to us and say, ‘Hey, I know you work with breweries. I’ve heard you speak at craft brewing conferences or followed your blog or social media posts. I’d love to have you come and talk and see if we can work together,’” Josh told me on a recent podcast we did together. You can see how the multiplier effect starts to build.

KEY TAKEAWAYS

If your passion is also your niche, your excitement comes through every time you interact with your clients.

Concentrating on just one or two industries allows you to dig deeper into that market and become the go-to advisor.

By showing clients you understand the trends within their industry as well as their unique challenges and opportunities, you become significantly more referable. If you’re ever in Chicago, reach out any time. Josh and I will be happy to buy you a round.

Josh Lance is a frequent contributor to the Intuit® Tax Pro Center. Check out his articles for key insights on advisory services and practice management issues.

Randy Crabtree, CPA, co-founder and partner of Tri-Merit Specialty Tax Professionals, is a widely followed author, lecturer and host of “The Unique CPA” podcast. Follow Randy on Twitter at @RCrabtreeCPA.

Complex Year-End Planning?

Let Paychex Help Simplify It.

Year-end planning is both critical and time-consuming. Paychex has the resources and tools to help make it easier. Visit our free online Accountant Year-End Reference Center to access valuable information, including:

• Ac countant and client year-end guides

• Year-end checklist

• 2022 tax briefing and more. Bookmark and frequent this page to stay informed of timely updates that could impact year-end plans.

• Current state and local filing updates

Paychex Can Help Throughout the Year

Paychex can assist FICPA members all year long with resources and services that can enhance your advisory role. Paychex can provide support with:

• HR-related issues (hiring, compliance, payroll, retirement services and more)

• Educational resources, including free CPE webinars

• Up -to-date local and state tax information and more

Employee burnout - How to spot it and what to do about it

By Paychex

Employee burnout often manifests as an increasing lack of enthusiasm and engagement that builds over time in response to job dissatisfaction. Burnout can also impact your company’s bottom line, through: increased employee absence, lower productivity, and higher turnover.

Learning to spot the early signs of employee stress can help business leaders take action to prevent burnout from impacting their staff.

What is workplace burnout?

Workplace burnout is the emotional and physical exhaustion caused by job and/or personal stress that ultimately affects an employee’s performance. Burned-out workers may shut down and become overwhelmed, leaving them unable to complete job tasks successfully.

What are the causes of employee burnout?

Employees burn out for many reasons. Increasing job pressures and the ability to communicate virtually at any time of the day can make “turning off” work difficult. This can lead to burnout, which is a common reason for low productivity. While some job stress is expected, extreme factors or a mix of multiple stressors can weigh someone down.

When employees become burned out, they can suffer from mental anxiety, physical symptoms, emotional outbursts, and a decline in productivity. Burned-out workers may leave to pursue other opportunities, believing a new job will be less stressful or a better fit with their needs.

IDENTIFYING BURNOUT

You can spot workplace burnout by reviewing trends and identifying changes in worker behavior. Employee satisfaction surveys or direct feedback can also provide information about burnout.

Other signs that your team may be stressed include:

• Employees complaining of being stressed, overwhelmed, or under pressure

• A rise in unexplained absences, or complaints about new physical ailments associated with stress, such as headaches or stomachaches

• Managers expressing concern that their team faces an unmanageable workload

• Increases in accidents, errors, or other issues that could be caused by stress and distractions

• Employees signal they may be seeking new employment

WHAT TO DO ABOUT BURNOUT

The best way to deal with burnout is to prevent it from happening. When you notice the signs of burnout becoming more prevalent, prioritize improving the work environment and help employees achieve a better work/life balance.

HOW TO PREVENT BURNOUT IN THE WORKPLACE

Consider a range of strategies and multiple solutions to address burnout and be flexible in your approach. Some ideas may work better than others, but it’s better to proactively try something rather than wait for an employee to develop their own coping mechanisms.

HERE ARE SOME SUGGESTED STEPS YOU CAN TAKE TO PREVENT BURNOUT:

• Recognize the signs

• Evaluate workloads

• Adopt flexible scheduling

• Invest in employee engagement

• Offer an employee assistance program

• Invest in soft-skills training

• Invest in a learning management system (LMS)

• Set expectations for work-life balance

Creating policies that set expectations around completing work, checking email, or availability outside of working hours can be fundamental to helping employees achieve a work-life balance that helps them avoid burnout.

Designing a work environment where employees are challenged and engaged rather than overwhelmed can help avoid employee burnout. Encouraging work/life balance instead of expecting 24-hour availability can allow employees to flourish and remain engaged while on the job.

2022 Tax Law Roundup

The Florida Legislature approved several bills related to taxes admin istered by the Department of Reve nue that may affect your clients. The following summarizes some of the key bills, which were signed into law by Gov. Ron DeSantis.

ELECTRONIC FILING AND PAYMENT REQUIREMENTS

Effective Jan. 1, 2023, taxpayers who paid $5,000 (reduced from $20,000) or more in one of the following taxes during the State’s prior fiscal year (July 1 – June 30) must electronically file and pay that tax during the next calendar year (January – December).

• Communications Services

• Corporate Income

• Documentary Stamp

• Fuel – Local Government User, Mass Transit System Provider

• Fuel – Pollutants

• Fuel – Florida Air Carriers

• Gross Receipts

• Insurance Premium

• Prepaid Wireless E911 Fee

• Sales and Use (including local option sales taxes, surtaxes, solid waste fees, and surcharges)

• Severance (including oil, gas, and sulfur production, solid minerals, and Miami-Dade Lake Belt Mitigation Fee)

The Department sends written notification of this requirement to newly affected taxpayers each fall. If a client’s mailing address has changed, please notify the Department online at floridarevenue.com/taxes/ updateaccount

SALES OF NEW MOBILE HOMES

Effective July 1, 2022, the state sales tax rate on new mobile home sales has been reduced to 3%. Applicable discretionary sales surtax continues to apply. Continue reporting sales of new mobile homes on the Sales and Use Tax Return (Form DR-15).

If you have clients who sell new mobile homes, please email the Department at AcctMaint@floridarevenue.com to confirm that the business activity code (NAICS code) assigned to the client’s sales and use tax account accurately reflects retail sales of mobile homes. This helps avoid filing issues and ensures the Department can correctly process tax returns. Include contact information, business name, and the sales and use tax certificate number(s) for each location where new mobile

homes are sold at retail in your email. For more information about the reduced tax rate on new mobile homes, see the Department’s Tax Information Publication #22A01-12 at floridarevenue.com/taxes/tips

RECORD NUMBER OF TAX HOLI DAYS AND EXEMPTION PERIODS

The 2022 session brought a record nine sales tax and one motor fuel tax holidays or exemption periods. The tax holidays or exemption periods begin on different dates and vary in length from one week to two years. While a few of the tax holidays or exemption periods have already taken place, several are ongoing and more are on the horizon. For a summary of all tax holidays and exemption periods, download a printable calendar at floridarevenue.com/salestaxholidays

If you have a question about tax holidays, exemption periods, or other recent changes to tax law in Florida, call Taxpayer Services at (850) 488-6800 or submit a question online at floridarevenue.com/faq/ Pages/contactus.aspx.

Heather Miller is the Sales and Use Tax Coordinator in the Florida Department of Revenue’s General Tax Administration Program.

By Heather Miller, Florida Department of Revenue

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