January | February 2022 | Vol. 18 No. 1 A publication of the Wisconsin Institute of CPAs | wicpa.org
MISSION DRIVEN Jill Boyle, CPA | 6
Plus: Attracting top talent | 12 Busy season 2022 | 16 DEI and the profession | 20 LLC legislation | 26
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A publication of the Wisconsin Institute of CPAs | wicpa.org
January | February 2022 Vol. 18 No. 1
6 Features
Columns
6 Mission driven Jill Boyle, CPA, knew she would be an accountant in 10th grade, and her community service-oriented family shaped her nonprofit career and volunteerism. By Marcia Tillett-Zinzow
26 WISCONSIN TAXATION Everything old is new again: LLC legislation A rundown on all the things Wisconsin’s new proposed LLC law will contain: What’s new, and what’s staying the same? By Joseph W. Boucher, CPA, JD and Eric W. Klemm, JD
12 Attracting top talent this tax season As tax season approaches, many CPA firms turn to seasonal employees to help carry the heavy workload. Your firm’s brand can make all the difference. By Lee W. Frederiksen, PhD 16 Expecting the unexpected Tax season has always been the most challenging time of the year in public accounting. In light of the past two years, what can we expect for busy season 2022? By Marcia Tillett-Zinzow 20 Building DEI for the future profession Organizations of every size need to appreciate the benefits and richness that can come from having a diverse workforce. By Anita Dennis
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30 FEDERAL TAXATION A “21-gun salute” to 2021 tax legislation A summary of Congress’s 2021 efforts to continue to support pandemic-impacted businesses while also focusing on developing additional areas. By James D. Brandenburg, CPA, MST 34 HUMAN RESOURCES The benefits of SEPs Small business owners may still have time to reduce their 2021 tax bills. Find out who is eligible to establish a SEP and why they should. By James Kieckhaefer, CPA, AIF
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38 Departments 3
In Touch | president & CEO’s message
4 Outlook | chair’s letter 11 Welcome | new members 15 Kudos | members in the news 25 Memorials | departed members
38 TECHNOLOGY Technology trends for 2022 A baseline introduction to the key technology trends every CPA professional should be aware of and understand. By John H. Higgins, CPA, CITP
On Balance
January | February 2022
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2021-2022 WICPA OFFICERS/BOARD MEMBERS Chair Angela C. Thomas, CPA
On Balance is published five times a year by the Wisconsin Institute of Certified Public Accountants (WICPA). Change of address should be sent to: Membership, W233N2080 Ridgeview Pkwy, Suite 201, Waukesha, WI 53188; Phone: 262-785-0445 or 800-772-6939; Fax: 262-785-0838; email: comments@wicpa.org. Statements and opinions expressed are those of the authors and not necessarily those of the WICPA. Publication of an advertisement does not constitute an endorsement of the product or service by On Balance or the WICPA. Articles may be reproduced with permission. © Copyright 2022 On Balance.
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Chair-elect Steven A. Pullara, CPA, CGMA Past Chair Wendi M. Unger, CPA Secretary/Treasurer Lucien A. Beaudry, CPA, JD Directors Jeff Dewane, CPA, CGMA, CMA, MBA John R. Heindel, CPA Ruth A. Kallio-Mielke, CPA Kyle R. Stephens, CPA Stacy A. Stinson, CPA
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IN TOUCH | PRESIDENT & CEO’s MESSAGE “We will continue to enhance the value of the CPA profession and help all stakeholders in their efforts to develop strategies to promote and sustain the CPA credential.”
Sustaining the Value of the CPA Credential By Tammy J. Hofstede
“C
PA Evolution” and “CPA pipeline” are terms we have heard over the past few years, and they are becoming more frequent in our everyday discussions regarding the future of the profession. In addition, we continue to see substantial changes in technology that impact both of these issues. As technology continues to permeate everything we do, we see the continued changes in the CPA Exam designed to redefine the licensure model. The role of the CPA today has evolved, with newly licensed CPAs taking on responsibilities that were traditionally assigned to more experienced staff. Becoming a CPA means CPA candidates need deeper skill sets, more competencies and a greater knowledge of technologies such as data analysis and cybersecurity as well as IT governance. The new exam, expected to launch in 2024, takes a core-plus-discipline approach. There will be three exams in the core: auditing, tax and accounting with technology. A fourth exam will consist of one of the following: tax compliance and planning, business analysis and reporting or information systems and controls. We can’t talk about CPA Evolution without talking about the CPA pipeline. While technology has the ability to automate gathering and organizing data, we cannot lose sight of the need for CPAs to interpret the data and how it’s relevant to their businesses or clients in making decisions. A recent study by the Illinois CPA Society found that the largest barrier to becoming a CPA is the workload and time commitment. Other factors
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include employers not requiring the credential and students not seeing the value or relevance to their careers or the return on their investment. Contrary to popular belief, the costs associated with obtaining the additional credits required to take the exam was not included in the top barriers cited. We have also heard about the pipeline challenges from our members — such issues as “churn and burn,” a lack of manger-level people in the job pool, low starting salaries, no employer encouragement or emphasis on having a CPA in accounting roles, no time given to take the exam and negative perceptions of the profession. Some even say we have an “identity crisis.” It is clear we have big challenges ahead of us. We will continue strategic discussions on the challenges, perceptions and influencers of the CPA pipeline. My ask of you is threefold: 1) Please give some thought to how your place of employment is handling these challenges, 2) consider how YOU can make a difference, and 3) share with us some ideas and opportunities that we can pursue moving forward. We will continue to enhance the value of the CPA profession and help all stakeholders in their efforts to develop strategies to promote and sustain the CPA credential. CPA Evolution and the CPA pipeline are going to be issues that remain with us for some time. Tammy J. Hofstede is president & CEO of the WICPA. Contact her at 262-785-0445 ext. 4518 or tammy@wicpa.org.
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OUTLOOK | CHAIR’S LETTER “Lawmakers often rely on these communications to gauge public opinion in their districts, and they want to hear from you.”
Zooming Our Way to Capitol Hill! By Angela C. Thomas
W
ith my background in state government, joining the WICPA Public Policy Committee seemed like a natural way to contribute my talents and skills to the profession and help progress the goals of our organization. In 2017, I assumed the role of chairperson for the committee, and since then, I have had more opportunities to effect change in Wisconsin and the profession than I ever imagined possible. The needs of CPAs are constantly evolving, and we need to keep the lines of communication open with our legislators.
COVID-19 Tax Penalty Relief: State CPA societies, in coordination with the AICPA, have been requesting that the IRS offer reasonable penalty relief measures for COVID-19-impacted individual taxpayers for more than a year. The Taxpayer Penalty Protection Act of 2021 (H.R. 5155) would provide taxpayers with targeted relief from both the underpayment of estimated tax penalty and the late payment penalty for the 2020 tax year. With appropriate congressional support, the bill should help encourage the IRS to offer reasonable penalty relief measures — all of which the IRS has the authority to do on its own.
Several committees in the WICPA regularly provide opportunities for members to have their voices heard as constituents and accounting professionals. Lawmakers often rely on these communications to gauge public opinion in their districts, and they want to hear from you.
Filing Relief for Natural Disasters: In the past few months alone, the severity and rapid succession of natural disasters occurring across the country have highlighted the urgent need to get the IRS to more quickly offer tax relief to impacted individuals and businesses. Currently, IRS authority to grant federal tax relief from failure to file and failure to pay, and to grant relief from debiting interest, outlined in Section 7508A, is limited to taxpayers affected by federally declared disasters. The bipartisan Filing Relief for Natural Disasters Act (H.R. 3574 / S. 2748) would allow the IRS specific authority to quickly postpone certain deadlines in response to statedeclared disasters, which should hasten badly needed tax relief.
Traditionally, a couple members of the WICPA board as well as AICPA Council representatives and the WICPA president & CEO have journeyed to Washington to meet with our congressional leaders. Because the pandemic travel restrictions made that impossible, we scheduled virtual meetings instead. While we missed the in-person meetings, something great also happened as a result of this new process: We were able to meet with the offices of ALL of Wisconsin’s 2021 members of Congress: Senators Tammy Baldwin and Ronald Johnson; and Representatives Scott Fitzgerald, Mike Gallagher, Glenn Grothman, Ronald Kind, Gwen Moore, Mark Pocan, Bryan Steil and Thomas Tiffany. On behalf of the WICPA, the AICPA and accounting professionals, we discussed the following legislative initiatives:
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The Fiscal State of the Nation: Focus is often on the short-term view provided by the annual federal budget. Enacting this resolution will foster additional transparency regarding the information included in the federal government’s financial report and will ensure that Congress better understands how current and/or future policy may affect the nation’s long-term fiscal health. We encouraged our legislators to co-sponsor the bipartisan concurrent resolution: The Fiscal State of the Nation (H.Con.Res.44 / S.Con.Res.11). This passed the House on Nov. 3, 2021.
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Recognition of Accounting as a STEM Occupation: The accounting profession is seeking recognition as a STEM occupation and believes accounting should be included under the technology definition of STEM. To further that goal, The Accounting STEM Pursuit Act of 2021 (H.R. 3855) was introduced. The accounting profession supports this bill and encouraged members of the House to sign on as co-sponsors to the current bill and encouraged senators to sign onto the companion bill when introduced in the Senate. In closing, the final important message for our congressional leaders was to communicate that the WICPA is available as a resource. Our members are experts and trusted advisors in our respective fields. Additionally, we are here for you — our members — and encourage your participation, engagement and communication within the organization. Be sure to check out Connect, our members-only online community connecting you to more than 7,000 fellow members who share your interests, challenges, technical background and professional experiences. Wishing all of you a healthy, happy and prosperous 2022! Angela C. Thomas, CPA, is the expenditure and revenue accounting section chief for the Wisconsin Department of Natural Resources and the 2021–2022 chair of the WICPA board of directors. Contact her at 608-318-3881 or angela.c.thomas@gmail.com.
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Photography by John Sibilski 6
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MISSION DRIVEN By Marcia Tillett-Zinzow
T
he not-for-profit tax director for Sikich LLP in Brookfield, Jill Boyle, CPA, knew in 10th grade that she would be an accountant. All the aptitude tests she took throughout elementary, middle and high school showed “accountant,” “actuary” and other similar careers as jobs she’d be good at. So when she entered St. Norbert College in 1999, she signed up as an accounting major — and she graduated as an accounting major, never considering for a moment changing her major. But what she didn’t realize back then is that there would be another vocation she’d be equally good at: working with nonprofits. It comes naturally to her, as she grew up in Antigo performing community service with her family at a young age.
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That mission-driven, purpose-driven work always made sense to her — so much so that she has contributed her time and expertise to service on as many as five nonprofit boards of directors or advisory committees at one time. wicpa.org
“My dad was a Cub Scout leader, and my mom was always involved in church,” Boyle said. “We were always working in the kitchen for every church event, setting the tables and taking the money. It was just part of life. I don’t think I knew that some people didn’t do that. It’s just how we were raised.” Her background led Boyle to raise her hand when the firm she was working for asked if anyone wanted to work with nonprofits. She had begun her career like most accounting majors who go into public accounting — working with for-profit clients. “I thought, ‘Sure, I’ll learn it.’ And then I reached a point where I realized the clients are different — they work for a mission, and their passion made them great to work with,” she said. That mission-driven, purpose-driven work always made sense to her — so much so that she has contributed her time and expertise to service on as many as five nonprofit boards of directors or advisory committees at one time. As the following list will attest, she has been drawn to organizations that serve women and children. • Impact100, an organization of women who collectively award transformative grants to deserving community organizations • An affiliate of the Down Syndrome Association of Wisconsin • Meta House of Milwaukee, an organization working with women battling addiction and their families
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• Momentum Milwaukee, a women’s networking group Boyle helped found in 2014 • Running Rebels, a mentoring organization for Milwaukee youth Boyle remains on the board of Running Rebels, which she said is her longest-running board service. She joined the board in 2013 and currently serves as board chair. She is deeply committed to the organization, which she found after searching for ways to bring more diversity into her life. Her enthusiasm underscores the need to believe in the mission of any organization you decide to volunteer for. “I went through a community leadership program at Marquette called Future Milwaukee, and through it I learned a lot about the Milwaukee community,” Boyle said. The group discussed topics such as conflict resolution, race, politics, the city’s diversity — and the many negative statistics reported by the media that tarnish Milwaukee’s reputation. So after she came out of Future Milwaukee, she went searching for a cause — and saw a LinkedIn post about Running Rebels looking to build their board. “I looked at the organization, and I thought, ‘Here I am — I’m white, I’m from up north, I’m an accountant, I’m Catholic and I lived in Tosa (at the time) — there is not a lot of diversity surrounding me,’” Boyle said. “I wanted to challenge myself to find diversity in my life and to learn and to grow. And I found this organization that was doing work in those areas, and I wanted to learn more about it.” The sports aspect of Running Rebels also attracted Boyle, who plays and coaches volleyball and is an avid fan of the Milwaukee Brewers, the Milwaukee Bucks and the Green Bay Packers. Running Rebels began as a way to get at-risk youth off the streets and onto the basketball court, where they were coached and mentored by the organization’s founder, Victor Barnett — who had noticed gang leaders recruiting youth in his neighborhood and decided to do something about it, according to the organization’s website. Today, the organization partners with Milwaukee County to provide mentoring and supervision to youth who have been through the Juvenile Justice System. The list of activities has grown and now includes (in addition to basketball) volleyball, chess, photography, videography, a music program and virtually anything young people may suggest they want to do. “If a young person comes in and says they’re interested in a certain activity, they’ll find a way to make it happen,” Boyle said. “Running Rebels truly will consider any activity that will help save even one more Milwaukee youth from getting into trouble.”
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Running Rebels offers youth many activities that provide mentoring and a productive use of their time.
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Running Rebels truly will consider any activity that will help save even one more Milwaukee youth from getting into trouble. All activities provide mentoring and help youth learn life skills in addition to just giving them a place to go and something productive to do with their time. Last summer, Running Rebels partnered with United Way on a youth employment program that focused on financial literacy. The organization employed teens for the summer to teach them job skills and money management, Boyle said. “They learned about having their own bank account, getting a paycheck and what it means, what you should spend and what you should save, how to shop and get the best deals, what taxes are and why we pay them, and how to manage money in general,” she said.
Board service: a two-way street for CPAs Boyle enjoys the satisfaction that comes with making a difference and easing some stress for nonprofits that are
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Every CPA has a gift to give to a nonprofit that will help them. There’s not a single person who shouldn’t consider doing something like this. Boyle is deeply committed to Running Rebels and has always chosen to volunteer for organizations she truly believes in.
doing good work in the community. She also appreciates the networking opportunities volunteering provides. She encourages all CPAs to get involved on a board of directors or join a committee if they’re not already on one — not just for the satisfaction of giving back, but also for the takeaways that service offers. “It’s a great way to not only be involved in your community, but also to grow personally. You learn a lot of things about group dynamics and decision-making dynamics, and it can be a great networking tool. You don’t even know it at the time, but you’re also building a great network,” she pointed out. Boyle pointed out that sometimes board involvement can lead to business for a person’s employer.” I’ve had a connection who I met through board service approach me asking if Sikich would be able to help their business. They know my firm and trust their work because of my board service. So it can be a really great business development tool,” she said. Board service requires two things, Boyle pointed out. One is time, and the other is commitment to the mission of the organization. Both need to be considered before joining a board. She noted that smaller boards for organizations that don’t have a staff will probably require more time than a larger board that operates more in an advisory capacity. They are called “working boards,” and there’s a reason for that. The board treasurer may wind up actually planning and running
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fundraising events, keeping the organization’s books and even sometimes writing the checks. On the other hand, an advisory board, such as that for Running Rebels, may require only a few hours a month to prepare for and attend meetings. Commitment to an organization’s mission is also important, and Boyle urges CPAs to look for organizations that are consistent with their interests. Her interest in finding diversity led her to Running Rebels, but she noted she might not be good on other boards. “I know what causes interest me, and I found a fit. It is important that you have your heart in it when you join a board, or it can be a waste of time for both of you.” Boyle noted that virtually any board of directors would jump at the chance to have a CPA sitting at the table. She also pointed out that some boards — not all — may have a financial giving requirement for board members. You should know that going in, and if making a donation is not in your budget, find another board to share your time and expertise with. The bottom line is this: Get involved. Learn. Network. And make a difference — as she has with Running Rebels. “Every CPA has a gift to give to a nonprofit that will help them,” Boyle said. “There’s not a single person who shouldn’t consider doing something like this.”
Marcia Tillett-Zinzow is a Wisconsin freelance writer and editor. Contact her at mtzinzow@icloud.com.
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Attracting Top Talent This Tax Season Your employer brand can make all the difference
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According to the U.S. Bureau of Labor Statistics, 4 million Americans quit their jobs in July, leaving a record-breaking 10.9 million open positions.
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By Lee W. Frederiksen, Ph.D.
s tax season approaches, many CPA firms turn to seasonal employees to help carry the heavy workload. However, the search for temporary employees might be more difficult this year.
According to the U.S. Bureau of Labor Statistics, 4 million Americans quit their jobs in July, leaving a record-breaking 10.9 million open positions. It’s being called “The Great Resignation,” and professional services firms in the Midwest and South are the hardest hit. Accounting firms are at particular risk during this time. Mid-career employees between the ages of 30 and 45 — those with the skills many CPA firms rely on — are driving resignations. There’s always been competition to hire top talent, but with the number of open jobs today, people have more options than ever before. Mid-career employees are most familiar with tax laws and require less training than junior CPAs. Unless accounting firms can build highly qualified candidate pools, increased training costs for less experienced seasonal help will cut into your profit margins. Amidst all this bad news, here’s some good news: By understanding the factors at play in the workforce, your firm can design a strategy that will attract the professionals you need for tax season and beyond.
A shift in priorities 2020 brought into clear focus ideas on work-life balance, remote work and the benefit of a shared cultural fit. Midcareer employees — especially those who work full time and care for young children or elderly parents — began to question the value of their current positions. While competitive salaries are the leading factor for individuals looking for a new job, Hinge’s 2020 Employee Study found other factors are driving resignations, too. Professionals today are attracted to organizations that share
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their values and promise to be a good cultural fit. They also respond to strong leadership and a clear vision for the future. These factors are certainly important for individuals seeking full-time employment, but contractors also look for the same qualities when signing on with a new firm. Hiring seasonal employees affords you the chance to evaluate the work performance, communication skills and professionalism of potential full-time employees. But remember, temporary employment allows contractors to evaluate your firm and its culture at the same time. Make sure to put your best foot forward.
Create an irresistible offer As you develop your job descriptions, consider the following points that will be attractive to job seekers. 1. Flexible work schedules. Flexible work schedules are a strong selling point for employees at all stages of their careers. Consider how you can meet your clients’ needs and entice the candidates who will make tax season successful. 2. Remote or hybrid work. Last year, a growing number of accounting firms offered the option of remote work to their full-time and seasonal employees. Offering
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these options when possible will help accounting firms attract and retain the individuals they need throughout the year. 3. Opportunity to work with professional accounting software. Contract employees seek opportunities to use cutting-edge accounting software, which will make them more attractive candidates for full-time work. Showcase the expertise of your firm and increase productivity by using high-powered software and offering to train seasonal help. 4. Team-based work. Job seekers value being part of a good team, one they can learn from and contribute to. Offering this option to seasonal employees promotes the expertise of your team and enhances your firm’s corporate brand and reputation as a workplace. Now that you have an idea of what the top candidates are looking for, it’s time to make sure your organization is visible to top accounting talent.
Build a highly visible, robust employer brand A strong employer brand is essential to your recruiting efforts. Your employer brand is your reputation as a workplace or employer. Since last year’s social justice protests, your employer brand has risen in importance as a component of your overall corporate brand. It has also come under more scrutiny by job applicants. Having a dedicated career page on your firm’s website is essential to your recruiting efforts. But potential employees will scour your entire site for information. Tell your organization’s story across your website, social media channels and created content. Pay close attention to search engine optimization (SEO) to ensure the people you’re looking for can find you.
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The work you put into hiring seasonal employees today can help you recruit and retain top talent year-round. Your competitors are only too eager to lure away prospective candidates. Put yourself in the minds of potential employees What will potential employees find out about your firm when they conduct a Google search or look on job boards and trade associations? It’s critical to know the answer and have a strategy in place to showcase your firm in an authentic and compelling light. The work you put into hiring seasonal employees today can help you recruit and retain top talent year-round. Your competitors are only too eager to lure away prospective candidates. Tailor your messaging and job descriptions according to a candidate’s career stage, industry, position and talent profile. You’ll be excited by the results. Lee W. Frederiksen, Ph.D., is managing partner at Hinge, a research-based branding and marketing firm for professional services. Contact him at lfrederiksen@hingemarketing.com.
Special kudos Kathy Koltin Blumenfeld, CPA, will assume the role of Wisconsin Department of Administration Secretary for Gov. Tony Evers on Jan. 17, it was announced by Gov. Evers in December 2021. Secy. Blumenfeld had held the post of Department of Financial Institutions Secretary since December 2018 (confirmed by the state Senate in October 2019). “Secretary Blumenfeld has been an incredible partner and leader at DFI since the beginning of my administration, including during the pandemic, providing guidance and steady leadership for Wisconsin’s financial institutions and the financial well-being of folks across our state,” said Gov. Evers. “I know she will bring the same sort of strategic and dependable leadership to the Department of Administration, and I’m really looking forward to her serving in this new role.” The WICPA wishes Secy. Blumenfeld the best of success in her new role.
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kudos William A. Bares
Matthew J. Brannan
Robert E. Freese
Gerald Arnholt, financial advisor for VantagePointe Financial Group, has been appointed to the 2021-2022 Membership Council of the Independent Business Association of Wisconsin. William A. Bares, CPA, has joined Vrakas CPAs & Advisors (Vrakas), Brookfield, as a tax principal with responsibilities in tax consulting, compliance and planning, as well as reviewing complex corporate, partnership and individual tax returns for privately held businesses and their owners. Matthew J. Brannan has joined Vrakas as a tax associate after graduating from Wisconsin Lutheran College. He interned with the firm in spring 2021. His responsibilities include income tax preparation for privately held businesses and their owners. Ryan Brummund, CPA, has started a new position as operations analyst at CyberOptics Corp. in Golden Valley, Minnesota. Heather Dunn, CPA, senior VP and CFO of West Bend Mutual Insurance Co., was recognized on Nov. 1 as a 2021 Notable Woman in Insurance by BizTimes Media. Robert E. Freese, CPA, has joined Vrakas as a tax principal with responsibilities in reviewing complex corporate, partnership and individual tax returns, along with tax consulting, compliance and planning for privately held businesses and their owners. Jan Hauser, CPA (retired), has been appointed to the board of directors for Enfusion, a global investment management software company. Joanne Horvath, CPA, MBA, has joined Rogers Behavioral Health as chief financial officer, providing financial leadership and oversight for hospital operations, strategic financial planning, capital resources and investment management.
Joanne Horvath
Michael Jankowiak
Ryan Laughlin
Amanda M.A. McNutt
Michael Jankowiak has joined Vrakas as an audit associate after graduating from UW–Whitewater. His responsibilities include financial statement and employee benefit plan audits and other assurance engagements for privately held businesses. Marcy Kempf, CPA, a partner at Cohen & Co., was appointed to the advisory council of SecureFutures, a teen financial literacy nonprofit. Ryan Laughlin, CPA, MST, JD, AEP, has joined Hawkins Ash CPAs as a partner. Laughlin has more than 20 years of professional experience with regional, national and global public accounting firms and provides tax and transactional planning to business owners, individuals and families. Carrie Leonard, CPA, has been elected the new president of Johnson Block and Co. Inc. following the retirement of the former president, Janice Froelich, CPA, from its board of directors. Froelich served on the board for 30 years.
Molly A. Mundinger
Nicole C. Rice
Brian Wilson
Security Financial Services Corp., until he retires at the end of 2022, at which time Oldenberg is expected to assume the roles. Nicole C. Rice, CPA, has joined Vrakas’s Kenosha office as an audit manager. She is responsible for performing various audit, review and benefit plan tasks for privately held businesses. Robert Traylor, CPA, has been promoted to executive vice president for Horicon Bank, where he also serves as chief financial officer. Brian Wilson, CPA, has been promoted to partner at RitzHolman CPAs.
ORGANIZATION NEWS
Amanda M.A. McNutt, CPA, has joined Vrakas as an audit principal with responsibilities in audit, review, compilation and benefit plan services for privately held businesses as well as business planning and owner transitions.
Baker Tilly US LLP announced the management buy-out of Baker Tilly Search & Staffing, formerly a subsidiary of Baker Tilly US LLP, effective Nov. 30. Named Truity Partners, the new recruiting, staffing and executive search business will be led by partners Laura Huggett, CPA; Carver Smith, CPA; Kim Herlitzka and Joel Buffington, along with their directors.
Molly A. Mundinger has joined Vrakas as an audit associate after graduating from Concordia University–Wisconsin. She interned with the firm in spring 2021. Her responsibilities include financial statement and employee benefit plan audits and other assurance engagements for privately held businesses.
Huberty has announced mergers with Van De Kreeke and Associates S.C. and RRK CPA LLC. The merged firms will continue to operate as Huberty. The merger gives the firm a presence in Port Washington in addition to their offices in Sheboygan, Plymouth, Fond du Lac, Ripon and Minocqua.
Mark C. Oldenberg, CPA, was appointed by Security Financial Bank (SFB) to succeed Paul Rudersdorf, CPA, as bank president, effective Jan. 10. Rudersdorf will remain in the role of CEO of SFB and CEO and president of its bank holding company,
Vrakas CPAs & Advisors has relocated its Kenosha office as a result of continued strategic growth and is now located at 6309 60th Street, Suite 200, in Kenosha.
Want your new job, promotion or award mentioned in Kudos? H Email your announcement and photo in JPG format to mtzinzow@icloud.com. H
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Expecting
the Unexpected
In the wake of two of the most challenging tax seasons in recent history, what will busy season 2022 look like? By Marcia Tillett-Zinzow
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ax season has always been the most challenging time of the year for CPAs, especially those in public accounting. They call it “busy season” for a reason: long hours, loads of work, new requirements, often new forms, sometimes new tax laws and always the filing deadlines looming closer every day. The last two years, the coronavirus pandemic added a lot of chaos to the usual frenzy. As tax practitioners and CPAs were in the midst of 2019 tax returns, Congress started passing laws and making changes — including deadline extensions — at breakneck speed. Everybody was sent home to try and stop the spread of disease, tax staff had to study the details of new legislation so they could help their clients understand it, technologies were rapidly implemented and/or upgraded to enable secure remote work, and staff at all levels were in work-from-home learning mode. “Where tax legislation is concerned, we always expect the unexpected,” said Jim Brandenburg, CPA, MST, a tax partner with Sikich LLP in Brookfield. “But the pandemic was the unexpected on steroids.”
Jim Brandenburg
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Last year’s tax season had some last-minute surprises as well, with another tax relief bill, the Consolidated Appropriations Act,
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Where tax legislation is concerned, we always expect the unexpected, but the pandemic was the unexpected on steroids. – Jim Brandenburg
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being enacted in late December 2020 and on its heels the American Rescue Plan Act in March 2021. “Both of those were significant, and any time you have a major tax change that’s either leading into or during busy season, it complicates things,” Brandenburg said.
don’t have the same items you had to deal with last year, but there are still some things out there that you do have to deal with. We just have to wait and see.”
Training ramps up Jordan Boehm, CPA, a principal with CLA, said additional trainings will be needed this year, whether from a tax standpoint, new FASB and GASB pronouncements or auditing standards that are coming into effect in the next year or two.
Some things have settled down as we approach busy season 2022. We’ve learned how to work from home, mastered Teams and Zoom meetings and settled into a new routine — whether it’s working remotely, being back in the office after a long time away (sometimes with new rules) or keeping a hybrid schedule that mixes remote and in-office time. But busy season still can hold surprises. “It always seems that there are some changes, whether it’s IRS additional filings or regulations that are out there or some items that Congress has changed,” said Brandenburg. “You
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Jordan Boehm
“Not only are we training newer team members on how to just be a professional and work in the environment and
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“
Not only are we training newer team members on how to just be a professional and work in the environment and understand what they’re doing, but I think for those of us who have been doing this for 10+ years, we’re learning a lot, too. – Jordan Boehm understand what they’re doing, but I think for those of us who have been doing this for 10+ years, we’re learning a lot, too. There’s probably more emphasis on learning for professionals this year because there have just been a lot of things changing,” Boehm said. At Wegner CPAs, headquartered in Madison, accounting and auditing staff have already started training on new lease standards that won’t actually kick in until next year, according to Glenn Miller, CPA, the firm’s managing partner. “Changes in the way leases are accounted for will have a big effect on Glenn Miller a lot of our clients, so we’ve tried to be proactive on that side. All our staff have gone through eight hours of training already on the new lease standards, and that’s just the tip of the iceberg; there will be more and more trainings going forward.” Another new challenge — cryptocurrency — may require training as well, albeit more so in the future. Brandenburg pointed out that the IRS has issued rules regarding cryptocurrency and has focused more prominently on it this year, moving a question formerly on Schedule 1 to page 1 of the Form 1040, asking if the taxpayer has been using cryptocurrency. Brandenburg suspects the IRS is making sure those who are investing in or buying and selling with cryptocurrency are reporting any income from it. As more and more people start using it for whatever purpose, he predicted, more questions will be added to the return, expanding the time spent on preparing and filing tax forms. “It may not make a significant tax impact on the return, but there will be a lot of additional reporting that will have to be done, and it may be pretty onerous in some cases. Taxpayers will need to be aware, and CPAs are going to have to get up to speed on it so they can keep their clients compliant,” he said. “Look for more guidance and training on this in the future.”
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All our staff have gone through eight hours of training already on the new lease standards, and that’s just the tip of the iceberg; there will be more and more trainings going forward. – Glenn Miller
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Staffing concerns continue Busy season calls for all hands on deck, and it’s no secret the profession has been experiencing the effects of a narrow CPA pipeline. This prompts many firms to go outside the profession for extra help during tax season — and an unusual amount of poaching. The competition for talent is stiff — and not just between firms. “We also compete with accounting demands in private industry, and we compete globally with every other profession out there,” said Boehm, who is involved with campus recruiting. “I’ve heard comments from some students who say finance and information technology careers are more attractive to them than accounting.” Carver Smith, CPA, recently a partner at Baker Tilly’s Search & Staffing division, now Truity Partners, said he’s never seen the demand for CPAs so high. He noted that the big firms are stepping up their compensation packages to attract and retain talent. Carver Smith
“There was just an article in the Milwaukee Business Journal about the ‘escalating perk wars’ developing between professional service firms,” Smith said.
The article outlined some steps being taken by PwC, which will now allow most staff to work anywhere in the continental U.S. and not be tied to an office, and KPMG, which is boosting 401(k) accounts, expanding paid leave across all categories and lowering the cost of health insurance. At Baker Tilly, Smith said, one thing the firm is focusing on is work-life balance, adding three additional holidays to its days-off calendar and seven “disconnect days” throughout the year to create three-day weekends when the workload allows. When the firm first announced the news, Smith watched for reaction on the firm’s intranet site and saw a significant amount of excitement expressed in the comments. “Staff really resonate with it and appreciate being appreciated,” he said. “People will work if they feel they’re appreciated, and it’s got to be more than just an occasional ‘Thanks.’” The pandemic has shown most organizations that people can be effective and sometimes even more productive in a virtual or flexible work environment. Brandenburg, Boehm and Miller all said their firms offer staff their choice of working from home, coming into the office full time or working a hybrid schedule, and that will continue through busy season. At Wegner, staff fill out a work-life balance statement, letting the firm know how many hours they want to work. “It’s built into our scheduling model. If someone says they want to work 40 hours a week and no more, that works in our system — and
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People will work if they feel they’re appreciated, and it’s got to be more than just an occasional ‘Thanks.’ – Carver Smith our supervisors are watching to make sure people aren’t working more,” Miller said. He’s hopeful that this year goes better than last year. Smith noted the effect the pandemic had on busy season culture the last two years. “Staff had all the downside of busy season and none of the perceived upside — long hours and pressures without the camaraderie and bonding that comes with toughing through a busy time in an audit or tax room to help a client together,” he said. Boehm and Brandenburg offered similar sentiments. Brandenburg said his firm misses having their usual busy season ice-breakers, like “Ice Cream Fridays,” pizza lunches and chili cook-offs — activities that bring people together, offer a break from the “busyness” and build relationships. Boehm thinks there will be an effort this year to get people into the office to collaborate with one another so that sense of culture isn’t lost, but they are also trying to maintain culture while working remotely. “One of the things we’ve done that has worked pretty well is virtual audit rooms,” he said. “We pick a day of the week and a few hours during that day, put a Teams meeting on the calendar and tell the team, “Okay, we’re going to work, and we’re also going to chat and have a little bit of fun, get to know each other and break up some of the monotony of the day.” There is still, however, a level of stress not seen before as busy season 2022 approaches. “I’ve been doing this for 31 years, and I don’t recall a time when it’s been as stressful as it is right now,” said Miller, who noted during the November interview that both Madison and Dane County were still under a mask mandate. “I talk to my neighbors who work in different industries and friends at Epic, and everyone is just frazzled. They’ve just had it,” he said. “I hope there isn’t another [COVID] surge in our society because it will add more complexity to busy season. Fortunately, however, we at least know what to do now.” Marcia Tillett-Zinzow is a Wisconsin freelance writer and editor. Contact her at mtzinzow@icloud.com.
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BUILDING DEI FOR THE FUTURE PROFESSION 20
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By Anita Dennis
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hen Richard Caturano, CPA, CGMA, became AICPA chair in 2012, expanding minority representation in the profession was one of his top priorities. “I felt that the biggest contribution I could make would be to take steps that would make the profession more representative of the population of clients we serve,” said Caturano, former national leader and now executive sponsor of culture, diversity and inclusion (DEI) at RSM in Boston. His conviction that proactive efforts were needed ultimately led to the creation of the AICPA National Commission on Diversity and Inclusion (NCDI), of which he is a past chair. Ken Bouyer, who served as the commission’s inaugural chairman in 2012 and is a current member as well as Americas director of inclusiveness recruiting for Ernst & Young (EY), says that the current environment provides an important impetus for change.
See it to be it One of the many ways to build a diverse accounting profession and work toward increasing the number of Black CPAs is to recognize and create awareness of the numerous Black CPAs who are making a difference. Among those are young leaders who inspire future Black CPAs. To raise their visibility, the collaboration behind the Black CPA Centennial project celebrated the first 40 Under 40 Black CPA Award winners in November 2021. One of the winners was Brittany Cummings, CPA, who first learned about the profession when a classmate’s parent gave a presentation to her high school calculus class. “He talked about the many career options and the fact that you don’t do the same thing every day,” said Cummings, who is now a director at BKD in St. Louis. When she eventually took a college accounting class, “It just clicked.” Another honoree, Kenneth Omoruyi, CPA, learned about the profession as an undergraduate accounting student in his native Nigeria. With a dream of immigrating to the United States, he decided that earning his CPA would give him instant credibility as a foreign-trained accountant. “No matter what background a person has or what school they went to, it is a leveler” that certifies a certain amount of competence, experience and expertise, he said.
Find or be a mentor For Cummings, the road to becoming a CPA was not always easy. During her first few years at the firm, she was self-conscious about being the only Black person in the room,
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I felt that the biggest contribution I could make would be to take steps that would make the profession more representative of the population of clients we serve. – Richard Caturano and she worried about things like her hair being different from her colleagues’. She tended to stay in the background, but then she saw someone else get an opportunity that she felt she deserved. Since then, “I always speak up,” she said. Cummings was encouraged by several important role models along the way. One partner urged her to be her authentic self and avoid putting up a façade to fit in. The partner also introduced Cummings to Black business contacts and recommended her for stretch assignments. Another woman encouraged her to apply for the 40 Under 40 Award despite Cummings’ doubts about her chances of being chosen. Both role models were white women. “A mentor doesn’t have to be Black,” she said, “just an advocate who will help you have the confidence to be yourself.” Omoruyi also benefited from early encouragement. After moving to Houston, he met Sam Abraham, CPA, at his church. Abraham had his own firm and had also attended university in Nigeria. He reviewed Omoruyi’s transcripts and experience and mentored him on what he needed to do to qualify as a CPA. “It was easy to connect with him,” Omoruyi said. “It was someone with similar experience, who looked like me, who made me believe that if he could do it, I could also.” Both role models and mentors can clearly make a difference in the career paths of aspiring and new Black CPAs. Caturano and Bouyer have been actively involved in mentoring. Caturano met Tracey Walker in a firm focus group on DEI issues. Because of her passion and persistence, “I realized she was exactly what we need for our program to be successful,” Caturano said. After working on his team, Walker has now succeeded him as national leader of culture, diversity and inclusion in the firm.
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Bouyer has mentored Lanier Mason, CPA, another 40 Under 40 honoree, since Mason first joined EY US. “That’s the importance of role models,” Bouyer said. “You need to see that people who look like you can have a great career.”
Improve a business’s DEI To accelerate the rate of change, “organizations, large to midsize and small, need to appreciate that there is such a benefit and richness from a diverse workforce,” said Bouyer. “It’s also important to consider whether you have a team that will serve changing demographics among clients, other stakeholders and society,” he said. To enhance diversity, Cummings recommended that firms consider factors in addition to grades in the recruiting process, including the reasons some students don’t fit the profile they are seeking. Cummings worked three jobs while going to college, but one firm refused to hire her because her GPA was one-tenth of one percent below their standard cutoff. She has thrived at BKD. While she said her firm does have Black partners who have been hired from outside, there has never been a Black partner who came up through the ranks within the firm. “My goal is to be the first one,” she said. For DEI to succeed, Caturano said, it must be a top strategic priority for the organization. In fact, he believes it can help achieve other critical goals, such as bringing in new business and staffing, by expanding the firm’s scope.
Inspire others Omoruyi’s dedication to the profession was tested when, due to a series of timing and other challenges, he ended up taking the CPA Exam 19 times before passing. His persistence paid off, and he is now thriving as the owner of his firm and
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Organizations, large to midsize and small, need to appreciate that there is such a benefit and richness from a diverse workforce. – Ken Bouyer was also recognized as a 40 Under 40 Black CPA honoree. Omoruyi knows and believes that sharing the many hurdles he overcame can help inspire other aspiring CPAs to persevere. Just as John W. Cromwell Jr. — who became the first Black CPA in 1921 — paved the way for generations of Black CPAs, Omoruyi believes the current generation of Black CPAs can also open doors for others. He was helped by someone, so he has also worked with several Black aspiring CPAs who have since become licensed, including providing CPA Exam study materials for some. He points to the ripple effect of one person inspiring five others who go on to inspire many more. “You’re building a legacy,” he said. Anita Dennis is a freelance writer based in New Jersey. The Black CPA Centennial (BCPAC) was a yearlong effort in 2021 to honor, celebrate and build upon the progress Black CPAs have made in shaping the accounting profession. The BCPAC was a collaborative effort of the AICPA, Diverse Organization of Firms, Illinois CPA Society, National Association of Black Accountants and National Society of Black CPAs.
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It shouldn’t take four days with no power, water, or communication to find out who your friends are.
BUT SOMETIMES IT DOES.
And that’s the Silver Lining®.
To find out more about the Silver Lining and a special discount on home and auto insurance just for members of the WICPA, contact this official supplier of the Silver Lining. Professional Insurance Programs at (414) 277-0154 or info@profinsprog.com Or to find an agency near you, visit thesilverlining.com.
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January | February 2022
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Volunteer this April for
Reading Makes ¢ents Sponsored by the WICPA Educational Foundation
Help Students Get Money-Smart April is National Financial Literacy Month and a great opportunity for you to help students get smart about money by reading to an elementary school class (K - 4th grade) about the basics of money.
The WICPA Educational Foundation will provide everything you need. Express your interest by contacting Devin Yates at 800-772-6939 ext. 4511 or devin@wicpa.org. 24
On Balance
January | February 2022
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memorials Larry Alan Cicchese, CPA (1967 – 2021)
Larry Alan Cicchese, CPA, died on Wednesday, Dec. 8, 2021, at age 54. Cicchese graduated at the top of his class from the Northwest Electronics Institute and then proudly served his country in the U.S. Marine Corps during Desert Storm. Following his service, Cicchese graduated from the University of Wisconsin– River Falls with a Bachelor of Business Administration in Accounting. He spent his career as a CPA with Bauman Associates CPAs and Advisors in Eau Claire. He was a member of the Fletcher-Pechacek American Legion Post 121 and served as their financial officer. Cicchese is survived by his mother, Shirley; two sisters; two brothers; seven nieces and nephews; a great-niece; extended family; and many friends.
John F. Fixmer, CPA (1938 – 2021)
John F. Fixmer, CPA, of Rhinelander, died on Saturday, Nov. 6, 2021, at age 83. Fixmer graduated from the University of Wisconsin–Whitewater in 1961 with a Bachelor of Science degree in business. He became a CPA and went to work for Wipfli Accounting in Wausau from 1961 to 1968 and then in Rhinelander from 1968 to 1988, where he served as manager of the Rhinelander office. He returned to Wausau and served as managing partner for Wipfli from 1988 until his retirement in 1996. Fixmer was a faithful member of the Nativity of Our Lord Catholic Church. He also supported the YMCA, many Rhinelander High School projects, the Alzheimer’s Association, and the local business community through the Chamber of Commerce. He was a big supporter of Hodag sports and was a big fan of all Wisconsin sports. Fixmer was preceded in death by his wife of more than 60 years, Dixie, and one daughter. He is survived by his daughter as well as three grandchildren, nieces, nephews, other family and many friends.
Maynard Allen Kunschke, CPA (1933 – 2021)
Maynard Allen Kunschke, CPA, passed away at age 88 on Wednesday, Oct. 27, 2021, in Kaukauna. He was a lifetime member of the WICPA. Kunschke graduated from Lawrence University in Appleton in 1955 and began his accounting career with Alexander Grant & Co. (now Grant Thornton). He became a CPA and ultimately progressed to partner there before moving on to serve as CFO for F&M Bank in Kaukauna. He is survived by his wife of 68 years, Mary Ann; their son; six grandchildren; five great-grandchildren; and many cousins, nieces, nephews and friends.
Robert Anthony Patrickus, CPA, ABV, CVA, CFF (1940 – 2021)
Robert (Bob) Patrickus, CPA, ABV, CVA, CFF, passed away on Thursday, Nov. 25, 2021, at age 81. He grew up in Green Bay, where he proudly earned the rank of Eagle Scout and attended Catholic Central (Premontre) High School, where he played basketball and baseball. Patrickus graduated from St. Norbert College and became a CPA. He later earned accreditations in business valuations, management consulting and financial forensics. Patrickus owned and operated General Bookkeeping and Tax Service with his father and later opened R.A. Patrickus and Associates Accounting firm (now known as Patrickus and Jones SC), helping many businesses and clients for over 50 years. Patrickus also taught accounting at St. Norbert College and continuing education for certified valuation consultants for many years. He is survived by three children; his longtime companion, Melanie Horkman, and her two children; five grandchildren; and his two brothers.
Thomas L. Spero, CPA (1949 – 2021)
Thomas Spero, CPA, passed away on Thursday, Aug. 19, 2021, after a long illness. He was 72. Spero was active in the WICPA and served on the 1983–1984 WICPA board of directors and was a Lifetime Achievement Award recipient. He graduated from Shorewood High School in 1967 and studied accounting at Drake University in Des Moines, Iowa. After graduation, he began working with Touche Ross (now Deloitte) and spent his entire career working there. He was managing partner of Deloitte LLP during the last 19 years of his career and retired in 2008. Spero was an avid community servant who — besides his active involvement in the WICPA — also lent his time to the Greater Milwaukee Committee, the Boys & Girls Clubs of Greater Milwaukee, Junior Achievement of Wisconsin Inc., the Medical College of Wisconsin and the Greater Milwaukee Foundation, among many other organizations. He is survived by his wife of 48 years, Janet; a son and daughter; four grandchildren; and many other relatives and friends.
If you are aware of a member obituary and believe it should be included in Memorials, please send a copy of the obituary or contact Marcia Tillett-Zinzow at mtzinzow@icloud.com.
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{ Wisconsin Tax | LLC legislation }
Everything Old Is New Again:
Wisconsin’s Proposed New LLC Law
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Joseph W. Boucher, CPA, JD and
isconsin’s original LLC law became effective Jan. 1, 1994. Since then, there have been several amendments, almost none of which changed the law in any substantive fashion. The most recent change, for example, 2017 Act 177, created a student entrepreneur program and a reduced filing fee for creating such entities. Additionally, relatively few Wisconsin court decisions have interpreted the law, meaning that the statutory language itself continues to be of primary importance.
Since the LLC’s inception in Wisconsin almost 30 years ago, LLCs have become by far the Eric W. Klemm, JD most popular entity choice for business owners. In 2020, over 90% of all new entities in Wisconsin were LLCs. CPAs have undoubtedly become comfortable working with LLCs in their normal tax and accounting practices. Wisconsin’s proposed new LLC law, Senate Bill 566 and Assembly Bill 566 (S.B./A.B. 566), had its first public hearing on Oct. 21, 2021, as a joint hearing between the Senate Committee on Veterans and Military Affairs and
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Since the LLC’s inception in Wisconsin almost 30 years ago, LLCs have become by far the most popular entity choice for business owners. Constitution and Federalism and the Assembly Committee on Financial Institutions. Currently, its chances look favorable to be passed yet this year and take effect on Jan. 1, 2023. It is important for all business owners in Wisconsin to know about this new law and how it differs from the old law. It is also important for all people who work with and advise Wisconsin business owners to know about the differences. The bill is, in fact, an update to all of Wisconsin’s entity laws, not merely LLCs. It includes corporations, limited partnerships, partnerships, etc., but this article will focus only on the changes affecting LLCs, which are by far the most popular entities in the state. Assuming S.B./A.B. 566 passes, it is important to note what is not changing: There are no provisions in the new law that change the tax treatment of LLCs. All tax-related
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provisions remain the same. This is obviously good news for CPAs trying to understand how the new law will impact their clients. What is changing, however, can still be impactful and important to the practice of CPAs across the state. Some of the changes will simply streamline the process for communicating with the Department of Financial Institutions (DFI) and updating fee schedules. For example, the DFI will be communicating by email instead of sending out new paper cards to remind business owners to file their annual reports (see proposed sections 178.0913, 179.0212 and 180.1622(1) of the bill). However, some changes are more substantial, and while [as of this writing] the final bill has not yet been passed
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and signed, it is helpful to prepare in advance for the more significant changes. The initial steps in creating an LLC will change, and some of these changes will affect or be affected by the CPAs who work with LLCs. For example, under the new law there will be no requirement for a written operating agreement, since operating agreements can be “oral, implied, in a record, or in any combination thereof …” (proposed 183.0102(13)). This means that any type of information about the business can be used to create an “operating agreement” — anything from emails to tax returns and K-1s for LLC members. While written operating agreements will still be advisable for people who go into business together without a written plan, it will be more important than ever for CPAs to ensure that the tax returns and financial statements they’re preparing for their LLC clients accurately
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{ Wisconsin Tax | LLC legislation }
reflect the intentions of the LLCs’ members, since those returns and financial statements will be evidence of member intent in the event of a dispute. The items required to be included in the articles of organization for an LLC will also change. Under proposed 183.0201, the address of the company’s principal office and the email address of the initial registered agent are new requirements, while the current requirement to state whether the company is manager or member managed would be optional. The proposed updates to the annual report requirements (183.0212) would require the name of at least one member if the company is member managed or at least one manager if the company is manager managed. Also important is the expanded ability of the DFI to administratively dissolve entities, which would be expanded to entities that fail to pay any dues, fees or penalties they owe to the DFI. For businesses that undergo a merger, there would no longer be a requirement to file the actual plan of merger. Instead, under 183.1024, the entity could simply file the articles of merger that state that the plan of merger has been properly approved and adopted. If passed, the new law will become effective for all entities as of Jan. 1, 2023. However, under proposed section 183.0110(2), entities formed before Jan. 1, 2023, will be able to file a statement with the DFI opting to continue to be governed by the old law if they so choose. Many portions of the law governing Wisconsin’s most popular business entity are staying the same. However, the early steps in creating an LCC — many of which can now
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The early steps in creating an LCC — many of which can now happen without a written operating agreement, including ensuring that annual report reminders are sent to a functional email and that annual reports contain the correct updated information — will be more important than ever. happen without a written operating agreement, including ensuring that annual report reminders are sent to a functional email and that annual reports contain the correct updated information — will be more important than ever. While the law isn’t yet in effect, it is never too early to be prepared. Joseph W. Boucher, CPA, MBA, JD, is a shareholder with Neider & Boucher S.C., a Madison law firm. Contact him at 608-661-4535 or jboucher@neiderboucher.com. Eric W. Klemm, JD, is an attorney with Neider & Boucher and can be reached at 608-441-2526 or eklemm@neiderboucher.com.
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WICPA Career Center
Post Job Openings l Upload Your Resume l Apply For Jobs
Whether you’re looking for a new career or a new employee, the WICPA’s new and enhanced Career Center can help you make the most of your search.
Find or post a job today at wicpa.org/CareerCenter.
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{ Federal Taxation | 2021 review }
A “21-GUN SALUTE” TO
2021 TAX LEGISLATION
2021
was another challenging year as businesses tried to move ahead after months of pandemic-related challenges. Congress, in an attempt to support struggling businesses, continued its COVID-19 relief efforts while also focusing on developing additional areas. The following three pieces of significant tax legislation were enacted in 2021: • The Consolidated Appropriations Act, 2021 (CAA), signed into law on Dec. 27, 2020 • The American Rescue Plan (ARP) Act, enacted on March 11, 2021
By Jim Brandenburg, CPA, MST
• The Infrastructure Investment and Jobs Act (Infrastructure), signed into law on Nov. 15, 2021 The following is our “21-gun salute” as we highlight 21 business tax provisions enacted in 2021:
CAA 1. Tax treatment of expenses on PPP loans — Following the passage of the Coronavirus Aid, Relief and Economic Security Act (CARES) in March 2020, the IRS announced that the Paycheck Protection Program (PPP) costs would not be deductible since the loans could be forgiven. While this led to much concern for borrowers, it was resolved with the passage of the CAA and its provisions that eliminated cause for concern. One of the key changes
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enacted in the CAA was the ability for borrowers to deduct the costs incurred with a PPP loan. 2. Tax treatment of other government loans and grants — CARES and the CAA introduced several other loans and grants besides the PPP loan, and the CAA extended the deductibility of the costs for other government programs that are also forgiven, such as Emergency EIDL grants and subsidies for certain pre-CARES SBA loans. 3. PPP loans extended — The PPP was introduced under CARES in 2020, and then a “second draw” of PPP with a loan cap of $2 million was included in the CAA. 4. Both PPP and ERC allowed for borrowers — When CARES was passed in March 2020, it stipulated that companies could not apply for a PPP loan and claim the Employee Retention Credit (ERC). However, the CAA reversed course and now permits a company to claim both the PPP loan and the ERC in 2020 and 2021. Note: A borrower cannot claim both the loan and the credit on the same wages. Therefore, they must work through both the PPP and the ERC to maximize their loan forgiveness and the amount of the ERC. 5. ERC extended through June 30, 2021 — The ERC initially was set to last only through 2020. The CAA extended the credit through June 30, 2021. 6. Lower thresholds made ERC easier to qualify for in 2021 — To qualify for the ERC in 2020, an employer needed to show a greater than 50% reduction in gross receipts compared to 2019, but the CAA reduced this threshold to a more than 20% decline in gross receipts. 7. Definition of small employer for ERC changed — A small employer is entitled to the ERC to pay employees whether they are working or not. For 2020, a small employer is measured as having 100 or fewer employees. However, the CAA increased the small-employer threshold to 500 or fewer employees. This change made the ERC available to many more employers in 2021. 8. Enhanced ERC in 2021 — In 2020, the ERC amounted to up to $10,000 per employee each year and then applied a 50% factor, resulting in $5,000 in credits per employee every year. The CAA increased the ERC to $10,000 per employee per quarter and also upped the ERC factor to 70%. Therefore, the revised ERC in 2021 amounted to $7,000 per employee each quarter. This was perceived as a major increase in the ERC benefits for 2021.
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9. 100% restaurant meal deduction allowed — The CAA increased the 50% deduction for meals to 100% for meals purchased from a restaurant in 2021 and 2022. 10. Disaster relief — The CAA offered various expanded disaster relief measures. 11. Shuttered venue operators grants (SVOG) — The CAA provided grants to operators of theaters and other performing arts venues. These SVOG grants also received tax treatment similar to that of PPP loans, in that grants are treated as tax-exempt income, and expenses incurred with the grants are deductible.
ARP 12. ERC extended through Dec. 31, 2021 — The ARP extended the ERC for the third and fourth quarters of 2021. 13. New ERC benefits in 2021 — The ARP expanded the ERC to offer new formats to startup businesses and significantly distressed businesses in the third and fourth quarters of 2021. 14. Restaurant revitalization grants (RRG) — Similar to the relief ushered in for shuttered venue operators, the ARP offered relief for restaurants impacted by the pandemic. 15. Support for unfunded multi-employer pension plans — Many multi-employer pension plans are unfunded, and the ARP made changes to shore up the finances of these plans.
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{ Federal Taxation | 2021 review }
16. Expanded reporting for third-party transactions — The ARP offered new reporting rules for third-party network transactions of over $600 (such as for home and vacation property rentals).
20. ERC changed again — There have been several ERC changes under the CAA and ARP this year, and yet another ERC change was enacted in the Infrastructure bill. This latest bill removes the credit for the fourth quarter of 2021, which is shortly after it was extended for the third and fourth quarters of 2021.
17. Medical and family leave benefits extended — Medical and family leave benefits for employees were extended by the ARP through Sept. 30, 2021.
21. The Build Back Better Act — The Build Back Better (BBB) Act continues to wind its way through Congress under the reconciliation process, and it contains many tax changes. As of year-end 2021, it had not been finalized in Congress. While it has passed in the House, its future in the Senate is uncertain.
Infrastructure 18. Cryptocurrency reporting requirements — Cryptocurrencies have grown tremendously in recent years, but the reporting rules for them have lagged behind. The recently enacted Infrastructure bill introduced new reporting requirements for cryptocurrency and penalties for noncompliance, opening up a new revenue stream to help fund infrastructure projects.
That’s it: 21 for 21. If the BBB is signed into law, there will be many other tax provisions to learn. We will address those in a future article — and find 22 tax changes in 2022.
19. Cryptocurrency treated as cash; additional reporting required — The Infrastructure legislation treats cryptocurrencies used in transactions greater than $10,000 as cash and requires additional reporting and penalties for noncompliance.
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James D. Brandenburg, CPA, MST, is a tax partner with Sikich LLP, Brookfield. Contact him at 262-754-9400 or jim.brandenbug@sikich.com.
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{ Human Resources | Retirement plans }
The Benefits of SEPs Small business owners may still have time to reduce their 2021 tax bills.
W
hat is a SEP?
A Simplified Employee Pension (SEP) plan is an employer-funded company retirement plan. Employers may make tax-deductible contributions that are limited to the lower of 25% of compensation or the Section 415 limit of $58,000 (for 2021) on behalf of each eligible employee. SEP contributions must be made by the company’s tax filing due date (including valid extensions) and are immediately 100% vested. All earnings (such as interest, dividends and capital gains) in a SEP account accumulate on a tax-deferred basis.
By James Kieckhaefer, CPA, AIF
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What companies are eligible to establish SEP retirement plans? Any business owner — whether sole proprietor, partnership or corporation — may establish a SEP.
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Because the employer must generally contribute the same percentage of compensation for all eligible employees, SEPs are often popular with businesses that have very few or no eligible employees other than the owner(s). What companies are best suited for a SEP? Because the employer must generally contribute the same percentage of compensation for all eligible employees, SEPs are often popular with businesses that have very few or no eligible employees other than the owner(s). Family-run businesses through which the owners are looking to find a flexible contribution capability are also suitable candidates for a SEP.
What are the advantages of a SEP to employers? It’s simple. There are no complicated plan documents or procedures involved in setting up a SEP. Also, third-party administration is not required for ongoing recordkeeping. Finally, there is no IRS filing required, such as Form 5500. It’s inexpensive. Because there is less paperwork and recordkeeping required to administer a SEP, the costs of maintaining it are minimal. It’s flexible. Employers sponsoring a SEP are not locked in to making contributions each year. Employers can vary their contributions each year up to 25% of compensation or skip them entirely in any given year. It potentially reduces fiduciary liability. Once the employer makes the contribution to each eligible employee’s SEP account, the employee controls the investment direction of their account. This potentially reduces the employer’s fiduciary liability.
What employees must be covered under a SEP? An employer must cover all employees except those under age 21, nonresident aliens and members of a collective bargaining unit. In addition, the employer may require that the employee has worked a maximum of three of the five preceding years and has earned $650 or more (for 2021) in the current year. The employer may choose to make the eligibility requirements less restrictive. For example, the employer may choose to require that employees work only one or two of the five preceding years. However, all employees — including the owner(s) — must meet all established eligibility requirements.
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How are withdrawals from a SEP IRA account treated? Similar to a traditional IRA, a SEP IRA is subject to required minimum distributions (RMDs), and all withdrawals are treated as ordinary income. Likewise, distributions taken before age 59½ may be subject to a 10% early-withdrawal penalty. The bottom line is that a SEP can still meet the needs of any small business owner who has not filed a 2021 tax return while providing a retirement plan that is low in cost and easy to establish. James Kieckhaefer, CPA, AIF, is a financial adviser and managing director of Kieckhaefer Wealth Management Group/RBC Wealth Management in Brookfield. Contact him at 262-395-1125 or James.Kieckhaefer@rbc.com. RBC Wealth Management is not a legal or tax advisor. RBC Wealth Management is a division of RBC Capital Markets, LLC, registered investment adviser and Member NYSE/FINRA/SIPC.
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{ Technology | Trends }
2022 TECHNOLOGY TRENDS
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T
o say we are living in interesting times is a significant understatement. The rapid evolution of technology on multiple fronts is significantly and rapidly changing every aspect of our lives and commerce. As CPA professionals, whether serving in By John H. our role of attesting to financial Higgins, CPA, reports, managing the financial CITP affairs of businesses small and large, serving as trusted advisors to business or educating our next generation of knowledge workers, it is imperative that we all develop an awareness and understanding of the key mega technology trends. This article provides a baseline introduction to the key technology trends of which every CPA professional should be aware. The graphic below illustrates the key trends shaping our world today. Each of these evolving technologies is having a substantial impact; however, when analyzing them as a group and the relationships between them, you begin to understand the unprecedented period of change we have embarked upon in the history of humanity.
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The rapid evolution of technology on multiple fronts is significantly and rapidly changing every aspect of our lives and commerce. Cloud computing This is the foundational technology that enables the emergence of all the other technology trends. The cloud computing infrastructure provides the capacity, reliability, security and scalability that is necessary to process the massive amounts of data produced by all these technologies.
IoT / big data / data analytics These three technologies work hand in hand to provide us with access to an unprecedented level of information in every industry. The internet of things (IoT) refers to the billions of sensor devices that capture a variety of data values, resulting in “big data” sets. Using data analytics software, big data is processed to provide information that was not available even a decade ago. One of the most practical examples of the application of this trio of technologies is Google Maps. The smartphones that are moving around the world in vehicles serve as IoT devices, feeding into massive datasets, which are analyzed in real time, providing us with visual navigation assistance in our vehicles. Pause for a moment to contemplate just how much data is being analyzed by Google Maps around the world 24/7 and how many people depend on that information to get them from point A to point B as efficiently as possible. Mind-blowing!
Robotic process automation (RPA) The concept of RPA has been around for quite a long time under the guise of different technologies. One of the earliest examples of RPA is the original player piano, which originally used perforated paper to play music on the piano hands-free. Today, of course, player pianos play digital files. A more recent example of RPA is the use of macros in Excel and other applications. An Excel macro executes a series
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{ Technology | Trends }
of keystrokes to perform a routine task in Excel. A classic example is a macro that selects a pre-defined range of cells and prints them to a specified printing device. RPA is simply the technology that automates routine computing processes. The requirements for an RPA application are defined inputs, processes and outputs. If you contemplate the various processes in your office, you will realize just how much of your day-to-day operations meet these criteria. The difference today is that RPA technology can be used to automate increasingly sophisticated processes. You can expect to see a whole lot of RPA applications coming online throughout society over the next few years. How long do you think it will be before McDonalds is using RPA technology to automate the order fulfillment process from end to end?
Artificial intelligence (AI) While RPA is often described as the automation of doing, AI is often described as the automation of thinking. The evolution of AI applications to power devices that think and act like humans is at the same time fascinating and scary. Take the simple example of Alexa asking if you would like a list of things to do today in New York City while you are visiting. It is common for people to carry on complete conversations with Alexa, Siri and others like them. Think about your business and the potential to automate decisionmaking. The entire process of preparing a corporate tax return with all the various decisions independent of human intervention is clearly within reach of this technology. AI has already had a substantial impact and will be the most disruptive and enabling technology of our time.
Blockchain technology In the graphic on the preceding page, I purposefully placed blockchain along the spectrum of all the other technologies. The reason for that is blockchain is a revolutionary model for storing data. Blockchain is so powerful since the database is replicated across multiple storage platforms, providing truth through consensus, and the data stored in the blockchain is immutable. There are multiple applications for blockchain, both public and private. The original application of blockchain is the Bitcoin cryptocurrency system. Cryptocurrency has unleashed the investment of billions of dollars in research and development for all sorts of applications for blockchain technology. It is poised to have a substantial impact on the flow of commerce and information for years to come.
Cryptocurrency and digital money Finally, any conversation about emerging mega technology trends would be incomplete without a discussion
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Each of the technologies discussed is certain to have a significant impact on your organization and your career. of cryptocurrency and more broadly, digital money. There is an especially important distinction between cryptocurrency and digital money. The former is a monetary system developed outside governmental control, whereas digital money typically refers to the transformation of fiat money from paper and coins to digital transactions. If you think about it, we have accelerated this transformation because of the COVID-19 pandemic. The overwhelming share of consumer transactions are now completed with credit cards, money transfer apps like Venmo and Zelle, and traditional ACH transfers. This technology trend is likely to have the most significant impact on CPAs and other financial professionals as our entire global monetary system undergoes a transformation. We have only touched the surface on each of these technology trends. I hope that you will take the initiative to learn more about them as part of your ongoing professional education. Each of the technologies discussed is certain to have a significant impact on your organization and your career. John Higgins, CPA, CITP, is chief partnership officer and co-founder of CPA Crossings LLC. He shares his expertise as a nationally recognized speaker on business technology at education conferences and strategic planning retreats and through online webcasts. Contact him at jhiggins@cpacrossings.com.
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