Category: Tax

A Report from the AICPA/ Blockchain Symposium

I was fortunate to be selected to participate in the AICPA/ Blockchain Symposium, which was held May 2, 2018 at the AICPA offices in New York.   This meeting, which included leaders from around the profession, including practitioners, educators, consultants, and AICPA leadership, was the kickoff of an effort by the profession to address the accounting, auditing, tax, and regulatory issues associated with distributed ledger technologies and assist members in understanding how they work, where they make sense, and what issues they should evaluate associated with their use.  The 64 participants were divided into three working groups for each of two sessions addressing accounting, auditing, tax, legal/regulatory, education, and privacy.  Prior to the symposium, each participant was asked to submit questions related to unresolved issues surrounding blockchain ledger technology and its use in the profession.  The groups evaluated these questions and created a list of possible strategies for a report which will be issued by the end of May.  AICPA will create working groups and an action plan in June, and the initial deliverables will be released at the end of November.

We discussed a wide range of issues where practitioners, clients, regulators, and taxing authorities need guidance to make it possible for us to do business more easily.  Some of the items which I recorded in my notes include the following:

  • The general understanding of the basic terms and concepts related to blockchain needs improvement in the profession.
  • It is clear from observations and behaviors viewed by the participants that cryptocurrencies and ICO’s are a major focus of law enforcement agencies and regulators, while the lack of guidance and caselaw makes it difficult for practitioners to hang their hats on available precedents to make good decisions.
  • Because it’s such a new area with new risks, there are clear issues related to client acceptance, what constitutes sufficient competent evidential matter, and how transactions should be recorded and disclosed for book and tax.
  • Authoritative guidance from the profession is clearly needed – perhaps an accounting/auditing guide for crypto-based ledgers and ICO’s?
  • The profession needs to work with many regulators to address the unresolved regulatory issues with agencies like the SEC, IRS, FASB, PCAOB, and numerous state departments of revenue and securities regulators. There are many unaddressed issues like
    • What represent constructive receipt of a token?
    • Is a token a security, an asset, a liability, an expense, revenue or something else?
    • How does one calculate the accounting and tax basis of bitcoins received in exchange for mining currency?
    • How can we get some “safe harbor” guidance for these unresolved issues so that we can deal with this rapidly emerging area?
  • Unfortunately, we see the possibility of state-by-state regulation of this area instead of federal leadership, which could make it very difficult for the US to take a leadership role in this area.
  • Many countries are ahead of the US in the adoption and implementation of regulations in this area, and one participant cited regulatory frameworks from the governments of Singapore and Switzerland as possible templates to be considered in the US.

I also think it’s important to address the fearmongers who say that blockchain, artificial intelligence, and machine learning will be the end of the accounting profession (to that, I say “balderdash”).  When I started in the profession in 1992, I did everything on 5, 7, and 14 column papers with a mechanical pencil and a 10-key adding machine.  Upon graduation, I was told by a friend that computers and the internet were going to end accounting.  In the 2000’s, I was told that my job was going offshore, and I would need to do something different to make a living.  Over the last few years, I’ve been told that artificial intelligence, machine learning, and blockchain are going to end jobs for US accountants.  My response to is that it’s 2018.  I’m still here, and am not going anywhere, and the world is becoming grayer instead of black and white – so accountants are going to be needed to make good decisions in this area.  While I do see many practitioners who clearly have not adopted technologies and methods to make their work more efficient (including one practitioner I recently saw who was working off a five-column pad), these emerging technologies will require changes to how we work, banishing the last few adding machines to the museums or the scrapheap.

It is clear to me that our profession must rethink how we work, what we do, and effectively “disrupt ourselves” before we fall so far behind that our work is irrelevant.  Many things have changed or will change – basic account classification/coding will be done by AI or user-programmed rules into applications like Xero, QuickBooks Online, or Sage Accounting, data will be entered using OCR tools like Receipt Bank, and the advanced technologies and analytical tools used by Wall Street financial services companies will find their way into our toolboxes.  The purpose of the work we all do ten years hence will be similar, yet the low-level tasks we perform will be different – in ways many of us cannot imagine.

I was absolutely blown away at the top-notch practitioners in the group, who were clearly deep thinkers and technicians who were at the absolute top of their game.  I also enjoyed the banter back and forth in the group, which was very collegial, and while there were politics in the room (as there is with any meeting of this type), it was as apolitical of a meeting as I have seen at this level in the profession.  In addition to the partners, I had the pleasure of meeting some exceptionally bright managers and senior managers who were members of the group.  These people remind me that, despite the rumors to the contrary, our profession is continuing to advance in this fast-moving world, and it gives me great hope about the bright future of the accounting profession.

Tax Haiku, 2018 Edition

Kelly Phillips Erb, who covers tax for Forbes, and is the majordomo at is running her annual #TaxHaiku contest.  (Many of you, the gentle readers of this blog have seen some of my previous year entries here and here).  (Who knew that people who could do #taxes could also write poems?  I suppose it’s the torture our souls have endured during the long, long winters in front of monitors.)

Continue reading “Tax Haiku, 2018 Edition”

State Sales Tax Holidays Infographic

A summary of the state Sales Tax holidays appears below, courtesy my friends at CCH/Wolters Kluwer.  Let’s be careful out there, people – shopping is NOT a contact sport.



Xero to Simplify Accountants Work by Building Out Export Capabilities

Online accounting software publisher Xero announced today that they have created a direct interface to two applications commonly used to work on business tax data – Intuit’s Lacerte Tax and ProSystem fx Engagement. This is the Company’s first foray into exporting data from Xero into U.S. tax and accounting applications, although the local versions of Xero for Australia and New Zealand have already created integrations with acquired products like Spotlight Workpapers which automate work for accounting professionals.

Xero’s US President, Jamie Sutherland, said, “We know our accounting and bookkeeping partners who prepare tax returns are looking to get data from Xero into tax software this tax season. We worked hard to create an easy export from Xero to Lacerte Tax and CCH ProSystem fx Engagement. Accounting and tax professionals will spend less time worrying about getting the data and writing up tax forms and more time advising and guiding clients on tax issues.” “We recognized that ProSystems fx and Lacerte Tax are the major players in the tax space but we’ll be looking at other tax software as their SaaS solutions come to market to make the accounting and tax workflow even more seamless.”

Xero partner and accountant Steve Chaney, CPA, owner of Chaney and Associates, a Roseville, California accounting and consulting firm is excited about the new feature and its immediate impact on his practice this tax season. Chaney said, “When you are managing tax filings for hundreds of clients, these efficiency gains add up and go straight to the bottom line.” Chaney’s firm was established in 2002, serves clients in six states, and positions itself as a leader in the effective use of new technologies by accounting firms.

Online accounting software Xero has a strategy of reducing and eliminating data entry for accountants and clients where possible by importing transactions from financial institutions and using user-defined rules to assign accounts to the transactions. Last month, the Company announced an integration with time tracking and invoicing application Harvest, and in 2012, the company launched a proprietary tool (the Xero Practice Manager) for its US accounting partners.


More Tax Haikus

The lovely and talented Kelly Erb (@TaxGirl) has been running a social media promotion where she asks aspiring poets to write haikus about taxes.  This has served as my brain break (in an open Excel sheet) for the last couple of days.  Today’s haiku follow:

Why do people quit firms?

Our review points reveal that

We are control freaks.


The Pizza man knows

the code to the office door.

Tax season is ON!


Dominos, The Hut,

TakeOut Taxi, Steak Out.

Preparer dining.


march madness is near

the tournaments will be shown

in the conference room.


it begins with a

1099 and ends with

one last extension.


Another Tax Season in the Rear View Mirror

Well, we made it.  Today is Tuesday, April 18, 2006, and it’s the first day after tax season.  I hope you all enjoyed a nice beer (or iced tea, or glass of wine, or whatever beverage you enjoy), and reflected on the end of the season.   I celebrated by treating the family (and extended family) to takeout Japanese, and by spending the evening reading books to my four year old.  (I’m trying to enjoy time with my son while he still thinks I’m cool).

A few things I learned this year which I’m going to try to implement over the next year:

Workflow management and document management are the keys to following up on where you are on projects, and focusing on getting things done.  I visited some accounting solution vendors recently, and one of the things which stuck out in my mind during the visit was the need to manage both your pipeline of tasks to complete and the documents needed to complete them.  I’m probably not the only one who has tried (in vain) to use shared tasks to manage my workflow in Outlook, and have come up short.  I’m not sure if it’s my frustration with the to do list in Outlook or my own stubbornness, but it hasn’t worked for me. As a Lacerte tax software user, I have been impressed with the UI behold both the Proseries line and Lacerte lines of tax software (note: similar functionality exists in most major tax software), which allows projects to be aged, status codes to be assigned (info pending, on extension, review pending, final, etc.).  This works fine if you look at  your tax software all day, but I wanted something which I could use for ALL of my projects – my tech implementations, the consulting projects for clients, and all of the other things I do besides tax returns.  And I wanted more than just one screen of data on the stuff in my pipeline – I wanted notifications on status changes on things I’ve staffed, and want to know when something’s ready for review.  In short, I want the reporting and management structure of a top 100 firm without the IT department.

XCM Solutions offers an interesting app for this issue.  XCM is affiliated with outsourced return prep vendor Xpitax, and is the method used by Xpitax to manage the workflow of items being processed offshore (think: the subcontinent).  This tracking app seems to have lots of potential, so I’m testing it to see how well it works with my work style and my needs.  More here to report later.  (for an intro to what the heck I’m talking about, see XCM’s flash demo here)

Good tax software makes your life easier.  I ended up doing some states which I had never done before, and the combination of the Allstates Quickfinder and my REP (remote entry processing, or pay per return) version of Lacerte tax software went pretty well.  I really love the little things in the tax software – the client tracker home page, the diagnostics which keep you from doing something really stupid in the caffeine-laced, sleep-deprived state that most CPA’s are in during the winter.  It’s also nice when you can set up your documents to print in a certain manner, and make those customizations for how you want your returns to look, it prints EXACTLY the way you like things to look.  I worked on a pro-bono (some would say por bonehead) project this year for an international student.  I delved into the world of tax treaties, weird states, and the 1040-NR for free.  After I was 3 hours into researching the exact rules relating to this country (let’s call it Narnia), I finally broke down and spend the $28 to do the return in Lacerte.  The nice thing about it was that the interview questions lined up perfectly with the Narnian treaty, and even though I’m not the world’s expert in preparing Form 1040NR, it made the whole process easy, and ended up saving me a lot of time.  At the end of the preparation process (which after I understood the law took about an hour, mostly due to telephone calls), I printed two copies of the return, packaged it in the presentation folders I use, and delivered it to the client.  The client was impressed with the presentation, and I think he will be back when it’s time for him to be a paying customer.  Either way, the consistency of the styles and print ordering made it so organized that I could package this return in less than 5 minutes, including paper-clipping the postage-paid envelopes to the extensions, stamping the copies of the return “Copy”, and printing the insert sheets for the presentation folder.  Nice stuff.

What did you learn this tax season, and how did it help you make more money in less time?