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Tax Tip Tuesday

Tax Tip Tuesday

2017

April 18 Are you irritated when the due date falls on the weekend? Hope you are getting some well-deserved R&R today. Here’s a little more humor to end your busy season on a high note.

  • “Doctor, I just can’t sleep at night.” complained the CPA. “Have you tried counting sheep?” asks the doctor. “That’s the problem. I make a mistake and then spend six hours trying to find it!”

April 11 – FOUR DAYS LEFT! What you need is humor, so here are some jokes:

  • Where do homeless accountants live? In tax shelters.
  • Did you hear about the cannibal CPA? She charges an arm and a leg!
  • The CPA’s prayer” “Lord, help me to be more relaxed about insignificant details, starting tomorrow at 10:53:16 am, Eastern Daylight Saving Time.
  • What do you call an accountant without a spreadsheet? Lost.

April 4 – April 15th will be here before you know it. But there's always one client you can't find. Resist the urge to extend a "lost" client's individual tax return.

March 28 – You may think your client does not have any foreign activity, but she may and if you don’t ask her about it, there could be trouble The Tip of the Iceberg: Professional Liability Claims and International Taxation discusses the importance of documenting these discussions and other tips to protect CPA firms.

March 21– Now it’s time to concentrate on individual returns. Individual tax clients depend on you, often asking for investment advice. Learn how to avoid becoming The Accidental Investment Adviser in this article.

March 14 – The business tax return filing deadline is one day away, but there are so many questions that remain unanswered. While clients may depend upon their CPA for everything, knowing what you know, and what you do not know, are equally important. Consider The Dangers of Dabbling before responding to a client question you have never encountered.

March 7 – You’re on the phone with clients from 9 am to 5 pm at this time of year, but are you documenting your discussions? CPAs are often sued for casual advice they may not even remember (or realize) they provided. Read the articles Avoiding Allegations of Improper Tax Advice and Documentation is Your Ally for Tax and Other Services to help you remember the importance of documentation, even when you’re tired.

February 28 – A married couple who has been a client for 30 years announces they are getting divorced. However, they have asked you to prepare their 2016 joint income tax return. Before doing so, read the article Considerations in Avoiding Becoming a Casualty in the Divorce Wars for valuable information on how to avoid being placed in the middle of an awkward situation.

February 21 – Do your clients have filing obligations related to their foreign assets? Do they even have foreign assets? Not sure? Your clients may not know either. Consider the risks by reading the Risk Alert CPA Responsibility with Respect to Client Reporting of Foreign Assets – A Second Look, which is available to policyholders in the Policyholder Resource Center.

February 14 – Happy Valentine’s Day!!! What do CPAs love most of all? Helping their clients. Unfortunately, those little extras and favors can be problematic in the event of a professional liability claim. Don’t Let Scope Creep Lead You Out of Bounds provides tips on how to minimize the risk of scope creep.

February 7 – What’s the most valuable asset to cyber-criminals targeting a CPA firm?  The personally identifiable information of your clients. Read the article Controlling Your Data for tips on how to help protect this information.

January 31 – A long-time client asks you to be the trustee of her trust. How can you say no? It’s the final thing you can do for such a dear friend. Unfortunately, professional liability claims arising from serving as a trustee can be stressful. Read the article The Unexpected Risks of Trustee Services to learn more.

January 31 – A long-time client asks you to be the trustee of her trust. How can you say no? It’s the final thing you can do for such a dear friend. Unfortunately, professional liability claims arising from serving as a trustee can be stressful. Read the article The Unexpected Risks of Trustee Services to learn more.

January 24 – The average adult spends more than 9 hours a day in front of a screen. If you’re an accountant, much of that time is spent emailing with clients or checking social media sites. While these methods of communication can be very effective, there are risks involved. What risks? Read the article How Social and Digital Media can be a #majorrisk to find out.

January 17 – Hopefully, you enjoyed an extended weekend. Before time gets away from you, consider reviewing your client list and terminating problem clients before tax season starts. Having trouble identifying them? The article, Clients: Knowing When to Walk Away, describes some common characteristics of problem clients. Refer to Client Termination Letters for tips on how to write an effective client termination letter.

January 10 – Did you miss the webinar Are You Ready? Risk Management Thoughts for Tax Season? Learn how to manage the professional liability risks associated with the new partnership audit regulations, tax related changes to the revenue recognition standards, powers of attorney and more in this 85 minute webinar replay (please note that no CPE is granted for replays per NASBA rules).   

January 3 – Considering buying another CPA’s practice to fill all that free time between now and April 15? Have you considered the related professional liability risks? Read the article Professional Liability Issues in Practice Mergers and Dissolutions to ensure that you have everything covered.

                                    


2016

April 26 Bill, bill, bill! It’s time to reap the benefits of all your hard work. Read the article Billing for Defense (and Payment), for tips on how billing may assist in the defense of a professional liability claim.

April 19 Hopefully, you’ve enjoyed an extended weekend and are well on the road to recovery. Before time gets away, consider reviewing your client list and terminating problem clients when the past busy season’s interactions remain fresh. Having trouble identifying them? The article, Clients: Knowing When to Walk Away, provides some common characteristics of problem clients. Refer to Client Termination Letters for tips on how to write an effective client termination letter.

April 12 (tax week) – Tax week! Smile, you’ve almost made it! Unfortunately, some taxpayers may file their taxes late. Do you think any of these excuses constitute reasonable cause?

  • Still waiting to hear from Ed McMahon about that million-dollar thing.
  • Had a nasty paper cut from 1040 form; passed out for three days from blood loss.
  • Tax time? I thought you said snack time!
  • H. Block finished on time, but R. Block was slower than molasses in January.

April 5 – Extension time again? Unresponsive individual tax clients beg the question, what do you do, extend or not? While it may be difficult to accept, an unresponsive client may have found someone else to prepare a return or extension. So do not extend.

Consider the CPA who filed an extension for a perpetually unreliable client. The CPA heard from this client two years after the extension was filed when she was contacted by the client’s attorney. The client had gone to another tax preparer and filed a late return, incurring substantial late filing penalties and interest. When the client’s claim for penalty abatement due to reasonable cause was denied because an extension was filed, the client sued the CPA for the penalties. So much for being attentive.


March 29 – It’s not an April Fool’s Day prank. Email and other electronic communication (think texts) may hurt the defense of a professional liability claim. Read the article, How social and digital media can be a #majorrisk  for tips on how to reduce the risk of electronic communication damaging your case or reputation.

March 22 – Still recovering from St. Patrick’s Day? Shake out those cobwebs and be on the lookout for the next new client opportunity. As Denzel Washington once said “I say luck is when an opportunity comes along and you’re prepared for it.” Review the article, Is This Client the Right Fit for Your Firm?, to ensure that a prospective client fits your risk profile.

March 15 – First deadline of tax season is almost over. Don’t forget to document all of the discussions you’ve had last week prior to the deadline. CPAs have been sued for off the cuff advice, as described in the articles, Avoiding Allegation of Improper Tax Advice and Write It Down: The Importance of Documenting Oral Advice.

March 8 – When providing tax services, Don’t Let Scope Creep Lead You Out of Bounds. This article is a good reminder of how important it is to operate within the terms of your engagement letter (and how easy it is to step out of bounds).

March 1 – Divorce is ugly, whether in business or your personal life. Fortunately, the article, Considerations in Avoiding Becoming a Casualty in the Divorce Wars, will help you review valuable information you should consider before continuing with a client who divorces.

February 23 – Anthem, Home Depot, Target and the IRS. What do they have in common? They have all have been the subject of headline grabbing data privacy breaches. CPA firms may have an accidental breach or someone may intentionally target the firm. If the firm believes it may have experienced a data privacy “incident”, read the article A Possible Privacy Breach: What Next?, for tips on how to respond. Better yet, speak with your insurance agent or broker before a breach occurs to determine if your policy has been or can be endorsed to provide coverage of a privacy data breach event.

February 16 – In honor of President’s Day, remember this sage advice from President Abraham Lincoln, “whatever you are, be a good one.” The article, The Dangers of Dabbling, is a good reminder of how important it is for a CPA, especially a tax practitioner, to play to one’s strengths and be cognizant of one’s limitations.

February 9According to the Chinese calendar it’s the “Year of the Monkey,” but that doesn’t mean you should be monkeying around. Be sure to ask all clients about foreign filing obligations and document their response. Explain the complexities and be alert for other foreign filing obligations. If you suspect a client has unfiled returns, refer to the Risk Alert CPA Responsibility with Respect to Client Reporting of Foreign Assets – A Second Look available to policyholders in the policyholder resource center.

February 2If Punxsutawney Phil does not see his shadow today we will have an early spring.  Spring means tax season. Get a head start on your tax work by reviewing organizers and other individual tax information when it arrives in the office. When an important piece of information is missing and the CPA must ask the client for it close to the deadline, it is embarrassing and may lead to a professional liability claim.

January 26Every tax practitioner knows how challenging the two weeks before April 15th can be. Therefore, it’s not surprising that many professional liability claims arise from services performed during this two week timeframe. What can be done to reduce this risk? Review The Early CPA Gets the Return Done (On Time) for steps that can be taken now to make April 15th more palatable.

January 19 – In 2014, approximately 50% of tax claims did not include an engagement letter. If you are not currently using engagement letters, review the articles Tax Practice and Engagement Letters and Buckle Up – The Importance of Engagement Letters. If you use engagement letters, consider updating your engagement letter templates with the AICPA Member Insurance Program’s sample engagement letters available to policyholders in the policyholder resource center.

January 12 – Did you miss the webinar, Are You Ready? Quality Control and the 2016 Tax Season: Professional Liability Considerations?  This webinar discusses professional liability risks associated with the Affordable Care Act, changes to form filing due dates and foreign investments. If that’s not enough, overall quality control was also discussed, including client acceptance and continuance, docket systems, documentation and extensions!

January 5 – As the New Year begins, tax season starts to rear its ugly head. Consider reviewing your firm’s tax quality control (QC) system. For a reminder of what QC entails, read the article, The Importance of Tax Quality Control. Don’t have a tax quality control manual? Policyholders have access to the CNA guide, Tax Quality Control – A Risk Control Perspective in the policyholder resource center, and AICPA tax section members can review Tax Practice Quality Control Guide for tips on how to create one.April