DELAY IN REVENUE RECOGNITION STANDARD
A vote earlier this month by the Federal Accounting Standards Board (FASB), may provide an additional year for financial statement preparers to implement the new revenue recognition standard. The FASB proposal calls for the standard to take effect for reporting periods beginning after December 15, 2017 for U.S. GAAP public companies. Private companies would get an additional year beyond the public company effective date to implement the standard. FASB staff has been directed to generate a formal ballot for the proposal and will take feedback during a 30-day comment period.Reasons cited for the time extension include: unresolved accounting issues, the lack of available IT solutions for the new standard, logistical issues caused by the requirement to review contracts with customers that may number in the millions and may have durations of 10 years or more, and the need to design and implement new internal controls and to educate personnel throughout the organization. Also noted was the impact on certain industries, such as media, entertainment and software manufacturing that are particularly affected by potential changes in the license of intellectual property guidance that the board plans to propose.
PCAOB TO REORGANIZE AUDITING STANDARDS
The Public Company Accounting Oversight Board (PCAOB) has approved the reorganization of its auditing standards in order to help users navigate the standards more easily. “The standards will be organized by topics that generally follow the flow of the audit process, making their use easier and more efficient for auditors,” said PCAOB Chairman James R. Doty.
Under the reorganization, the individual standards will be grouped into the following topical categories:
* General Auditing Standards: standards on broad auditing principles, concepts, activities, and communications
* Audit Procedures: standards for planning and performing audit procedures and for obtaining audit evidence
* Auditor Reporting: standards for auditors’ reports
* Matters Relating to Filings Under Federal Securities Laws: standards on certain auditor responsibilities relating to U.S. Securities and Exchange Commission filings for securities offerings and reviews of interim financial information
* Other Matters Associated with Audits: standards for other work performed in conjunction with an audit
The SEC must approve the reorganization before the standards are updated on the PCAOB’s website. If approved, the amendments will take effect as of Dec. 31, 2016. Upon approval, the PCAOB’s website would be updated with the reorganized standards to allow audit firms to begin their transitions to the new numbering system.
WHAT GOOD IS ART IF YOU CAN’T DRIVE IT?
According to the Knight Frank Wealth Report, classic cars were the top performing collectible investment in 2014. With gains of 16%, it outpaced fine art (15%), rare coins (13%), as well as stamps, jewelry, wine, colored diamonds and watches. Cars posted best ten and five year performance — 487% and 140% respectively. The Knight Frank report notes that prices for vintage Ferraris, Porsches, Mercedes and Bugattis aren’t likely to maintain their speed. The 16% gain marks a big slowdown from their 47% gain in 2013.
The higher you go up the income ladder, the greater share of income comes from capital gains. That’s the finding of a new study by the non-partisan Tax Policy Center and reported by NBR/CNBC. For the 99% of taxpayers making less than $500,000, salaries and wages accounted for 75% of their adjusted gross income. For those making $500,000 to $1 million, salaries and wages accounted for more than 50% of earnings. But for those making above $10 million, salaries and wages amounted to only 15% of their income – the rest came from interest and dividends (15 to 20%), and about 25% from stakes in a private company. In a previous study, the Tax Policy Center found that among those in the top 1 percent, about half were only in the 1 percent for one year over the course of a decade.
HAPPY TAX FREEDOM DAY!
On April 24th (114 days into the year) the nation as a whole will have earned enough money to pay their federal, state and local tax bill for the year according to the annual report just released by the nonpartisan Tax Foundation. “Tax Freedom Day gives us a vivid representation of how much we pay for the goods and services provided by governments at all levels,” said Tax Foundation Economist Kyle Pomerleau. “Arguments can be made that the tax bill is too high or too low, but in order to have an honest discussion, it’s important for taxpayers to understand cost of government.” Key takeaways from the report:
* Americans will collectively spend more on taxes in 2015 than they will on food, clothing, and housing combined.
* Americans will pay $3.3 trillion in federal taxes and $1.5 trillion in state and local taxes, for a total bill of more than $4.8 trillion, or 31.1 percent of the nation’s income.
* If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur 14 days later on May 8.
CAN YOU HEAR ME NOW?
Wireless consumers continue to face excessive tax burdens when compared to other goods and services purchased in the competitive marketplace. That is the finding of the non-partisan Tax Foundation that notes that the average rates of taxes and fees on wireless telephone services are more than two times higher than the average sales tax rates that apply to most other taxable goods and services. Americans pay an average of 17% in combined federal, state, and local tax and fees on wireless service, comprised of a 5.82% federal rate and an average 11.23% state-local tax rate. Click for full report: Wireless Taxation (PDF)
AND THEN THERE’S PROPERTY AND VEHICLE TAX
Consumer finance website WalletHub’s new report ranks states with the highest and lowest real estate and vehicle property taxes.
Some findings: American households on average spend $2,089 on real estate property taxes each year, and residents of the 27 states with vehicle property taxes shell out another $423. The report also noted that real estate taxes average 39% higher in Blue States than in Red States. Click for full report: (WalletHub report)
TROUBLES WITH UNCLE SAM
Earlier this month, the Department of Justice announced it would not be seeking contempt charges against Lois Lerner for refusing to testify to Congress on the IRS targeting scandal.
On another front, however, in a federal lawsuit brought by conservative groups, (which could receive class action status) judge Susan J. Dlott ordered the IRS to produce a list of all 298 conservative nonprofits targeted by the IRS. Judge Dlott, a Clinton appointee, has said that Tea Party groups can pursue their claims that the IRS violated their First and Fifth Amendment rights, along with a section of federal law that prohibits the government from releasing private information contained in tax returns. The lawsuit seeks a list of all dissenting groups targeted for additional scrutiny by the IRS from January 20, 2009, through July 15, 2013. The court said this information was “directly related to the issue of class certification in this federal court proceeding.”
A TAXING PROBLEM
If an IRS employee is unable to contact or unable to locate a delinquent taxpayer, the collection case may be closed as currently not collectible. In Fiscal Year 2012, the IRS closed 482,611 tax modules involving approximately $6.7 billion as such cases.
That is the finding of a new report just released by the Treasury Inspector General for Tax Administration (TIGTA) citing that the Internal Revenue Service (IRS) may be missing opportunities to collect delinquent taxes because it is not always completely researching cases before closing them as uncollectible.
TIGTA found that IRS employees did not always complete required actions before closing cases. Of a stratified sample of 250 cases TIGTA reviewed, there was no evidence that employees completed all of the required research steps for 57 percent of the cases prior to their closure. Moreover, seven percent of the cases did not have a Notice of Federal Tax Lien filed on all delinquent tax periods as required.
The hardest thing to understand in the world is the income tax. -Albert Einstein
The income tax has made liars out of more Americans than golf. -Will Rogers
Simply the right choice
Weinberg & Company is a leading, international, full service, multi-office CPA firm serving clients throughout the United States and the Pacific Rim. Founded over two decades ago, the practice groups include: Assurance and Audit, Tax and Accounting, and Advisory Services. Weinberg has a depth of knowledge and experience to meet the needs of both public and privately held companies, high net worth individuals, entrepreneurs, family offices, and can provide customized business management services. www.weinbergla.com
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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