Accounting News


Wednesday, August 31, 2011
Do Companies Have Too Much Cash

The cash balances of many companies are on the rise. CFO magazine did a study of 885 companies and found cash on the balance sheet has risen from 3.7 percent to 7.3 percent in 210. The companies surveyed had $750 billion in cash, four times as much as they had a decade earlier.

With all the uncertainty in the market it is not surprising that companies are taking a conservative approach. But investors are starting to get restless. Cash does not have a great return. Investors give money to earn a return on their money. Not to have the company sit on the cash. In the end the investors might just take out their investments to sit on the cash themselves or put it where it can earn a greater return.

If a company is sitting on too much cash it can always buy back stock or increase their dividend to maintain share prices.

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Accounting News


Wednesday, August 24, 2011
RSM McGladrey Sold By H&R Block

H&R Block Inc has announced plans to sell its RSM McGladrey unit. The consulting unit is going to McGladrey & Pullen LLP for $610 million. The unit has over 5,000 employees. H&R Block Inc acquired RSM McGladrey in 1999 to help them expand beyond their core business of tax preparation. However, they were not able to make the profit they expected from the unit. The return on RSM McGladrey's was only 9.3 percent while their return on tax preparation was 27.1 percent.

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Accounting News


Monday, August 22, 2011
AICPA Respond to IRS

The AICPA has made a public response the the IRS continuing education proposal. The IRS is looking to mandating a course-by-course pre-approval process for classes required for tax preparers to maintain their license. The AICPA did not think this was a good solution and would slow the process. They thought the accreditation by the National Association of State Boards of Accountancy was sufficient.

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Accounting News


Friday, August 19, 2011
IRS Lowers Interest Rate

The Internal Revenue Service has announced that it is lowering the interest rates for the fourth quarter of 2011 (October through December). The interest rate for over-payments will be two percent for individuals and three percent for corporations. The interest rate for under-payments is now three percent for individual and five percent for corporations. The rate for over-payments exceeding $10,000 has dropped to half a percent.

The new rates represent a one point drop from their current levels. The IRS uses the federal short-term rate to determine its rates. If you have any questions about how this will affect your situation you should contact your tax preparer.

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Accounting News


Wednesday, August 17, 2011
143 Year Sentence for Tax Preparer

Norma Coronel, a tax preparer in California is facing 143 years in prison for filing false tax returns. The sentence would be the maximum if found guilty of every charge in the 35-count indictment filed by persecutors. She could also face fines of $5.6 million.

The best part of the story is how she got caught. Norma filed a return with 19 dependents. The social security numbers were false. She thought that the IRS wouldn't notice that all the kids had the same birthday. If she really had given birth to 19 kids it probably would have made the news. I wonder if she tried to claim medical expenses for them all?

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Accounting News


Wednesday, August 10, 2011
Use Tax Audits Up

The Aberdeen Group’s Financial Management and Governance, Risk & Compliance research practice has looked into how states are coping with revenue shortfalls. Two things that are popular with states are increasing audits of businesses for sales and use taxes and eliminating tax holidays.

Many governments receive up to 30% of their revenue from sales and use taxes. However, they get far less attention in most businesses than do corporate income taxes. As a result there are often many errors. And even if there are no problems then there are costs associated with the audit.

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Accounting News


Friday, August 5, 2011
Tax Preparation Costs Stable

The National Society of Accountants of has released the results of a survey of 8,000 tax preparers across the country. According to the survey the average cost of and individual tax return for 2010 was $233. The average cost to file a return without deductions was $128. This represents a 1.7% increase and 0.8% decrease respectively. Obviously not a significant change for accountants. The fees for tax preparation represented almost 60% of the revenue for the average accountant.

The most common type of practice is a sole proprietorship (35%). An average they have a net income of $85,000.

If you want to order the full survey visit the NSA.

Accounting News


Monday, August 1, 2011
Bill Introduced to Collect Online Sales Tax

Senator Dick Durbin of Illinois introduced the Main Street Fairness Act on Friday. The bill is aimed at evening the advantage that online retailers have over their brick and mortar counterparts over sales taxes. It would give authority to states to require retailers to collect the sales taxes. Online retailers have be exempted from collecting local and state sales taxes from a 1992 Supreme Court decision. Under the ruling, retailers must only collect taxes where they have a physical location. Individuals are required to report online purchases and pay the appropriate sales tax but very few choose to do so.

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