Special 2 hour Update provided to MACPA members at CPA Day in Annapolis on January 20, 2010. Part of our six-point plan to help CPAs during the recession, this 2 hour free CPE program covered the latest developments in legislation, regulation, and standards for CPAs at bothe the federal and state level.

1. Welcome to the 2010
Special Legislative /
Regulatory Update
“A pioneer in using social media and Web 2.0 technologies in
accounting, Hood (and his team at MACPA) has tapped his
expertise to roll out one of the most extensive sets of resources
p
in the country for helping CPAs handle the recession.”
- Bill Carlino, Editor Accounting Today Magazine
1

2. CPAs
CPA are
overwhelmed
by the tsunami
of legislative &
g
regulatory
changes
happening

3. Q: What is the # 1 Issue facing all CPAs?
A: Keeping up with changing standards & regulations
“As it relates to science and technology, the rate of
change in the next decade, is likely to be 4 to7 times
decade
faster than in the last decade. If it is 4x faster it would
be like planning for 2009 in 1890, if it is 7x faster it
would be like planning for 2009 in 1670 ”
1670.
-Expert on Education Panel, The Aspen Institute, 2007

4. “No man’s life, liberty, or happiness are safe when the legislature is in session.”
- Mark Twain
You don’t
want to be
negatively
negatively
impacted by
these changes.

5. CPAs are
asking what
can we do to
stop or
change these
laws and
l d
regulations
g

6. MACPA is
watching out for
you. W will
We ill
show you how
we can work
together to ride
g
these waves of
change.
change

7. Here is our Game plan for this update!
p p
1. Update – current issues
you need to know now
dt k
2. Background & Context ‐
Understanding the CPA
g
Profession Infrastructure
and how to work it
3. How to make changes ‐
3 How to make changes
How MACPA works on
your behalf
4. Four things you can
must do to help us

8. “The faster you go, the further
ahead you have to see.”
h d h t ”

9. What are MACPA members saying?
What should be MACPA s #1 priority?
MACPA’s
• Advocacy with regulators & legislators
• Protecting our CPA license
• Insuring integrity of the CPA profession
• Continuing Professional Ed
C ti i P f i l Education
ti
Insights form the Spring & Fall, 2009 PIU / town hall meetings covering 2,500+ members

10. What are MACPA members saying?
What phrases, images, topics stuck out
p , g , p
for you?
• Generations
• IFRS
• XBRL
• Social Networking
• Transparency
T
• Change!

11. Insights & Opportunities
“But a time of turbulence
is also one of great
opportunity for those who
can understand accept
understand,
and exploit the new
realities.
realities It is above all a
time of opportunity for
leadership.”
p
- Peter Drucker,
Managing in Turbulent Times
g g

12. Action
“The best way to
The
predict the future
is to create it.”
- Peter Drucker,
Managing in Turbulent Times

13. Five Qualities of Extraordinary Leaders
1. Sight - Ability to see emerging
patterns and shift perspective
when necessary
LC 2.
3.
3
Insight - Ability to learn faster
than the rate of change in your
industry
Create - Ability to think
C t
strategically and critically to gain
insights that create new
opportunities
4. Communicate - Ability to
collaborate inside and outside
you organization and o build
your o ga a o a d to bu d
and sustain social networks of
people engaged in the work
5. Inspire – Ability to mobilize
p
support and engage others to
join you in ACTION

14. 1. Update – current issues you need to
know now
know now
1. Wall Street Reform &
Consumer Financial
Protection Agency Act of
2009 (HR 4173)
2. FTC (Federal Trade
Commission) Red Flags rule
Commission) Red Flags rule
3. Special Tax Federal Update
4. NY Tax Preparer Licensing
5.
5 International Accounting
International Accounting
Standards (IFRS) & Private
Company Standards
6. Upcoming Maryland
Upcoming Maryland
Legislative Agenda ‐ 2010

15. 1.1 Wall Street Reform & Consumer Financial
Protection Agency Act of 2009 (HR 4173)
 Exemption for CPAs
 Stop Congress takeover of
Stop Congress takeover of
FASB Standard Setting
 Stopped increased liability
(aiding & abetting)
(aiding & abetting)
 Stopped elimination of
SOX 404(b) – exemption
set at $75 million and
$75 illi d
below
 Supported PCAOB
regulation of auditors of
Broker‐Dealers

16. 1.2 FTC “Red Flag” Rules ‐ $3,500 Penalty
 How business should
develop, implement, and
p, p ,
administer Identity Theft
Protection Programs
 AICPA & 30+ State CPA
Societies (including MACPA)
rote the FTC and Congress
 Deadline moved from
November 1st to June 1st
b t t
 AICPA files lawsuit against
FTC
 Resources available to CPAs
and businesses

17. 1.3 Special Tax Update (from AICPA)
p p ( )
1. Section 7216
2. Regulation of Tax Return
Preparers
3. Status of Estate Tax
4. Health Care Reform‐ Tax
Issues
5. Tax Return Due Date
Project
P j t
6. New SSTS

18. 1.3.1 Section 7216
A. Brief History
 Background on Treas. Reg. section 301.7216
(
(2006-
(2006-2009).
)
 AICPA activities over the last several years
before Congress and the Administration.
B. IRS Guidance Released on 12/29/09 and
12/30/09
 Final and temporary 7216 regulations.
regulations
 Rev. Proc. 2010-4.
2010-
 Rev. Proc. 2010-5.
2010-

19. Section 7216 (cont’d)
C. Issues of Interest to AICPA Members:
 Types of professional services considered
“legal or accounting” services” under Treas.
g g
Reg. section 301.7216-2(h)(1)(i).
301.7216-2(h)(1)(i
 Distribution of newsletters and other forms of
communications.
 Tax return preparer’s contacts with professional
liability insurance carriers.
 Disclosure or use of tax return information for
quality, peer, or conflict reviews.
 Preparer receives a call from client to sent the
tax return to the local bank or lender.

20. 1.3.2 Regulation of Tax Return Preparers
A. Brief History
A. 30% error rates on refundable tax credits
B. Commissioner Shulman Announces Review
a. Enhance compliance
b. Elevate the ethical conduct of paid preparers
20

21. Regulation of Tax Return
Preparers (cont’d)
 Jan 4th – IRS Released Report
a. PTIN
b. Subject to Circular 230
c. CPE component
d.
d Entry testing regime initially for 1040 series returns
 Exemption for CPAs for CPE and testing
 Phased in implementation but not impacting 2010 filing season
21

22. Regulation of Tax Return Preparers
(cont’d)
 AICPA Position
 Support PTIN and Circular 230
 No duplicative or overlapping requirements on CPAs
 We have concerns with:
a. Exam may confuse taxpayers regarding the
relative qualifications of tax return preparers
b.
b Fee structure
str ct re
c. Treatment of non signing preparers
22

23. Regulation of Tax Return Preparers
g p
(cont’d)
E. Going Forward
Numerous issues presented
 FFees
 Non signing preparers
 Public relations effort
 Will work closely with IRS and AICPA public relations
team to distinguish CPAs
 Working with AICPA state legislative team
Goal - drive an implementation solution that supports both our
members’ practices and public interest
23

24. 1.3.3
1 3 3 Estate Taxes
 Congress
 No estate tax legislation in 2009
 2001 Tax Act rules in effect
 P
Possible C
ibl Congressional action i 2010
i l ti in
 Timing
 Scope
 Effective date
24

25. Estate Taxes (cont’d)
 As of Jan. 1, 2010 for 2010:
 No estate tax & GST tax
 Modified carryover basis – limited adjustments
 $1 3 m. basis increase
$1.3 m
 $3.0 m. additional basis-surviving spouse
 Gift tax lifetime exemption $ million
$1
 Gift tax rate decreases to 35%
25

26. Estate Taxes (cont’d)
 On Jan. 1, 2011:
 2001 rules return
 Estate tax & GST tax back
 Estate, gift,
Estate gift & GST tax exemptions - $1 million
 Maximum estate & gift & GST tax rates - 55%
 Stepped up basis
 GST technical changes from 2001 disappear
26

27. Estate Taxes (cont’d)
 Significant uncertainty in estate planning
 Estate plans:
 May not be effective – formulas
 Should be reviewed – result as intended
 Members & taxpayers may want to:
 Consider implications - basis
 Consider strategies in early 2010
 lower gift tax rates, no GST tax
27

28. 1.3.4 Health Care Reform
 Senate passed “Patient Protection and Affordable Care
Act” on 12/24/09
 House passed “Affordable Health Care for America Act
Affordable Act”
on 11/7/09
 Discussions on reconciling the House and Senate
versions?
i ?
Slide 28

29. Health Care Reform (cont’d)
 Tax
T provisions i l d d i b th S
i i included in both Senate and H
t d House
versions
 Tax/fees on medical devices and plans for comparative
p p
research
 Limit FSAs to $2,500
 Limit reimbursement of over-the-counter medications
over-the-
from HSAs, FSAs & MSAs
 Increase penalty to 20% for nonqualified distributions
from HSAs
f HSA
 Eliminate deduction for expenses allocable to Medicare
Part D subsidy
 Corporate information reporting
Slide 29

30. Health Care Reform (cont’d)
(cont d)
 Key revenue provision (House bill only)
 5.4% surcharge on income > $500,000 ($1 mil for
MFJ)
 Key revenue provisions (Senate bill only)
 40% excise tax on group health coverage >
$8,500/$23,000
 Additi
Additional 0.9% M di
l 0 9% Medicare HI payroll t on wages i
ll tax in
excess of $200,000 ($250,000 joint)
 Raise 7.5% AGI floor on medical exp. deduction to 10%
 10% excise tax on tanning services
 $500k deduction limit on salaries of health ins. providers
 Annual fees on manufacturers and importers of drugs
and health insurance providers
30

31. 1 3 5 AICPA Return Due Date Project –
1.3.5
History
 Prop/Temp regs mandating 5 month extension f
P /T d ti th t i for
partnerships, trusts and partnership withholding
returns - June 30, 2008
,
 Follow-up member survey - May 2009
 Task Force deliberations June – Nov 2009
(Includes meetings with JCT, Treasury, IRS, OTA)
 First filing deadline subject to 5 month extension regs
–SSept 2009 (Described as “b
(D ib d “brutal” b practitioners)
l” by ii )
 Task Force approval of draft position – Jan 2010

32. 1.3.6 Statements on Standards for Tax
Services
 Enforceable tax practice standards f members of
E f bl i d d for b f
the AICPA.
 Revised SSTSs effective as of January 1 2010
SSTSs, 1, 2010.
 Address each member’s obligations regarding the
following issues:
issues:
 Level of authority needed to recommend a tax return
p
position or p p
prepare or sign a tax return
g
 Effort required to answer all questions on a return
 Extent to which information furnished by the taxpayer or
y p y
a third party can be relied upon without verification
32

33. Statements on Standards for Tax
Services (cont’d)
 Use of the taxpayer’s estimates in preparing a tax return
 Ability to recommend a tax return position that departs
from a position determined in an administrative
proceeding or court decision with respect to a prior
year s
year’s return of the taxpayer
 Action to be taken upon becoming aware of an error in a
return previously filed by the taxpayer or of the
taxpayer’s failure to file a required return
 Form and content of advice to taxpayers
33

34. 1.4 New York Tax Preparer Law
anti‐mobility legislation
y g
 Would have imposed fee
$100 per preparer for >
$100 per preparer for >
10 individual tax returns
 Effective December 1st,
Effective December 1 ,
2010
 Repealed – out‐of‐state
p
& in‐state CPAs exempt
 Signed by Gov Paterson
g y
on Dec 10th, 2009

35. 1.5 International Financial Reporting
Standards & Private Company Standards
Standards & Private Company Standards
1. IFRS mandate for public
companies is on after
last G‐20 summit in
Pittsburgh
2. FASB Private Company
Committee loses on Fin
48, etc (PCFRC)
( )
3. IFRS issues SME edition
in July, 2009
4. AICPA urges FAF to form
4 AICPA urges FAF to form
Blue Ribbon Committee
on Private Company
Standards

36. 1.6 MACPA’s 2010 Legislative
Agenda
A d
• Stop sales Tax on Accounting & Tax services
p g
• Support State Board’s 120/150 legislation
• Stop efforts to liberalize tort laws (lawsuit abuse)
• Stop efforts to repeal Peer Review
CPA Day in Annapolis
January 20, 2010
Visit http://www.cpalegislativeinsider.com

37. 2. Background & Context ‐
Understanding the CPA Profession
Understanding the CPA Profession
Infrastructure and how to work it
1. Where do changes
come from? Us or
them
2. Past examples of
major issues
3. What’s on the horizon

38. Where do major changes come from?
Us – MACPA & AICPA Them - lawmakers
OR
State Federal

39. Federal Laws & Regulations – SEC,
DOL, Treasury, GAO, PCAOB
CPA Profession Standards – AICPA
& FASB, GASB FASAB, IASB, IFAC
FASB GASB, FASAB IASB
State CPA Statutes
police power of the states to protect their citizens vs commerce clause

40. Another View
Public Company Private Company Int’l Company
Financial SEC FASB IASB
Reporting
FASB PCFRC IFRS & SME
Attest
AICPA
Performance
Standards
PCAOB ASB
IAASB
Code of AICPA AICPA
Conduct
PEEC PEEC
IFAC
CPA
Licensure State Oversight & Enforcement of CPA License

41. Standards Changes
• AS 5 & 6 - PCAOB
• IFRS – SEC International gets legs (again)
• Fair Value Accounting
• XBRL – SEC mandatory
• Codification Project – FASB
• Clarity Project – ASB
– Convergence with international
• Reliability Project (comps & reviews)
• DOL 403 (b) Plans
• Internal Control – COSO
• Fin 48 effective 2009
• Form 990 C Changes
• Fraud & Forensic SAS 99

42. 3. How we make changes ‐ How MACPA
works on your behalf
works on your behalf
1. Membership – strength
in numbers
b
2. Volunteers – key person
program, PAC,
program PAC
Legislative Executive
Committee
3. Partner with AICPA
4. Network of State CPA
Societies
5. Legislature is about
(
numbers (votes) ) It s
It’s a numbers game!

43. Four examples of legislative & regulatory
changes that benefit you
changes that benefit you
1. SOX & Maryland
Corporate
Accountability Act of
2003 (SB 560)
2003 (SB 560)
2. MD Tax Preparer
Licensing
Li i
3. Mobility
4. Success in NY Tax
Preparer Bill

44. CPA Mobility Legislative Activity 2009
WA
VT
MT ME
ND
MN
OR NH
ID WI
SD MA
NY
WY MI
CT RI
IA PA
NV NE NJ
UT OH
IL IN DE
CO WV
CA VA MD
KS MO KY
DC
NC
AZ TN
OK AR SC
NM
MS AL GA
AK
TX LA
PR
HI FL
GU
2009 -2010 Anticipated V
Legislative
Activity
Mobility Enacted - 43
No Formal Activity Legislation Introduced - 1
Mobility Enacted Only for Other
Mobility States -2 (GA PA)
AICPA March 2009

45. It’s a numbers game –Do the math…
What effect does stopping these have on
What effect does stopping these have on
your bottom line?
1. FTC red flag penalty
$3,500 / instance
2. MD Tax Preparer
2 MD Tax Preparer
Licensing est $250 per
CPA & per staff + CPE
3. Mobility – other states 5
states x $100 = $500 (PV
= $7,811)
= $7 811)
4. Success in NY Tax
Preparer Bill ($100 per
CPA/staff)

46. Recent Maryland Leg/Reg Changes you
need to know!
eed o
 Peer Review Requirement – October 1st
 New Mobility Law
y
 Maryland Individual Tax Preparer Act
 New Corporate Reporting Requirements
 New CPA Exam Requirements
 New CPE regulations
 Mandatory e-file
M d t fil
 New Non-Profit Audit Requirements > $500,000
 MD Workplace Fraud Act - Independent
Contractor Legislation
 Maryland Franchise Act – conflict with audit
standards CPA Day in Annapolis
 Maryland Privacy Act of 2008 January 20, 2010

47. 4. Four things you can must do to help us
1. Support membership (100%
firms & companies)
2. Contribute and support our
b d
PAC (CPA/CPA)
3. Support & Attend CPA Day in
3 Support & Attend CPA Day in
Annapolis (Jan 20, 2010)
4. Support & Attend MACPA
pp
CPA Member Summit
(MDBIZEXPO) & Swearing‐in
of New CPAs Jun 28th & 29th,
of New CPAs Jun 28 & 29
2010

48. CPAs are
asking what
can we do to
stop or
change these
laws and
l d
regulations
g

49. MACPA is
watching out for
you. W will
We ill
show you how
we can work
together to ride
g
these waves of
change.
change

50. Tom Hood, CPA.CITP
CEO
Maryland Association of CPAs
Business Learning Institute
(443) 632‐2301
E mail tom@macpa org
E‐mail tom@macpa.org
Web http://www.macpa.org
Blog http://www.cpasuccess.com

51. CPAs and Social Media – Passing Fad
or Valuable Tool?
or Valuable Tool?
Tom Hood, CPA.CITP
CEO & Executive Director
Maryland Association of CPAs
http://www.MACPA.org
tom@macpa.org
t @
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