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June 2010

SUPREME COURT RULING ON BUSINESS METHODS DOESN’T GO FAR ENOUGH

In addition to the PCAOB, Sarbanes-Oxley decision on Monday, the U.S. Supreme Court, in Bilski v. Kappos,  ruled unanimously (9-0) that a particular mathematical hedge fund model was too abstract be patented, but in a split 5-4 decision overturned a lower court decision that basically outlawed all business method patents.  The court upheld business patents under certain circumstances.

 

The court’s decision does not prohibit the patenting of business methods, which means that tax strategies will still be patented and that more work needs to be done on legislation that would prohibit such patents.

 

According to AICPA president and CEO, Barry Melancon on Monday, this ruling does not go far enough to ban tax strategy patents.

 

Today’s Supreme Court decision in Bilski v. Kappos, while striking down a particular business method patent, does not stop the U.S. Patent and Trademark Office from continuing to issue tax strategy patents and the AICPA renews its call on Congress to act quickly to pass legislation to ban tax strategy patents,” he said.

 

Read here for more details on this ruling.

http://www.aicpa.org/Press/PressReleases/2010/Pages/AICPACallToBanTaxStrategyPatents.aspx

 


UNITED STATES SUPREME COURT VOTES TO KEEP SARBANES-OXLEY

The U.S. Supreme Court ruled yesterday, June 28, 2010, that a small, specific part of the Sarbanes-Oxley Act is deemed unconstitutional because the process violates the Constitution’s appointments clause.  The specific ruling altered the process for removing members of the Public Company Accounting Oversight Board (PCAOB), the committee appointed by the SEC to establish accounting and auditing rules for public companies.

 

With a 5-4 vote, the Court upheld the constitutionality of the Act as a whole and ruled that the Public Company Accounting Oversight Board may continue to operate. This ruling is considered a win for the accounting profession because of its support for SOX and having an effective regulator to enhance investor protections.

 

For more details on this ruling, and to read AICPA’s comments, click below.

http://www.aicpa.org/Press/PressReleases/2010/Pages/BarryMelancononPCAOBDecision.aspx


TSCPA SENDS LETTER TO U.S. CONGRESS REGARDING TAX PREPARER REGISTRATION PROPOSAL

The TSCPA today submitted a letter to Texas Members of Congress stating its concerns with aspects of the recent IRS proposal to regulate paid income tax return preparers. The Society is also urging legislative members to contact the IRS to exempt CPA firms from the requirement to register people working in CPA offices who do not sign tax returns.

TSCPA requests that Congress impress upon the IRS the need to exempt CPAs' employees from the non-signing preparer requirements of the proposed PTIN regulations.

The Society strongly believes that regulations should specify that the preparer PTIN requirements not apply to non-signing preparer employees of CPA firms.

 

Download TSCPA Ltr to Rep McCaul IRS Tax Preparer Registration 6-28-10


New PTIN Database Tracks Paid Preparers’ Tax Obligations

Per Ken Horwitz & Patty Wyatt telcon with IRS June 15:

The new online Preparer Tax Identification Number (PTIN) database, scheduled to open September 1, 2010 gives the Office of Professional Responsibilities (OPR) a much-improved vehicle for tracking paid preparers’ compliance with the filing and payments of personal, corporate and payroll tax returns.

The PTIN application will require disclosure regarding the applicant’s (1) Federal tax compliance status (that is, return filing and payment of tax), and (2) history of criminal convictions. Via teleconference in a TSCPA/IRS meeting June 15, 2010, Robert Johnson with OPR’s Washington, D.C. office, expressed that now is the time for our members to resolve any outstanding compliance issues.

We are reminded that an un-filed refund return is not exempt. OPR can (and does) reprimand, censure, suspend, disbar, and invoke monetary penalties to non-compliant paid preparers. It then shares public disciplinary actions with state boards of public accountancy. All paid preparers must obtain a PTIN or renew their current PTIN and pay the applicable fee in the new database before the January 2011 filing season.


AICPA Tax Division Issues Letter re: H.R.4213 Provision Effecting SCorps

On June 9, the AICPA has issued a letter to the members of both the Senate Finance and House Ways & Means Committees expressing concerns about and opposition to the provisions of Section 413 of the American Jobs and Closing Tax Loopholes Act of 2010 as it affects the treatment of income derived from professional service Sub S Corporations. 

This section has significant adverse implications for Attorneys, MDs, DDSs, CPAs, and all other professionals who own interests in such entities.  The AICPA is also working on a strategy to introduce an amendment to the act that would strike this section.  The TSCPA is prepared to react rapidly to any request from the AICPA for assistance through Key Person contact with members of the Texas Delegation on these committees to assist with opposing this law. 

Senator Cornyn is on Senate Finance and Congressmen LLoyd Doggett, Sam Johnson and Kevin Brady are on House Ways & Means.  No Texan is currently on the Joint Committee on Taxation.  We will notify our members when we need their help and keep you informed of our efforts on this matter.
Read the AICPA Letter.


IRS TO REQUIRE PTIN HOLDERS TO REREGISTER WITH NEW SYSTEM THIS FALL

Beginning in September, the IRS will demand all paid tax return preparers to register with its new online system and obtain Preparer Tax Identification Numbers (PTINs). Preparers with current PTINs will be able to keep their assigned number, but will have to reregister and pay a user fee (amount TBD). PTIN holders may be subject to periodic checks for compliance with personal and business tax filing and payment obligations.

 

Read here for more details.

http://www.irs.gov/taxpros/article/0,,id=218611,00.html#PTIN