PROJECT DESCRIPTION
Prior to my role as NCCPAP’s public relations manager, its members had been regularly meeting with the IRS, testifying before members of Congress and shaping tax policy in their respective states with little to no recognition in the press. Our PR efforts significantly increased NCCPAP’s visibility as members became regular contributors to financial and tax publications.
Recognition in local and national media outlets further solidified NCCPAP members’ reputations as experts in their field. CPAs who serve NCCPAP to shape tax policy do so on a voluntary basis. Getting them recognized in publications that garnered press for the organization had a positive secondary effect by providing marketing for their own practices. This not only increased their own value in the view of their clients and prospective clients, but elevated the value of a NCCPAP membership.
FOR IMMEDIATE RELEASE
Accrual vs. Cash: Subcommittee Meets Tomorrow to Consider Change
Issued by the National Conference of CPA Practitioners (NCCPAP)
July 9, 2014, Washington, D.C. -- Tomorrow, July 10 at 10 a.m., the Subcommittee on Economic Growth, Tax and Capital Access will consider if current accounting policies should change for small businesses. Stephen Mankowski, Partner, EP Caine & Associates, CPA, LLC will be testifying on behalf of the National Conference of CPA Practitioners (NCCPAP). The hearing will be held in the Rayburn House Office Building, Room 2360. The hearing will also be streamed live and accessible via this link: http://smallbusiness.house.gov/legislation/live.htm
NCCPAP believes there are many benefits to leaving the current system in place. Now small business owners can work with their tax professional and choose either an accrual or cash accounting method, whichever works best for a particular business.
The discussion tomorrow will include requiring business owners to convert to the accrual method. Mankowski acknowledges, “Banking people want the change, because it removes the ambiguity. For example business owners can now record all their revenue, not related expenses, to look better for financing.” With cash accounting, business owners record income when it is received and expenses when they are paid.
If small businesses were required to convert to the accrual accounting method, the revenue would have to be recorded when a client is invoiced. This would mean the business owner would pay taxes on the invoiced amount, regardless of when they get paid for their work.
Mankowski states, “The problem with the accrual method is you could pay taxes on income before you receive payment. You also are required to pay taxes personally on the income, since you are personally liable for those taxes if you operate as a sole proprietorship, S-Corporation or partnership.”
Mankowski states, “Some businesses currently operate on a cash basis and if required to go to an accrual basis, might have no change in revenue, potentially a change in expenses though. Other businesses, if made to convert, could be affected significantly. Initially, they would get a one time tax hit when the companies convert because the aged accounts receivable would now be recorded as revenue.”
Mankowski explains that almost all of his small business clients opt for cash accounting. He says, “I am for letting the business owner choose the method that's best for them. I recently completed over 100 business-related returns, zero are on the accrual basis. The cash basis makes sense to business owners because that’s the way they run their lives. The worst thing for business owners is to not understand what's going on. A forced change to the accrual basis could make things more complicated for business owners already overwhelmed and confused.”
Mankowski is NCCPAP’s current National Secretary and the Chair of NCCPAP’s Tax Policy Committee.
ABOUT NATIONAL CONFERENCE OF CPA PRACTITIONERS (NCCPAP)
NCCPAP is a professional organization that advocates on issues that are of importance to CPAs in Public Practice throughout the United States. NCCPAP members represent over one million businesses and individual clients. NCCPAP monitors and influences tax administration and tax policy by meeting with Internal Revenue Service representatives and state taxing authorities as well as national and state elected officials. In addition, NCCPAP provides a platform for its members to exchange ideas and information on managing and running a successful CPA practice in today’s competitive environment.
“It has been my pleasure to know and work with Alexis Burd in my capacity as chair of the public relations committee of the National Conference of CPA Practitioners. Alexis is an excellent writer, a very good listener and has been very attentive to our organization’s needs. Her follow-up with assignments has been excellent and we have achieved significant growth in our public relations activities under her guidance.”
Carol Markman, CPA
Public Relations Committee Chair
NCCPAP