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AICPA to Senators: Don’t Even Think About Touching Cash-Basis Accounting

Posted on by Caleb Newquist

Maybe you've noticed, but there are a few things that grind the AICPA's gears:

1. Questioning the integrity of CPAs in a YouTube video, on the radio or anywhere for that matter.

2. Management accounting credentials that are not the CGMA.

3. Nationally syndicated columnists suggesting that anyone is more qualified than a CPA to represent a taxpayer before the IRS.

You can add to that list: anyone who's even thinking about getting rid of cash-basis accounting:

In a letter submitted for the record of the committee’s hearing on “Navigating Business Tax Reform,” AICPA President and CEO Barry C. Melancon, CPA, CGMA, wrote, “As the Committee drafts its proposals, we urge maintaining the current availability to use the cash method of accounting for pass-through entities and personal service corporations, such as accounting firms.  Determining taxable income under the cash basis is simple in application, is a method of accounting which the service industry has used for decades, and must remain an option for these businesses.”

Uh, okay? Last we checked, 46 US Senators had the AICPA's back on this. Sure, that was the last Congress, but has the cash method come under attack and we weren't made aware of it? Was there something in the Panama Papers about this? Did Donald Trump threaten deportation for cash-basis businesses?

Here's more from AICPA President, CEO and Venti Iced Skinny Hazelnut Macchiato, Sugar-Free Syrup, Extra Shot, Light Ice, No Whip drinker Barry Melancon's letter:

“The AICPA has consistently supported tax reform efforts that promote simplicity and economic growth and do not create unnecessary administrative and financial burdens on taxpayers,” Melancon wrote. “An accrual method mandate falls short in that regard. We strongly urge retaining use of the cash method of accounting.”

Again, not sure what provoked the cash-method to launch such a vigorous offensive, but maybe the AICPA knows something we don't.

[AICPA]

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More Proof That Busy Season Could Kill You

The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight — everything you need to help you prosper and enjoy the accounting profession.

During the tax season of 1995-1996, Norm Lorch was not feeling well. He had a sore throat, but told himself it would go away. In any case, he did not have time to go to a doctor.

Lorch is principal of Owings Mills, Maryland-based Norman J. Lorch, Chartered, a firm that assists contractors, accountants, and attorneys in areas unique to government contracts.

Eventually, he spoke with a doctor on the phone who prescribed antibiotics – two weeks on and off – but he still did not feel much better. At one point, Lorch passed out, but he told himself that he had tripped on something, picked himself up, and went back to work.


While attending an American Bar Association conference, Lorch met a friend who would be conducting the session he was planning to attend. The friend told him in “pretty clear English” how he looked and said he needed to see a doctor. Lorch said no, but the friend insisted, saying that if Lorch didn’t call a doctor, he would stop the session.

Lorch set up an appointment for the next day. The doctor’s diagnosis was strep throat and made an appointment with a cardiologist for the following Monday. At first Lorch said “No, I have to go to Chicago,” but eventually he acquiesced. The strep had settled in Lorch’s aortic valve and destroyed it, causing congestive heart failure. He was given three to five days to live if he did not have immediate surgery.

“This is a crazy profession. Accountants are nuts. We work ourselves to death. I had allowed my clients to be the most important thing in my life. I didn’t listen to anybody,” Lorch told AccountingWEB.

“Making a few bucks less won’t kill you. When you are tired, quit. When you don’t feel good, stop working. Yes, some clients may leave, but they are going to find someone else if you die,” he said.

“I made a lot of money that year and eventually earned a penalty for underpayment of estimated taxes. I called the Internal Revenue Service to explain, spoke with a supervisor, and she said, ‘if you receive another penalty notice have them contact me.’

“Now, my priorities are my health and my family. My daughter had to leave college during her exams because of my medical condition, and I nearly missed her graduation. My clients can wait, and those that can’t wait can go. When you remember what comes first, everything else will fall in line,” Lorch said.

“When I teach, I tell everybody about this and what stress can do to your health because if I can help one person, it is worth it. I persuaded the moderator at an AICPA tax conference to allow me to speak to a group of 50 or 60 people when I wasn’t scheduled. As we were leaving, one man said, ‘Thank you very much. I am going to the hospital,’ Lorch said.

Since his illness, Lorch has lost weight and is careful what he eats. He walks five to seven days a week for one and a half miles. When he doesn’t feel well, he calls his doctor.

A specialist in financial oversight, compensation, and administration of U.S. government prime contracts and subcontracts, Lorch travels at least 50 percent of his working hours, but now plans travel with his health in mind. “I try to extend the hours, spreading two days of work over three.”

Earlier:
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