Member Advantage #107 - March 16, 2006

The fax is provided exclusively to NCACPA members as a member service. For more information, please contact Jim Ahler at (919) 469-1040.

NC DOR Settlement Initiative: The Department has a new settlement initiative under which partial penalty relief will be granted to taxpayers who claimed a NC tax benefit related to one or more transactions or techniques considered improper under the law. The settlement initiative is an opportunity for taxpayers to resolve the income tax treatment of eligible transactions. Taxpayers may sign an election to participate in the settlement initiative through June 15, 2006. For more information, visit the NC Department of Revenue’s website at www.dor.state.nc.us.

NC Department of Revenue Clarification: The 2005 NC S Corporation and partnership forms provide a line item and instructions to present the NC deduction for 20% of 30%/50% federal additional first-year depreciation (AFYD) amounts that were previously added back to taxable income by individual shareholders/partners for 2001-2004. 20% deduction allowed for 2005-2009 of the 30%/50% additional first-year depreciation added back to NC taxable income during 2001-2004 is based on the actual amount added back by the taxpayer, without regard to changes in the taxpayer’s ownership percentage since the year of the add-back. The deduction is allowed even if the taxpayer is no longer a shareholder/partner. The deductions are lost if the taxpayer dies or is a regular corporation that goes out of existence. A more detailed summary of this clarification appears on the association’s website at www.ncacpa.org.

National Impact of New California Practice Privilege: A new practice privilege requirement in California went into effect on January 1, 2006. The California Board of Accountancy requires out-of-state CPAs preparing business or fiduciary tax returns for California clients obtain a practice privilege. This requires CPAs to file a California Practice Privilege Notification form and pay a $100 practice privilege fee. In recognition of the unintended consequences of its requirements and pressure from state CPA associations, the California Board of Accountancy took steps to provide relief. Legislation has been introduced to alter the existing regulations to allow out-of-state CPAs to serve California clients under specific conditions. For more information, please visit the California Board of Accountancy website at www.dca.ca.gov/cba.

Outsourcing: A number of new state board regulations took effect January 1, 2006. Members are encouraged to visit the NC State Board of CPA Examiners’ website and review the new rules. For example, the new outsourcing of client information rule has a written client notice requirement. The state board’s website is www.nccpaboard.gov.

Annual Business Meeting: Members are invited to the NCACPA Annual Business Meeting on Sunday evening, May 7, 2006, at the Grandover Resort & Conference Center in Greensboro. The report of the Nominating Committee will be voted on by members present at the business meeting. Beginning with a reception at 6:00 pm, the association will host a year-end awards celebration to recognize specific members for their contributions to the profession and association. Dinner and the business meeting will follow at 7:00 pm. Members planning to attend are requested to call the Member Service Center at (800) 469-1352 to register.