Watch Out: 7 Ways to Fix the ‘Tax Gap’

GAO, IRS want new, tougher measures.

by Rick Telberg

In a new report, U.S. Comptroller General David Walker tells the Senate Budget Committee that cracking down on tax cheats alone isn’t enough to close the nation’s widening tax-revenue shortfall.

Walker, a CPA, goes further. He says Congress must simplify the tax code if we really want to close the tax gap. And he seems to have the backing of IRS Commissioner Mark Everson. The IRS figures it gets only 81 percent to 84 percent of the taxes the government is actually owed. That’s almost $400 billion. Even in Washington, that’s a lot of money. But Walker sounds a new alarm: “Our nation’s fiscal policy is on an imprudent and unsustainable course.”
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Posted on February 27, 2006
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Do CPAs Really Understand the Small-Biz Client?

The market is vast, and opportunities abound for CPAs in both industry and public practice. But are they talking the same language?

by Rick Telberg
At Large

Have you been paying attention to finance and accounting’s biggest market – the small business enterprise?

Whether you’re building a career in business and industry, or building a practice to serve business and industry, you should probably take another look at what’s out there. CPAs working within small- and midsize businesses need to know how their company works, how it gets customers, what they want, how to find them and how to sell them what you’ve got. In the same vein, you need to know how other small business buy finance and accounting services. Are you getting what you want from your CPA firm? Need we say that CPAs in public practice need especially to know what clients really want? Why they buy, why they change firms, what they like and don’t like about their current outside accounting provider? Read more

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Posted on February 21, 2006
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Taking on the Tax Gap

GAO Says Complexity Undermines Compliance

In a new report, U.S. Comptroller General, David Walker, CPA, tells the Senate Budget Committee that Congress must simplify the tax code if we really want to close the $345-billion-a-year revenue shortfall.

Walker:

Our nation?s fiscal policy is on an imprudent and unsustainable course. As long-term budget simulations by GAO show, over the long term we face a large and growing structural deficit due primarily to known demographic trends, rising health care costs, and lower federal revenues as a percentage of the economy. GAO?s simulations indicate that the long-term fiscal challenge is too big to be solved by economic growth alone or by making modest changes to existing spending and tax policies. Rather, a fundamental reexamination of major policies and priorities will be important to recapture our future fiscal flexibility.

Under-reporting of income by businesses and individuals accounted for most of the estimated $345 billion tax gap for 2001, with individual income tax under-reporting alone accounting for $197 billion, or over half of the total gap. Corporate income tax and employment tax under-reporting accounted for an additional $84 billion of the gap.

Reducing the tax gap would help improve fiscal sustainability. Given the tax gap?s persistence and size, it will require considering not only options that have been previously proposed but also new administrative and legislative actions. Even modest progress would yield significant revenue; each 1 percent reduction would likely yield nearly $3 billion annually. Reducing the tax gap will be a challenging long-term task, and progress will require attacking the gap with multiple strategies over a sustained period. These strategies could include efforts to regularly obtain data on the extent of, and reasons for, noncompliance; simplify the tax code; provide quality service to taxpayers; enhance enforcement of tax laws by utilizing enforcement tools such as tax withholding, information reporting, and penalties; leverage technology; and optimize resource allocation.

Download the 25-page GAO report (PDF) and the IRS Tax Gap Figures (PDF). Read more

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Posted on February 17, 2006
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Do You Deserve “Hazardous-Duty Pay”?

How corporate governance issues can affect your career moves.

by Rick Telberg
On Careers

Should you be concerned about corporate governance issues if you’re only an employee? Or if you work for a private company or independent accounting firm? You bet! When you join a company, you’re making one of the biggest investments of your life. Not only do you want to be sure the company is going to return the favor by investing in you, but you also want to look for the same red flags that any savvy outside might look for. But where to start? Read more

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Posted on February 15, 2006
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32% of Accounting/Finance Workers Plan to Leave Their Jobs in 2006

Low pay, long hours, no promotions, zero bonus: Any wonder?

CHICAGO (CareerBuilder.com) – Close to one-in-four accounting/finance workers say they are dissatisfied in their current positions and one-third say they plan to find a new job in 2006, according to a CareerBuilder.com survey.
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Posted on February 15, 2006
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How Good Is Your Retirement Plan?

CPAs Sound-Off with Planning Advice.

By Rick Telberg
At Large

Finance and accounting professionals are never shy about giving their opinions, especially when it comes to individual financial issues. So it’s no surprise that when we opened the door to their views, we were overwhelmed with responses. Considering the state of the nation’s savings rate and its health insurance, retirement and pension systems, we asked how people should protect themselves financially. The answers ranged from obvious to optimistic to outrageous. All were passionate.
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Posted on February 13, 2006
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Reward Your B Players

The Pitch: As seen in Sales and Marketing Management

featuring Rodger Stotz, Vice President & Consultant,
Maritz Inc.
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Rodger Stotz
bio

http://rick.telberg.mr-2.us/feature1.phtml

Motivating your top performers is a no-brainer. But will that alone increase your bottom line? Not quite. That’s the finding of a recent survey by Maritz Incentives, a provider of reward and recognition programs based in St. Louis. Midlevel performers thrive when they know they’ve got something to work toward ? and you’ve got to give that to them. In fact, 52 percent of respondents who qualify for incentive programs at their companies ? which typically reward the top 10 percent of workers ? feel they have only somewhat or no chance of winning an award. This is far from motivating. “Your B-players have a significant effect on your bottom line,” says Rodger Stotz, vice president and managing consultant for Maritz Inc. “You’ll always have a top five percent, but those rewards don’t move the middle.”

A typical company may have 10 percent A players and 80 percent B players, Stotz says. If you get the top 10 percent to improve by 20 percent, then overall results climb 2 percent. But if you get just 5 percent more out of your mid-performers, overall results will go up 4 percent. That is why managers must recognize and reward those who may not perform at the top level, but who perform consistently. “Studies say that well-designed sales incentive programs do increase performance,” Stotz says. “Ask your B players what their impression is with the current recognition and reward plans. They may think, “I can’t try, because I can’t make it,” when it comes to top-performer incentive programs. That is just demotivating.”

So what can you do to make sure your rewards plan doesn’t alienate your B players? Stotz offers the following suggestions:

BE CLEAR ON YOUR OBJECTIVES “Instead of only using top-performer measures, such as most volume, create an incentive for the most improved, which will attract the B’s,” Stotz says.

PROMOTE THE PLAN Sometimes executives “launch a program but participants don’t know they’re in the program ? that’s not good,” Stotz says.

STAY INVOLVED The sales manager’s role is critical in any type of incentive program. Salespeople are independent but they look to managers for direction.

SET UP GOALS Work with B players to set up individual goals for achievement and recognition. This can get them out of a rut and improve performance.

CREATE A MENTOR PROGRAM “If it is within the culture, look to A players to mentor the B’s,” Stotz says. “They can offer ‘tips from the top’ class sessions, for example, once a month. Sharing tips for success motivates the B’s.” Read more

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Posted on February 13, 2006
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TAX SEASON STRESS-O-METER UPDATE

Based on responses gathered from tax practitioners through January, a third were reporting they were feeling stressed most or all the time, a third said sometimes, and another third only occasionally or never. At the same time, about 33 percent were reporting business was running better this year, with about 23 percent reporting worse conditions, and the rest unchanged. Read more

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Posted on February 10, 2006
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What’s Next for Sage Under Vodaphone Exec?

Sage Group, U.K.’s largest listed software company and parent to Best and Peachtree in the U.S., is changing chairmen.

Michael Jackson, chairman since 2000 and part of the company for 22 years, is stepping down, to be succeeded by Julian Horn-Smith, the outgoing deputy chief executive of Vodafone Group.

Under Jackson, Sage became a world leader on software for small and mid-sized business, rivalled only by Oracle, Intuit and Microsoft, each of which have been tough competitiors and sometimes suitors. Sage shares were trading near a 52-week high.

Jackson’s abdication was, by one report, precipitated by his chairmanship of PartyGaming which, like Sage, is a FTSE 100 company. Under UK corporate guidelines, an individual should not hold two FTSE 100 chairmanships simultaneously.

Horn-Smith has been at Vodafone since it was founded in 1984. He joins the Sage board in March as a non-executive director, before leaving Vodafone in July and then taking the reins on Jackson’s departure.

What’s next for Sage? So far, no one’s talking. But we’d place a bet with PartyGaming that Horn-Smith has something to prove. Read more

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Posted on February 7, 2006
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