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With just over one month until individual income taxes must be filed with the IRS, Congress is yet again considering a last-minute change to tax laws that will only further complicate the preparation of 2009 income tax returns.

Following the earthquake in Chile, the chairman of the House Ways and Means Committee introduced legislation that would allow taxpayers to deduct on their 2009 income tax returns donations made in 2010 for Chilean earthquake relief. Congress took the same action in response to the earthquake that struck Haiti earlier this year.

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As the Journal of Accountancy reported yesterday, a Swiss court blocked the release of confidential information identifying the owners of 26 Swiss bank accounts sought in the IRS’ ongoing tax-fraud investigation. Considering that the earlier settlement entitled the IRS to information on 4,450 accounts, this is an almost imperceptible victory for proponents of Swiss bank secrecy. Nonetheless, for the owners of those accounts, the decision is certainly more than welcome.

The ruling, delivered by a Swiss administrative tribunal, determined that simply failing to file an informational form identifying the account owner as a U.S. citizen (IRS From W-9) does not constitute tax fraud. Since the tribunal ruled that its decision could not be appealed, the owners of the 26 accounts in question are, at least for now, safe from further scrutiny, and ultimately, penalties and interest on unreported earnings. As the settlement reached earlier this year between the IRS and Swiss government called for the release of roughly 10,000 names, the IRS will likely let the 26 accounts covered by the Bundesverwaltungsgericht’s¹ ruling in U.S. Taxpayers v. Swiss Federal Tax Administration forgo further investigation. It is unclear, however, whether more of the 10,000 names to be released will benefit from this ruling.

I was laid off in June 2009, and a typical response to what I planned to do with my newfound free time was, “I’ll study and sit for the CPA exam.” It’s now the end of January, and I’ve done neither.

To be honest, money was always a problem. The exam isn’t exactly inexpensive to take, comprising of four parts that each cost roughly $200 to register for. Then there’s the initial registration fee exacted simply to find out whether my education qualifies me. That second part always made me nervous, since my Bachelors degree is in Audio Engineering Technology. But, earlier this month, I finally sent my application and a check equivalent to my monthly car payment to the processing center in Tennessee.

On Saturday, I received an email from NTS Notification Service¹ that I was too afraid to open. After all, as an organizer for WordCamp Boston, I was too preoccupied to concern myself with the notice, and if the message was a rejection, I didn’t want to distract myself with that nightmare.

Thankfully, when I finally opened the email this morning, my apprehension was met with the following relief:

CPA Examination Candidate:

Your state board has found you eligible to take the Uniform CPA Examination.

So, having received my Notice to Schedule, I now have until late July to sit for the first section of the exam. That gives me 18 months from now to complete all four parts. Clearly, my procrastination (a skill that could likely earn me a doctorate, at least an honorary one) must end.

How ironic that the notice comes just as I’ve involved myself in myriad other engagements ranging from freelance web design and programming to audio engineering.

The procrastination is over.

After six months of relaxing, I’ve mailed the registration forms and made the financial commitment to sit for the CPA exam.

Over the course of 2010, look for periodic updates on my progress as I study for the four parts that comprise the exam. For those taking the exam in the future, I’ll include my study methods, how I’m keeping motivated, and any other useful tips I can provide.

Hopefully, by the end of February, I’ll have taken the Auditing & Attestation portion of the exam.

With any luck, I’ll have more success this time around than I did with my last attempt.

The following is a paper I coauthored in December 2006 for a Seminar in Management Control Systems while completing my Masters of Science in Accounting & Taxation at the University of Hartford. Given the recent resurgence of news relating to options backdating, I thought I’d reprint the paper for those who might be interested.

Executive Summary
Stock option backdating is a complex issue. While there are legal ways to backdate stock options, as we found, few companies can properly account for backdated options. As a result, we found that many companies lose top talent, are scrutinized by regulatory bodies, and are subject to fines and penalties. The negative effects on shareholder value are significant cause for concern. Ultimately, the potential gain executives’ reap is far outweighed by the likelihood of detection. Nonetheless, stock option backdating is a prevalent practice. The statistics can be staggering: $5.9 billion in fines, more than 120 companies under investigation. In the coming pages, the history, legal issues, and effects on shareholder value will be explored.

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In the past few years, much has been made of the plans to merge the accounting standards used in the US with those used by much of the rest of the developed world. In 2002, the US standards setter and the international standards bodies agreed to a framework for convergence of US generally accepted accounting principles (US GAAP) with the International Financial Reporting System (IFRS) in a document known as the Norwalk Agreement.¹ Since then, the US and international bodies (known, respectively, as the Financial Accounting Standards Board, or FASB, and the International Accounting Standards Board, or IASB) have worked to align their respective standards so that, eventually, developed nations will have a homogenous accounting system. One particular point of difficulty in this effort, however, has been the issue of fair value accounting. The economic recession that began in 2007 further complicated convergence efforts as attention was drawn away from reconciliation efforts and focused on both placing blame and reforming the practices that caused the crisis. Then, with the election of President Barack Obama, the entire convergence movement was threatened when the newly-appointed chairwoman of the Securities and Exchange Commission announced that she would not “feel bound”² by the convergence roadmap established by her predecessor.

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Recently, public-interest news organization ProPublica, in partnership with public radio’s Marketplace, reported on allegations of fraud and deceptive enrollment tactics at the University of Phoenix, the nation’s largest for-profit educational institution. While the allegations are both saddening and disconcerting, they should come as no surprise. After all, the University of Phoenix’s parent company, Apollo Group, is a publicly-traded entity whose shares are listed on NASDAQ. As such, Apollo Group and its subsidiaries have one responsibility, and one alone: to increase shareholder value.

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When the Financial Accounting Standards Board (FASB) voted at its September 24 meeting to adopt a rule change recommended by its Emerging Issues Task Force (EITF), very little changed. Nonetheless, the adoption of EITF 08-1 has won praise from many technology and service companies. The change involves recognizing the revenue, or sales price, of items that involve multiple parts or whose sales contract covers multiple years. Examples include a piece of hardware whose accompanying software license spans multiple years or a two-year contract to provide consulting services. Typically, because a portion of the sales price relates to more than one year (accounting or reporting period), the sale must be recognized proportionally over the life of the agreement, rather than recording the full sales price in the year the agreement is signed.

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In the IRS’ ongoing battle against tax evasion, a key deadline is approaching. Individuals with previously-unreported offshore bank accounts have until next Wednesday, September 23, to disclose the accounts’ existence and pay both back taxes and penalties without facing criminal charges. The deadline comes as UBS prepared to turn over 4,450 account-holders’ names to the Department of Justice as part of the ongoing tax evasion investigation. Besides avoiding criminal penalties, individuals who voluntarily disclose their offshore accounts will not be subject to penalties for failing to file a Foreign Bank Account Report.

As Wendy Kaufman reported for NPR’s Morning Edition today, however, tax evasion cases can be hard to prove, making the decision to provide voluntary disclosure a particularly difficult one. Nonetheless, considering that the 4,450 names to be disclosed by UBS are just the starting point in the agreement between the Swiss and US governments, holders of undisclosed offshore accounts have reason to be concerned. Reflecting that concern, more than 400 voluntary disclosures were made in a single week in July of this year, more than were made in all of 2008.

As The Wall Street Journal reports, UBS plans to release the names of 4,450 Americans holding UBS accounts as part of its settlement with the US and Swiss governments. The initial release of 4,450 names represents only about half of the total identities the US hopes to receive from UBS. With this information, the IRS and Department of Justice can begin criminal tax-evasion proceedings against these individuals. At issue is an estimated $10 billion on which US income taxes were never paid. Simultaneously with the announcement that UBS was releasing the names, the Swiss government moved to sell shares it held in the bank. This is largely seen as a move to distance the Swiss government from UBS at a time when it is increasingly interjecting itself into the banks affairs.

While the release of names was not unexpected (see “UBS, Swiss Government Reach Settlement with IRS” and “UBS Troubles Spread to Hong Hong“), it represents a significant weakening of the once-infamous Swiss bank privacy laws. To combat this problem, the process by which the IRS will receive the names is a bit tedious. UBS will first turn the names over to the Swiss government’s tax administration for review, after which the names will be forwarded to the IRS and Department of Justice. To begin, 500 names will be released, with the remaining provided in batches in future months. For the thousands of American clients of UBS who now find themselves in the government’s crosshairs, there is a bit of hope.

Until September 23, 2009, the US government is accepting voluntary disclosure of the accounts not previously reported to the Treasury. Theoretically, those who volunteer their information will face less-stringent prosecution than those the IRS discovers on its own. Either way, many individuals are likely to face criminal prosecution for tax evasion. Given that the average size of the UBS accounts in question is approximately $1 million, the fines and penalties can be substantial. Already, the IRS has begun prosecuting some former clients of UBS and reached settlements with others.

For more detail on the settlement and more information regarding the ongoing negotiations between the US government and UBS, see the Journal’s original article, “UBS to Give 4,450 Names to US.”