January 21, 2013
Brett McGrath, Tax & Business Services Partner, Interviewed by The Hartford Business Journal: "CPAs Under the Gun as Tax Season Nears"
Q&A talks about the impending tax season with Brett McGrath, a tax partner in the Hartford office of Marcum Accountants and Advisors.
Q: Was the "fiscal cliff" legislation the biggest headache for CPAs in years? It seems as if accountants, bookkeepers, and business owners were scrambling during the holiday week to reconfigure payrolls. Was it like months of tax work rolled into one week?
A: The uncertainty during 2012 over what tax laws would govern in 2013 due to the potential expiration of the Bush-era tax cuts made year-end tax planning a very challenging time. The volume and unprecedented amount of tax related issues, coupled with the tax provisions that take effect Jan. 1, 2013 as part of the Affordable Care Act, put pressure on tax professionals to make clients aware of these issues and propose plans of action that would be beneficial for them. Contrary to the usual year-end tax advice, in anticipation of the income rate increase, we were advising our clients in some situations to accelerate income or defer deductions so they could benefit from the potential lower rates in 2012. Another challenge involved estate and gift tax planning as the lifetime exemption was scheduled to drop from $5,120,000 to $1,000,000. For people with significant estates, November and December was a very good time to take the appropriate steps. However, these transactions are complicated and require tough decisions, which further added to the pressure that CPA's and other professionals endured at year end.
Q: What should people know about alternative minimum tax? What's been done to the AMT and who benefits and suffers because of it?
A: Thanks to the fiscal cliff deal, the alternative minimum tax will not ensnare tens of millions of middle-class Americans for whom it was never intended. The American Taxpayer Relief Act of 2012 raised the income thresholds before the AMT kicks in and indexes them for inflation going forward. As a practical matter, this means that 28 million filers who would have had to pay AMT tax on their 2012 returns have been spared and are much less likely to have to pay the tax in the future.