Weiner Launches Fiscal-Year Reform Initiative

By James A. Woehlke, CPA

NYSSCPA President Alan Weiner recently launched an initiative to re-energize the fiscal-year reform effort. Beginning with correspondence to state CPA society presidents asking them to make fiscal-year reform an important part of their agendas, Weiner then requested that Society committee chairs and chapter presidents do the same.

"This year we are 'celebrating' an unlucky anniversary, the thirteenth anniversary of the Tax Reform Act of 1986, which ushered in chronic workload compression," Weiner wrote to the state society presidents.

Traditionally, CPAs have experienced a heavy first-quarter workload due to calendar year-end audits and tax filing deadlines for individuals and calendar year-end businesses. The Tax Reform Act of 1986 seriously aggravated this busy-season problem by requiring nearly all small businesses to use a calendar year-end. CPAs call this "workload
compression."

Weiner's goal is for CPAs across the country to communicate their concerns about workload compression to the AICPA, which now believes CPAs generally have adjusted to the problems. Previously, the AICPA lobbied Congress to pass a bill relaxing the calendar-year requirement. In 1992 Congress twice passed the bill, which was vetoed by then President George Bush. Eventually, the AICPA came to believe that the bill would not be passed.

"I am very supportive of Alan's efforts," said John Joseph Kearney, Nassau Chapter president and chair of the Society's Tax Division/Executive Committee. "The workload crunch caused by the IRC's restrictive fiscal-year rules is very damaging to the CPA profession and harmful to our clients."

Weiner gave three reasons for the need for reform.

"First, clients are harmed by not having fiscal-year accounting available to them," he said. "Second, working conditions in CPA firms have become very difficult during the first third of the year. And finally, obtaining qualified staff to work just part of the year has become a serious business challenge."

Subject to the grandfathering of existing fiscal years, the Tax Reform Act of 1986 took the ability to decide their own accounting period away from small business clients and trusts. Except for rare cases in which the IRS grants permission to use a fiscal year, the client's actual business cycle is no longer relevant.

"This precludes clients from arranging their affairs so that their heaviest accounting activity occurs during the slower part of the year," Weiner said. "Financial information from these taxpayers is arguably less useful to banks and other lenders because the federally mandated calendar year does not necessarily coincide with the taxpayers' natural business year."

According to Thomas Riley, workload compression's impact is a real concern for CPAs.

"When I started out it was typical to spend forty-five to fifty hours a week during tax season," Riley said. "Now it's seventy to seventy-five hours. It's begun to drive people out of the profession. It has become very difficult for people with a family orientation to maintain a balance between family and business demands. It also creates problems for clients who want to be on fiscal years. It makes it hard on everybody."

Weiner encourages CPAs to write to the following people and identify fiscal-year reform as an urgent issue that the AICPA should resolve: