CLIENT NEWS

Rural Crossroads Institute

The Rural Crossroads Institute recently worked with the SC Department of Commerce to ensure that the Magic Johnson Foundation Community Empowerment Center became a reality in South Carolina. Earvin “Magic” Johnson and the Magic Johnson Foundation, in partnership with the SC Department of Commerce, Richland County School District One, and HOPE Worldwide SC, will officially launch the first of five Community Empowerment Centers in South Carolina. This first community center, located at the Webber Elementary School in Eastover, SC, will advance education, technology and employment opportunities for underserved communities in South Carolina.

The community empowerment centers will serve as comprehensive, one-stop facilities to provide youth and adults access to technology and educational resources that will improve academic performance and prepare them for the emerging job market. The five community empowerment centers will significantly impact the lives of more than 200,000 socially and economically disadvantaged South Carolinians.

NEWS FROM BP&S

New Staff

We are very pleased to announce that Thomas Hughes and Aaron Blakmor have joined our staff.

Thomas Hughes was born in Athens, Georgia and raised here in Columbia. He attended The Citadel where he lettered in soccer and completed his degree as an Accounting Concentration major. Thomas worked for Bauknight Pietras & Stormer as an intern during the summer of 2005.

Thomas enjoys competing in sports, the outdoors and traveling.

Aaron Blackmor has joined our audit staff. Prior to moving to Columbia, Aaron worked with one of the largest energy companies in the U.S. as a downstream financial analyst, as well as with one of the “Big Four” public accounting firms as a risk consultant.

Aaron was born in Ft. Worth, TX but grew up in Houston. He attended Texas A&M University in College Station where he earned his Bachelor’s of Business Administration in accounting and his Master’s of Science in Management Information Systems. He enjoys camping, backpacking and traveling with his wife, Megan, and he likes to keep pace with current trends in technology. He is currently working toward his CPA designation and is considering working toward a CISA as well.

CPA Exam

Congratulations to Dana O’Shields for passing the CPA exam!

Seminar

The Firm will be hosting a continuing education seminar on Friday, October 20.

As in the past, we are planning for four hours, starting around 8:30am and ending with lunch. The schedule for October 20 is as follows:

Time Topic Presented by

8:45am - 9:15am SFAS 115-Marketable Securities - an overview David Ward

9:15am - 9:45am Fraud--red flags and warning signs Christian Rasor

9:45am - 10:00am Break

10:00am - 10:30am Small business tax issues Denise Gunter

10:30am - 11:15am Small business tax issues Barbara Luksik

11:15am - 11:30am Break

11:30am - 12:30pm Retirement planning Cheryl Holland

12:30pm Lunch

If you are interested in attending this seminar, please contact Tom Pietras (so we can get a head count).

Telecom Industry Seminars

During the week of October 16, we will again be presenting our wireless telecommunications industry seminar in Las Vegas, presented in association with CoBank and Moss Adams. Please contact Chris Stormer  if you are interested in attending.

Looking for Experienced Auditors

Due to continued strong growth in our audit and accounting practice, the Firm is looking for an audit senior with two to four years of recent, high quality audit experience.  Compensation will be commensurate with experience.  If you are interested (or know of someone who is interested), please e-mail your resume directly to Tom Pietras.

TECHNICAL ISSUES

Refund of Federal Telephone Excise Tax

The IRS has announced the standard amounts—ranging from $30 to $60—that individual long-distance customers can use to compute their telephone excise tax refund under the safe harbor method provided by IRS. To use the standard amount, most taxpayers will only have to fill out one line on their regular 2006 return.

Background. As we previously noted, in Notice 2006-50, 2006-25 IRB, the IRS conceded that telephone communications for which a toll charge varied only with elapsed time, and not distance, wasn't taxable. Accordingly, taxpayers or collectors of the tax could request a credit or refund of amounts paid for service that was billed to taxpayers after February 28, 2003, and before August 1, 2006, but only on their 2006 income tax returns. IRS is creating a special short form (Form 1040EZ-T) for individuals who don't need to file a regular return.

Individuals (including Schedule C filers), but not other taxpayers, may request a refund or credit using either the actual amount of tax paid for nontaxable services or the safe harbor amount. Individuals using the safe harbor amount aren't required to submit or keep any documentation to support their refund request. To use the safe harbor amount, individuals must (1) have paid all taxes billed by their service provider after February 28, 2003, and before August 1, 2006; (2) have not received a credit or refund of these taxes from the service provider, and (3) either have not requested a credit or refund from the service provider or have withdrawn any such request.

Taxpayers not using the safe harbor amount must be able to substantiate their refund claim. For example, they must have bills showing the tax charged for nontaxable services for each month and receipts, canceled checks, or other evidence that the tax was actually paid.

Standard telephone excise tax refund under safe harbor. The IRS announced that the standard amounts for telephone excise tax refunds under the safe harbor will range from $30 to $60. The standard amounts, which are based on the total number of exemptions claimed on the taxpayer's 2006 federal income tax return, are:

... $30 for a person filing a return with one exemption;

... $40 for a person filing a return with two exemptions;

... $50 for a person filing a return with three exemptions; and

... $60 for a person filing a return with four or more exemptions.

As explained in “ Telephone Tax Refund Questions and Answers” on the IRS's web page, taxpayers won't get the telephone tax refund in a separate check. The refund will be treated as a one-time payment on a taxpayer's 2006 return. It will reduce the amount that a taxpayer otherwise owes on his return or increase the amount of his refund.

IRS says that the standard amounts are based on actual telephone usage data, and that the standard amount applicable to a family or other household reflects the long-distance phone tax paid by similarly sized families or households.

IRS Commissioner Mark W. Everson emphasizes that this is the easiest way to get a telephone excise tax refund. “These amounts save taxpayers from locating 41 months of old phone bills and analyzing these bills to determine the taxes paid,” he said.

Possible relief for businesses. Businesses and nonprofits can't use the safe harbor method and must base their telephone tax refund on the actual amount of tax paid. However, the IRS says that it is looking into reasonable methods for estimating the telephone excise tax refund amounts to make the refund process easier for these taxpayers. We will alert you to the safe harbor method once the IRS releases this information.

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