If you operate your professional services business on a cash basis and if your gross receipts are over $10 million, you may be forced to change to the accrual method. 

A House Ways and Means Committee tax reform discussion draft proposes to make the accrual method mandatory for tax purposes. This means that business owners who fit this category and operate in any form of organization other than sole proprietorship would have to pay tax in advance of collecting cash payment from their clients.

The AICPA, along with state CPA societies, member CPA firms, and CPAs who are AICPA Key Persons, are opposing the draft, demonstrating that it will create a hardship for those operating professional services companies (including accountants, actuaries, architects, consultants, engineers, doctors, and attorneys). The AICPA also believes the proposal is unfair, since it places a requirement on these individuals that other taxpayers don’t face.

We’ll keep you updated on the progress of this discussion as it moves forward.