Fight to retain cash basis accounting continues.

CalCPA's Government Relations Committee recently reported that House Ways and Means Committee Chair Dave Camp released draft legislation to overhaul the federal tax code. Part of his plan includes a proposal that would considerably impact CPA firms and other businesses that use the cash method of accounting by requiring that they use the accrual method for tax purposes.

The cash method of accounting, which records revenue when cash is received and records expenses when cash is paid, is a longstanding accounting method popular among service-based businesses, such as CPA firms. Forcing certain businesses to use accrual accounting, which recognizes revenue...