Q&A: Ron Mutascio - Not Your Normal CPA in West Roxbury
Mutascio talks about not owning a white shirt, lawn gnomes, rigor mortis, and taxation.
Ron Mutascio is a certified public accountant with a business office located at 415 Belgrade Ave., West Roxbury.
The very personable and entertaining Mutascio answered some questions from Patch.
Remember you don't have to wait to pay your taxes - so get 'em done early, and move on to other things.
Patch: When and why did you recently decide to open your own business?
Mutascio: Although I have been thinking about it for years, I officially decided to formalize my tax practice by incorporating as a Professional Corporation on January 1, 2012. However, I began preparing client’s individual and business tax returns under my own name in 1980s. Because my practice has grown substantially over the past few years, I decided it was time to fully concentrate all my efforts to this endeavor. I realized that it is more rewarding to help people that I could make a personal connection with, rather than doing it for someone else’s clients. The recommendations and encouragement I received from my existing clients and friends once I had announced my decision convinced me that I had made the right move.
Patch: Where were you working before opening your own business?
Mutascio: I began my career working for Price Waterhouse Coopers, before moving on to a small CPA Firm in Concord, Mass. Although I loved working at a public accounting firm, I was presented an opportunity to get in at the ground floor of a developing real estate syndicator, The Krupp Company. My task was to head a newly created in-house tax department with a staff of one, me. It was a small regional company with maybe 50 employees and about 2,000 investors. These investors owned shares in about 15 limited real estate partnerships that the company operated as general partners. In my 14 years of working there, the company grew rapidly into a national real estate syndicator, property manager, and loan originator. I ultimately managed a staff of 12, and held the position of Senior Vice President of Tax. I was responsible for timely preparing and filing 200,000 partner information returns (K-1’s) along with 100,000 1099’s for 200 real estate partnerships, REITS, and trusts for property located all over the country.
Along the way, the company changed its name to The Berkshire Group, and for several years held the reputation of being the largest syndicator of partnerships in the world. When the company decided to manage their holdings, and not pursue further expansion or acquisitions, the challenge of the job was gone. I was bored overseeing the empire that had been built and decided to get back into a more challenging field. Although the transition was daunting, and one that not many people pursue, I decided to go back into public accounting. After re-establishing my credentials in this field, I took a position as tax manager for Samet and Company, a mid-sized CPA Firm located in Chestnut Hill. I spent 10 years there working on very high profile individuals, and some well-known companies. My duties included preparing/reviewing tax returns for individuals, corporations, trusts, partnerships, limited liability companies, tax exempt organizations and non-profit organizations. I also supervised a staff of accountants and handled all the tax notices received by the firm’s clients. In addition, I represented the firm on behalf of any individual or entity under audit before the Internal Revenue Service or state taxing authorities. During this time, I authored over 40 articles which were published in The New England Real Estate Journal.
Patch: You're from West Roxbury? What do you like best about the area?
Mutascio: I grew up on Perham Street in a family orientated neighborhood teeming with kids. West Roxbury Center offered many different shops; people would meet their neighbors and chat on just about every corner. St Theresa’s and Holy Name had teams in the CYO, and everybody was involved. People were proud to be known as coming from West Roxbury. Billings Field always had something going on, and there were many different athletic organizations for kids to participate in. After many changes in Boston over the years, it seems to me that the children and young families have moved back into the area. It is impossible to go into Roche Bros supermarket and not run into someone you know. People take pride in their neighborhoods. Opportunities for kids exist in many locations including the Roche Center, the Parkway Little League and youth hockey programs. I think it is a great community and I welcome the opportunity to have my practice here.
Patch: What business services do you offer?
Mutascio: I am a Certified Public Accountant with a Masters in Taxation, so my core business is tax and accounting. Although I specialize in high net worth individuals, many of my clients are considered middle class. I also do both tax and accounting work for small businesses with gross receipts of $10 million or less. Included in the mix are partnerships, LLC’s, S and C Corporations, all types of trusts and several non-profits. I am currently filing tax returns for both individuals and businesses in 26 states, so I have extensive multi-state experience. In addition to my core business, I have several associates that I share and refer work to. I like to think of this service as one stop shopping. Clients can get everything they need to satisfy all their financial situations from one source. What I think is great about this approach, is that every professional that works on a client knows what the other professional is doing. As a result, there is frequent communication to make sure that nothing is overlooked or duplicated. The objective is to insure that the tax, as well as financial implications, of any action is considered before being recommended to a client. These associates include financial planners with Merrill Lynch, Ameriprise and Wells Fargo, an Estate and Elder Care attorney, a business attorney, a retirement/pension organization, a bookkeeping service and several different insurance agents. I am also affiliated with four other accounting firms that share information and provide advice and second opinions on some of the more difficult tax issues that may arise.
Patch: Do you usually work with individuals, families, businesses, or all of the above?
Mutascio: Generally, individuals who have related business ventures like to keep everything in one place. Individuals who have family members needing tax work tend to follow the same path. Throughout the year I generally receive an equal number of calls for advice on issues from my individual and business clients. I also do a lot of tax consulting work for a public accounting firm in Georgia.
Patch: You've said you're not the typical CPA - how are you different than other CPAs?
Mutascio: I think the general image of an accountant is someone who is a bit out of shape, wears a sports coat over a white shirt with suspenders and a bow tie and has a personality like cardboard with no sense of humor. The typical accountant’s casual attire is a pair of old suit pants, a short sleeve shirt with a pocket protector, a green eye shade, and glasses attached to a rope around his neck and wingtips. In fact, there is currently a TV ad being run by a tax preparation firm depicting a balding man with glasses and a bow tie talking about the lady who brought in seven boxes of receipts for the past several years. He relishes the thought of working through these receipts to solve the mathematical puzzle. That is so not me! I love to laugh, joke around and may never grow up. People usually see me in jeans and a leather jacket. I don’t even own a white shirt! I have never taken myself seriously, and never try to impress people with my knowledge about taxes. I am not a Math whiz. What I am is a highly trained tax professional that has experienced just about every tax situation that exists. I have been tested under fire and shown that I can stand the heat and pressure of any situation. I do not believe in exposing my clients to questionable tax positions. I am honest and always look to get the most favorable tax treatment for my clients in every situation. But I will not be pressured into doing something which I do not think is legitimate. I have worked for brilliant business men and have earned their respect as well as that of my peers from my knowledge and never give up attitude. I care about people and really want to help them.
When people call me for an answer, I get back to them within a day. I cannot begin to tell you how many clients I now have because their accountants ignored them once tax season was over and they got paid for their services. I like to treat my clients as friends and take an interest in their lives, just the way I would like to be treated. I may only see someone once a year, but I want them to think of me as someone who is always with them.
Patch: And do you have clients from all over the world? Talk about that. Are taxes different in other states or countries?
Mutascio: I do nothing outside of the United States. The tax laws in the United States are hard enough to keep track of, never mind the tax treaties we have with other countries. Although I do not do any returns for other countries, I do work on returns for US citizens living abroad. As far as taxes for other states, at the business return level, each state wants to think that the company’s income and related tax belongs to them. Whether to file or not depends a number of factors, generally called nexus. For a multi-state business this can be a very tricky area with dire consequences if not treated properly. At the individual level, the major problem in filing multi-state is the tax rates. Ideally, you receive a credit in your home state for taxes paid to other jurisdictions. Although it appears that the same income is being taxed twice, (if you are filing in your home state and one other) you receive a credit for the tax paid to the non-resident state, so you only pay taxes once. The same theory would apply if you are filing in multiple states. This would occur if you had an investment in perhaps real estate that operated properties that generated income in several states. The income would flow to you from an investment K-1 and you would be required to file a tax return, unless the entity filed a composite return in the state on your behalf. However, because each state has different tax rates, and allows different deductions, the tax is never the same. You are allowed a tax offset up to the rate in your state. This means that if you have identical income in two states, but your non-resident state has a higher tax rate than your home state, you only get a tax credit up to the amount of your state’s tax. The silver lining to this dark cloud is that the balance of the tax that exceeds your home state’s tax can be used as an itemized deduction on your federal tax return.
Patch: What do you recommend to people who realize they need to pay their taxes on April 14?
Mutascio: The most common thought that occurs to people on April 14 when they owe tax is 'I will just extend my return for six months and pay what I owe later in the year'. Unfortunately, an extension of time to file, is not an extension of time to pay. In fact, Massachusetts will not honor an extension of time to file if the tax is not paid by the due date. When the return is filed Massachusetts will assess a failure to file penalty. The IRS is a little more lenient. Failure to pay will not void the extension and thus no failure to file penalty will be imposed. However, both Massachusetts and the IRS will charge interest and usually penalties from the time the payment is due until the liability is paid in full.
Generally, my clients know well in advance of April 14 that they have an obligation. Although many of my clients enjoy surprises, none of them enjoy paying taxes and finding out about it at the last possible minute. If someone cannot pay the entire amount, I tell them to pay what they can and we will request an installment agreement for paying the balance. Non-deductible personal interest will continue to accrue on the unpaid balance, but you will avoid the nasty letters. Although paying by credit card to build up frequent flyer mileage is an option, there is a fee charged based on the amount due which far outweighs the mileage benefit. To avoid putting people in a situation where they have to mortgage their homes to pay the taxes due, I provide quarterly estimates of tax. The idea is that although the total tax may be the same it is easier to pay if it can be budgeted. It is the same advice I give my clients on how to eat an elephant - one bite at a time.
Patch: The IRS recently announced its 2013 standard deductions, what are some deductions, whether new or not, that people often don't know about, but could take advantage of?
Mutascio: There are really not any new deductions that were recently passed into law. What basically happened is the president extended, renewed or slightly increased many of the old deductions that were introduced in the Bush era.
However, there are two items which are worth mentioning. Individuals who operate their own businesses, may be allowed a home office deduction. They may be eligible as long as there is not another office located outside of their residence which they could use. Assuming the space is used exclusively for business purposes, the individual can deduct a portion of the costs of operating the house, as well as depreciation. This deduction can raise numerous issues as to what qualifies and what doesn’t; so many people just don’t bother with it. In fact, I have had new clients who would otherwise qualify for the deduction, decline to take it out of fear of being audited. This belief is similar to the belief that lawn gnomes really exist. To make this deduction easier to use, beginning with expenses incurred in 2013, the IRS is allowing a standard deduction of $5 per square foot of space used for business, maxing out at $1,500. The basic rules to qualify for the deduction remain, and people who take the standard amount are not allowed to take depreciation for the allocated space. The other item of interest has to do with dividend income and capital gains. For 2012, individuals whose taxable income is in the 15% or 10% tax bracket do not have to pay any taxes on their capital gains and qualified dividends. OK, so maybe if you are in one of those brackets you wouldn’t be in a position to generate capital gains. However, what most people don’t realize is that the 1099s they get from their small stock portfolio or mutual fund holdings may contain capital gains and qualified dividends. The qualified portion of a dividend received, not the non-qualified piece, is also included in the calculation resulting in no tax. The 15% tax bracket ends when your taxable income exceeds $70,700 Married filing Joint, $47,350 Head of Household and $35,350 Single or Married filing Separate. So before you file your return, if you fall into this 15% or 10% bracket, review your 1099’s and brokerage statements for these items. Properly reporting them may save you some cash.
Patch: Please share anything else you'd like to share.
Mutascio: I think I have over shared with this. Rigor mortis is starting to settle in.