Coast River Business Journal

It’s tax time again – when you begin the annual ritual of rummaging through drawers, boxes and every nook and cranny searching for receipts, cancelled checks, bank statements and other financial documents before tackling your income tax return. Then, after grabbing a bottle of aspirin, you sit and stare at the mounds of paper in front of you

Astoria CPA Mike Wallis is in the midst of his busiest time of the year as income tax filing season is in full swing. Photo: Greg Cohen

This is about the time you decide to call a professional like Mike Wallis, a certified public accountant.

Most of Wallis’ waking hours at this time of year are devoted to helping people make sense of those mounds of paper and guiding them through the labyrinth of tax forms that must be completed.

Wallis, a principal at WWC Business Solutions, Inc., in Astoria, said the IRS has become a stickler for documentation of deductions a taxpayer takes when filing an itemized return.

He said documentation is just as important whether you are an individual taking a deduction for a charitable contribution or a business reporting losses as a result of the economic downturn.

A tax return showing low wages and a large number of deductions is likely to "raise a red flag" when the return is being processed, Wallis said.

"That’s the kind of thing the IRS will focus in on," he said.

While most filers know the importance of maintaining good records on the sale or purchase of a home, as well as documents relating to improvements to a residence, Wallis said one area taxpayers may overlook is documenting how they used proceeds from a line-of-credit home-equity loan.

"It’s important to identify the purpose of why you’re drawing down on your line of credit if you are not using it for home (improvements)," he said. Interest on portions of the loan not used for home improvements cannot be used as a tax deduction.

"That’s one area the government is beginning to crack down on," he noted.

That’s the kind of information that makes someone with Wallis’ expertise invaluable to the overwhelming majority of taxpayers who don’t understand one tax form from another.

Wallis is a graduate of the University Portland where he earned a bachelor’s degree in accounting. He served as a manager at Yergen & Meyer, a regional accounting firm. He then worked for 13 years as chief financial officer, treasurer and vice president of finance for Ag-Bag International in Astoria.

Wallis and business partner Suzanne Corliss have operated WWC Business Solutions for the past five years.

For Wallis and other tax preparers in Oregon, the early rush of clients looking to file their tax returns has been impacted this year by the special January election on Measures 66 and 67. Measure 66 raises the state’s tax rate on household incomes starting at $250,000 ($125,000 for an individual), while Measure 67 raises certain business and corporate taxes.

"The election has delayed us in processing state returns," he said.

Like every professional tax preparer, Wallis uses a software program to prepare a client’s tax return. The software program is regularly updated to account for changes in local, state or federal tax rates, as well as any changes in the tax laws.

That’s why he advises people who use a "canned" tax program to be sure that it includes the most current tax rates and information on changes to the Tax Code.

He said such programs do serve a purpose in the marketplace, especially for people "who don’t have overly complex tax situations. But you have to be aware of their limitations."

The canned programs also fall short when it comes to helping clients look at ways to lessen their tax burden in the future.

"We try to look ahead at opportunities as we see things change," Wallis said. "That’s one of the benefits in talking to a live body."