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31st October 2024
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INDUSTRY
Investing in talent: A new era
Financial institutions are increasingly focusing on employee well-being by enhancing health benefits and professional development opportunities. The accounting profession, facing a talent shortage and changing workplace expectations, must adapt quickly. Major investment banks are capping work hours to combat burnout, a trend that is influencing other industries. According to the Bureau of Labor and Statistics, 300,000 accountants left their jobs between 2019 and 2021, and nearly 75% of working CPAs are nearing retirement age. To avoid a talent crisis, firms are moving away from traditional partnership models and exploring employee stock purchase plans (ESOP) and project-based pricing. Progressive firms are also implementing work-life rhythm plans tailored to individual goals. As one expert noted, “Healthy work-life rhythms matter to them, and they want to engage more outside of work.” The accounting industry must innovate to retain talent and prevent a looming crisis.
FASB proposes new accounting standards
The FASB has introduced a proposed accounting standards update aimed at refining the identification of the accounting acquirer in business combinations. This initiative, stemming from the Emerging Issues Task Force, seeks to enhance the consistency of requirements under FASB Accounting Standards Codification Topic 805. The proposal emphasizes that the determination of the accounting acquirer can significantly influence the carrying amounts of assets and liabilities, ultimately affecting post-transaction net income. FASB stated, "The proposal would enhance financial statement comparability by providing consistent requirements for economically similar transactions." Stakeholders are invited to review and comment on the proposed update by Dec. 16, 2024.
FREE WEBINAR
Join us on October 30 at 11 am PT to get the latest cybersecurity update for accounting firm leaders.

Ransomware, data breaches, and phishing—oh my! With spooky season quickly approaching, you might be thinking about things that can go bump in your financial operations.

The good news is that October is also Cybersecurity Awareness Month—and we've developed a brand-new webinar full of pro tips and best practices for CAS firm leaders.

Join us October 30th at 11 am PT for Cybersecurity Update for CAS Accounting Firm Leaders to earn one CPE credit and ensure your firm is prepared.

In this On-Demand Webinar, you’ll learn in non-techie terms how to:
  • Better understand the main areas of cybersecurity risk.
  • Identify key cybersecurity compliance requirements.
  • Gain insight into cost-effective cyber risk mitigation options.
Register for the On-Demand Webinar Now
 

 
TAX
Chicago's property tax hike shocker
Mayor Brandon Johnson is set to propose Chicago's largest property tax increase in nearly a decade, amounting to $300m, as part of his $17.3bn budget plan for 2025. This decision marks a significant shift from his campaign promise against raising property taxes, justified by a projected $982.4m shortfall. Johnson stated: “This was a very excruciating process, but it's one that I recognize in this moment that the alternative is just not acceptable.” The budget also includes cuts to migrant services and a reduction of 743 vacant positions, primarily from the Chicago Police Department. Despite the tax hike, Johnson aims to maintain his progressive agenda, emphasizing investments in mental health and anti-violence initiatives. The budget reflects a 3.2% increase from the previous year, with ongoing negotiations expected to be challenging. Johnson's administration is also looking to declare a record $570m surplus from tax increment financing districts to help address the deficit.
OECD considers new tax guidance
The OECD is considering new guidance to establish permanent safe harbors and clarify the treatment of mobile assets under the global minimum tax, according to Achim Pross, deputy director of the OECD's Center for Tax Policy and Administration. Pross mentioned that there is an “active conversation” regarding a simplified effective tax rate calculation. The organization aims to simplify calculations while minimizing adjustments to a company's financial accounting income, ensuring the integrity of the global tax framework is maintained.
Tax codes can combat climate change
Amy Hanauer emphasizes the potential of federal, state, and local tax codes as tools for creating a climate-resilient America. She argues that a modernized tax code should discourage emissions and promote lower-carbon designs, particularly in transportation, which accounts for about 25% of U.S. greenhouse gas emissions. Hanauer notes: "We should use this moment to make tax policy reflect new climate realities." She advocates for increasing gas taxes to maintain infrastructure and encourage fuel-efficient transportation. Additionally, she suggests implementing congestion pricing, as seen in cities like London and Stockholm, to reduce traffic and emissions while generating revenue for public transit. The article highlights the need for tax policies that address the full societal costs of carbon emissions and promote greener communities.
IRS pulls Wilks from Money20/20 talk
Seth Wilks, executive director of the IRS’s digital asset initiative office, was set to discuss digital asset taxation at the Money20/20 conference in Las Vegas on October 28. However, the session was closed to press, leading to his withdrawal from the event. Tina Loncaric, a spokesperson for the conference, confirmed that all discussions on that stage would be off the record. The IRS stated it was unaware of the event beforehand and emphasized its commitment to press access at public events. Former IRS officials, including David Kautter and John Koskinen, highlighted the importance of transparency, with Koskinen noting: “It’s appropriate that the IRS ensure that all of its presentations are open to the press.” Nina Olson of the Center for Taxpayer Rights expressed concern over the closed nature of the discussion, questioning the intent behind it.
LEGAL
Tax court case heats up
In a recent ruling, the United States Tax Court addressed the case involving Mattock Holdings, LLC, which claimed a charitable contribution deduction of $18.275m for a conservation easement over 127.42 acres in Alabama. The IRS disallowed this deduction, leading to motions filed by Ornstein-Schuler, LLC, Mattock's tax matters partner, to compel the IRS to produce relevant documents. The court denied these motions, stating, “we will follow a Court of Appeals decision which is squarely on point.” The court emphasized the importance of tax reporting in the section 170(e) analysis, noting that the lack of critical tax information could significantly impact the case. Ultimately, both motions to compel were denied, with the court suggesting alternative avenues for obtaining the necessary information.
Court shuts down tax preparer for good
A federal court has permanently barred Juan Santiago and his company, Madison Solutions LLC, from preparing federal tax returns or operating any tax preparation businesses. The injunction was issued after Santiago failed to respond to a civil complaint alleging that he used various schemes to improperly reduce clients' tax liabilities and obtain refunds. The Justice Department stated, "the court entered the permanent injunction against him by default."
TECHNOLOGY
AI leaders reap rewards: Higher revenue growth and cost savings expected
The use of AI has skyrocketed globally, with 98% of companies now experimenting with the technology, up from 47% in 2023, according to a Boston Consulting Group (BCG) survey of 1,000 executives worldwide. In the U.S., generative AI is widely used in the workplace, with 28% of employees engaging with it and over 40% of those in management and tech fields integrating it into their jobs. Even 20% of workers without a college degree use AI tools regularly. BCG identifies "AI leaders" as the 4% of companies generating significant value from AI and the 22% with an AI strategy that is yielding gains. These leaders leverage AI primarily to improve core business processes, accounting for 62% of its derived value. They also allocate double the resources to digital transformation and scale twice as many AI solutions as less committed companies. As a result, they expect to see 60% higher revenue growth and 50% greater cost savings compared to their peers. Additionally, AI leaders focus 70% of their AI investment on employee development and process integration, favoring deep, end-to-end workflow over isolated solutions. 
Intuit unveils game-changing innovations
At the Intuit Connect 2024 event, Intuit Inc. showcased its latest innovations aimed at enhancing accounting automation, payroll, and workforce solutions for mid-market customers. CEO Sasan Goodarzi emphasized the company's commitment to helping businesses grow, stating: “Together, we serve the financial needs of millions of shared customers.” Key announcements included the Intuit Enterprise Suite, designed to streamline operations for growing businesses, and enhancements to QuickBooks and Mailchimp. The event also highlighted AI-driven tools like Intuit Assist, which automates invoicing and financial management tasks, allowing accountants to focus on higher-value advisory services. With over 2,400 accounting professionals in attendance, the conference underscored Intuit's dedication to supporting the accounting community through innovative solutions and educational resources.
AI unchained 2024: A game changer
AI Unchained 2024, held in Santa Rosa, CA, from October 8-10, attracted over 2,000 attendees eager to explore the future of accounting through AI and automation. Kal Penn, the keynote speaker, humorously connected his Hollywood experiences to the transformative potential of technology in various industries, stating, “I still need a ZOOM or a personal conversation... that’s a huge component of what you and your teams do.” The event featured powerful sessions led by industry leaders, focusing on operational challenges and tech integration. Enrico Palmerino, CEO of Botkeeper, introduced the upcoming Firm Insights module, designed to enhance efficiency and agility for firms. The conference also showcased entertainment from comedian Robert Strong, blending humor with technology. Overall, AI Unchained 2024 inspired attendees to embrace innovative strategies for their practices.
ECONOMY
U.S. economy grows at 2.8%
The U.S. economy expanded at a robust 2.8% annual rate from July to September, driven by strong consumer spending, which rose to a 3.7% pace. Despite a slight slowdown from the previous quarter's 3% growth, the latest figures indicate resilience amid high interest rates. Ryan Sweet, chief U.S. economist at Oxford Economics, stated: "The report sends a clear message that the economy is doing well, and inflation is moderating." The personal consumption expenditures index, the Federal Reserve's preferred inflation gauge, increased at just a 1.5% annual rate, the lowest in over four years. While business investment slowed, spending on equipment surged. The economy continues to grow despite predictions of a recession, with the Fed expected to announce further rate cuts. President Joe Biden remarked: "Today's GDP report shows how far we've come since I took office." Overall, the report reflects a still-healthy economy, with consumer confidence rising and job openings decreasing.
INTERNATIONAL
Non-dom reforms 'will see Britain’s richest residents flee'
U.K. finance minister Rachel Reeves has confirmed the government will abolish non-dom tax status from April 2025, replacing it with a residence-based regime with reliefs for temporary visitors. For the first time, the former non-doms will be taxed on their worldwide income and capital gains, not just from work and investments in the U.K. The new regime will also bring foreign earnings into the inheritance tax system, but will extend the transition period for people to bring money onshore from two years to three. Another concession is an extension from two years to three years in the period during which former non-doms would pay a lower rate of tax of 12%-15% on repatriated income used for spending or investing in the U.K. While some have welcomed the move, others have warned that the abolition of the system could negatively impact the U.K., with Miranda Fisher, partner in the family law team at Charles Russell Speechlys, saying it could lead to “a loss of the highest proportion of millionaires in the world over the next few year.” The OBR estimated that 25% of non-doms with offshore trusts would now leave the U.K., up from a previous estimate of 20%. Scrapping the scheme could cost the U.K. £6.5bn ($8.4bn) by 2035, and 23,000 jobs by 2030, according to the free-market leaning Adam Smith Institute. But the government believes the reforms would raise more than £12bn ($16bn) in the next five years. 

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