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Federal income-tax refunds are averaging $1,395 so far this filing season, according to figures released Friday by the IRS - almost 29% down on the size of the average refund year-on-year, compared with the first batch of data on last year’s income taxes.  Filing season started January 29th, compared with last year’s January 23rd start, which means the IRS hasn’t processed as many returns as it had at this point last year. “Considering the loss of seven days in this comparison, filing season statistics … show a strong start to filing season 2024, with all systems running well,” the IRS said in a note about the Friday numbers. The IRS has received 15.3m returns so far, a roughly 19% decrease compared with the first round of data last year. 

 

CNET	Market Watch

A new TIGTA report has found that the IRS continued to give 19 contractors access to sensitive systems despite having background reports that were returned as “not favorable.”  “These contractors still retained their access to one or more sensitive systems because the IRS did not take action to suspend or disable the contractors from the IRS’s systems, as required,” according to the inspector general. In addition, the report outlined a range of insufficiencies in IRS security, stating that it “has repeatedly reported that a key deficiency in the IRS’s detection and deterrence processes is not ensuring that all sensitive systems are providing complete, accurate, and usable audit trail logs for monitoring and identifying unauthorized access and for other investigative purposes.” An IRS spokesperson said due to privacy issues they could not provide specific dates for when the issues were flagged, but said they were “promptly resolved” when identified by TIGTA.

 

US News and World Report

When millions in taxes owed by 10 Los Angeles cannabis businesses went up in smoke, California's tax agency took what it could find in the pot shops and put it all up for auction. The businesses owe the state more than $14.4m. Interested attendees will have to bid on the lot as a whole, not individual items. Items up for grabs range from glass bongs and pipes to a raffle wheel and sandwich boards. This is the first time the agency is auctioning personal property taken from a weed business. Between 2020 and 2022, the state had seized more than $32m in cash and products from such businesses. “Seizing and auctioning property from cannabis businesses that evade the law is a tool to recover the taxes owed to the state,” said Nick Maduros, director of the California Department of Tax and Fee Administration.

 

Los Angeles Times

EY took on around $700m in extra borrowing to deal with costs related to its failed plan to spin off its consulting unit. According to accounts filed with Companies House in the UK, current loans at EYGS LLP, the entity that provides services to the network’s member firms more than tripled from a year earlier to $983m as of June 30th 2023. “It is common for a $50bn global organization such as EY to maintain a modest financing facility on our balance sheet,” the company said in a statement. “The costs incurred during Project Everest will be almost entirely paid down by July 1st 2024. There is no change to this position.”

 

Bloomberg

Financial Times

The SEC and Commodity Futures Trading Commission have approved new rules requiring hedge funds to confidentially share more information about their investment strategies. The new rules will require firms to provide more details with watchdogs, including investments, borrowing and counterparty exposure. While specific data included on the so-called Form PF isn't made public, regulators can use it in enforcement actions and to assess broader market risks. The information collected by the regulators will bolster efforts by the Financial Stability Oversight Council, according to the SEC. The new rules apply to hedge funds with net asset values of at least $500m. They will have to share more about operations and strategies and generally report separately on each component of a fund. 

 

Accounting Today

The Eighth Circuit should stop the IRS from reallocating almost $23.7m of 3M Co.'s royalty income from its Brazilian subsidiary to the U.S. parent for tax purposes because the relied-upon tax code regulation is substantively and procedurally invalid, the company said in an appellate brief. 3M challenged a $4.8m notice of deficiency issued by the IRS after it allocated more than $23m in additional income under IRC Section 482 to reflect the arm's-length compensation the agency says 3M do Brasil Ltda. 

 

Bloomberg Tax

Boards should understand that even if climate change and environmental stewardship ranks low on their list of priorities for 2024, that may not be the case for their shareholders. According to a new report by the EY Center for Board Matters, investors representing $50tn in assets want companies to prioritize climate change and environmental stewardship. The report highlights a disconnect between investors and boards of directors, with investors prioritizing talent and the environment, while boards focus on economic conditions and capital allocation. Investors are calling for companies to reduce emissions, innovate for a clean-energy transition, and establish specific targets for emissions. They want evidence of credible commitments and may raise concerns if companies fail to meet targets. The EY report emphasizes the importance of companies aligning with shareholder priorities on climate change and environmental stewardship.

 

Law

The IRS has updated its FAQ page on the Premium Tax Credit used for purchasing health insurance through the marketplaces established by the Affordable Care Act (ACA). It offers new details on eligibility requirements, unemployment compensation for 2020 and 2021, and details on reporting, claiming and reconciling the tax credits. The IRS also added new information on employer coverage for employees and their family members.

 

Accounting Today

Haryati Hamzah, Jan De Clercq, and Stephen Losavio of Deloitte share lessons on how tax leaders can get more of what they need in enterprise resource planning (ERP) system upgrades to help keep pace with tax authorities’ growing demands. The article discusses the challenges faced by tax leaders in implementing tax features in upgraded ERP systems. It emphasizes the importance of tax optimization in ERP projects and provides four principles to make the case for tax optimization. The principles include knowing the value tax brings, getting the base case right, avoiding regret costs, and talking the language of finance and IT. The authors highlight the need for tax leaders to be proactive and knowledgeable about the tax technology landscape. By understanding the value and functionality of ERP systems, tax leaders can position themselves as business partners with a value proposition.

 

International Tax Review