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The IRS Criminal Investigation (CI) division has investigated 1,644 tax and money laundering cases related to COVID fraud, potentially worth $8.9bn. With a 98.5% conviction rate, the IRS has indicted almost 800 people and sentenced 373 to an average of 34 months in prison. The IRS continues to open new COVID fraud investigations, amounting to $5bn in potential fraud in the last year alone. CI chief Guy Ficco emphasized the agency's commitment to pursuing fraudsters who stole money from government loan programs. IRS Commissioner Danny Werfel praised the work of the IRS Criminal Investigation in protecting against fraud and ensuring fairness in the tax system. The CI unit encourages individuals with information about COVID fraud to contact their local CI field office.

 

Accounting Today

CPA Practice Advisor

One year ago, Los Angeles implemented the "mansion tax," which levies a 4% charge on property sales above $5m and a 5.5% charge on sales above $10m. Proponents argue that the tax generates crucial funding for affordable housing and homelessness initiatives, raising approximately $215m in its first year. However, critics, including real estate professionals, claim that the tax has negatively impacted the market, leading to a significant drop in luxury home sales. The slowdown can be attributed to various factors, including rising interest rates and buyers opting for properties in neighboring areas not subject to the tax. Despite initial projections, the tax has not raised as much as expected, but there are hopes for higher figures in the future. The real estate community has actively opposed the tax, with ongoing legal challenges. The next hurdle for the measure is a statewide ballot initiative that could potentially require another vote or repeal the tax. Despite the opposition, supporters remain committed to addressing the housing crisis with the funds generated by the tax.

 

Los Angeles Times

Historically, tax-smart investing has been a powerful strategy for real estate investors. By leveraging various investment strategies and vehicles, investors can optimize returns while minimizing tax liabilities. Qualified opportunity zones (QOZs), Delaware statutory trusts (DSTs), and real estate funds are three tax-smart options that provide unique opportunities to navigate tax implications and maximize financial gains. QOZ funds, born out of the Tax Cuts and Jobs Act of 2017, encourage long-term investments in underserved communities. DSTs qualify as "like-kind" real estate for 1031 exchanges, allowing investors to defer capital gains taxes. Real estate income funds offer potential depreciation and interest deductions. However, investors should evaluate each investment's potential and consult with professionals before making decisions. Tax-smart strategies are essential for enhancing returns and facilitating intergenerational wealth transfer. Embracing the nuances of tax-smart investing is a pivotal advantage for real estate investors.

 

CPA Practice Advisor

A group of retired Grant Thornton partners in the U.S. is seeking a bigger payout following the sale of a majority stake to private equity, accusing management of short-changing them on their pensions.

 

Financial Times

Top 25 accounting firm Withum has merged with BBD, a boutique accounting, tax, and advisory firm in Philadelphia. Financial terms of the deal have not been disclosed. Withum has added BBD's five partners and 40 team members to its roster. The merger is convenient for both firms as they already share an office building in downtown Philadelphia. Withum's managing partner and chief executive Pat Walsh expressed excitement about the partnership, stating that it deepens their expertise in the nonprofit and government sectors and expands their presence in the Philadelphia business community. BBD, founded in 1997, serves over 500 nonprofits in the greater Philadelphia area and throughout the Mid-Atlantic.

 

CPA Practice Advisor

Marshall & Stevens (M&S), a Los Angeles-based financial opinion and valuation advisory firm, has acquired Rocky Mountain Advisory (RMA), a Salt Lake City-based forensic accounting and litigation consulting firm. M&S’ acquisition of RMA will give it a fifth U.S. office location and expand its presence to Utah. The deal will expand its services to include more comprehensive dispute resolution and expert witness consulting, as well as augment its dispute and litigation support practice with new offerings in bankruptcy consulting, investigative accounting, and divorce services.

 

Consulting

U.S. factory activity unexpectedly expanded in March for the first time since September 2022 on a sharp rebound in production and stronger demand, while input costs climbed. The survey from the Institute for Supply Management (ISM) suggested the sector, which has been battered by higher interest rates, was on the mend, though risks remain from rising raw material prices. Its manufacturing gauge rose 2.5 points to 50.3, just above the 50-mark separating expansion from contraction. Economists polled by Reuters had forecast the PMI would rise to 48.4. Nine industries reported growth in March, led by textile mills, nonmetallic minerals, paper products and petroleum. Six contracted, including furniture, plastics and rubber products, and electrical equipment. “Demand remains at the early stages of recovery, with clear signs of improving conditions. Production execution surged compared to January and February, as panelists’ companies reenter expansion,” Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, said in a statement. Separately, the March S&P Global U.S. Manufacturing PMI inched down to 51.9 from 52.2 in February, signaling further expansion in the sector although less pronounced. The latest reading was lower than the forecasted reading of 52.5.

 

Advisor Perspectives

Bloomberg

Market Watch

Reuters

U.S. construction spending unexpectedly fell in February as strength in single-family homebuilding was more than offset by weaknesses in nonresidential and public projects. The Commerce Department said that it declined 0.3%, following on from a 0.2% drop in January. . Economists polled by Reuters had forecast construction spending rebounding 0.7%. On an annual basis, it grew 10.7%.

 

Reuters

The IRS is seeking $2.7bn in unpaid taxes from Walgreens Boots Alliance due to alleged issues over transfer pricing. The agency audited the company's 2014 to 2017 tax years and found problems related to transfer pricing. Walgreens Boots Alliance, the owner of Walgreens and Boots, disagrees with the report.

 

Bloomberg Tax

A federal judge in Los Angeles has rejected a series of motions filed by Hunter Biden, son of U.S. President Joe Biden, to dismiss the tax charges against him. Among the claims that U.S. District Judge Marc Scarsi rejected in eight separate motions were that federal prosecutors caved to pressure from Republicans or that Hunter Biden, 54, had immunity from a previous plea deal he had negotiated. Mr. Biden has pleaded not guilty to failing to pay $1.4m in taxes between 2016 and 2019. The trial is due to start in June.

 

Politico

US News and World Report

Washington Post

Scammers are always on the lookout for opportunities to trick people into giving them money or personal information, and tax season is no exception. One of the most common scams is related to identity theft, where someone else files a tax return in your name to receive a refund. The IRS received over 294,000 identity theft complaints in 2023, and victims wait an average of 19 months for the IRS to process their returns. To protect yourself, be aware of scammers' tactics based on fear, urgency, and money. The IRS never contacts taxpayers via unconventional means, so be cautious of impersonation scams. Research tax professionals to avoid imposters, and don't share information on incoming calls from unknown numbers. Use technology like the IRS pin system, password managers, and regular credit report checks to enhance security.

 

US News and World Report