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Despite chronic, and pandemic-specific, challenges, the IRS is making strides in improving its service levels, according to the recently released National Taxpayer Advocate Annual Report to Congress. The report highlights the agency's successes in eliminating most of its tax return backlog, improving tax refunds, and enhancing customer service availability and responsiveness. While obstacles remain, such as staffing and tax avoidance schemes, the IRS sees tremendous opportunities in data, analytics, and artificial intelligence (AI). The report also identifies seven prevailing trends impacting tax agency operations, including the explosion in data sharing, the use of AI and generative AI against tax agencies, and the need to crack down on unexplained wealth. The IRS is tapping into AI to investigate tax evasion and is adopting real-time risk scoring to improve compliance. The agency is also focusing on sharing innovation with developing countries, addressing the skills shortage, and gaining citizen trust while embracing modernization.

 

CPA Practice Advisor

The Alabama House has passed a bill to create a sales tax holiday for outdoors equipment and supplies. The Alabama Adventure Awaits sales tax holiday would exempt a wide range of equipment from the state's 4% sales tax during the first weekend of May next year and the two following years. The bill also allows counties and cities to waive their sales taxes on the covered merchandise. However, the legislation is contingent on another bill that would increase the sales tax rate for online purchases. The aim of this legislation is to level the playing field and encourage the longevity of Alabama businesses. If approved, the sales tax holiday is estimated to reduce revenues to the Education Trust Fund by $14.2m annually. Some of the items covered by the tax holiday include boating and water activity supplies, camping supplies, sports and recreational equipment, fishing supplies, hunting supplies, and general outdoor supplies.

 

Al.com

The IRS is encouraging taxpayers to use the IRS Tax Withholding Estimator to ensure they are withholding the correct amount of tax from their pay in 2024. The digital tool provides workers, self-employed individuals, and retirees with a user-friendly resource to adjust their tax withholding effectively. The Tax Withholding Estimator helps taxpayers avoid unwanted results in 2024, such as a too large or too small refund or a surprise tax amount due. Employed individuals can use the Estimator's findings to decide whether they should fill out a new Form W-4 and give it to their employer, ensuring the correct tax amount is withheld and potentially reducing any tax refund at the end of the year. Taxpayers should review their withholding at least once annually and after significant life events. The Estimator works for most taxpayers, but those with more complex tax situations should refer to Publication 505, Tax Withholding and Estimated Tax.

 

Tax Notes

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Have a look at how a dose of Canopy can help.

 

AICPA has submitted a letter to the Financial Crimes Enforcement Network (FinCEN) providing feedback on proposed regulations for Registered Investment Advisers (RIAs). The Institute believes that the proposed regulations overlook the practical considerations of the size and capacity of RIAs, particularly smaller firms, and suggests evaluating regulatory thresholds based on a combination of factors. It also raises concerns about the introduction of additional regulatory requirements that could impose a significant administrative burden on small RIAs. AICPA urges FinCEN to reassess the proposed regulations to ensure a balance between regulatory objectives and practical realities faced by RIAs. According to Dan Snyder, CPA/PFS, director of Personal Financial Planning at AICPA, the recommendations will help small CPA firms that are also RIAs, increasing access to personalized financial services and encouraging innovation and diversity within the industry.

 

CPA Practice Advisor

PwC U.S. is to realign its organizational structure across three lines of service—Assurance, Tax and Advisory—three years after it restructured it into two sides, Trust Solutions and Consulting Solutions. The changes, effective July, will also see a new Operating Committee formed to run the firm; it will include assurance leader Deanna Byrne and tax leader Krishnan Chandrasekhar. Tyson Cornell, the deputy platform leader for the U.S. cloud and digital practice, will serve as U.S. advisory leader. Jenny Koehler, the U.S. chief investment and strategic growth officer, will become chief operating officer of advisory. The Big Four firm is also considering shrinking its new class of U.S. consulting partners to 85, from 174 a year earlier. 

 

Bloomberg Tax

Accounting Today

Financial Times

Wall Street Journal

The number of Americans who applied for unemployment benefits in the seven days to April 13th was unchanged at 212,000, according to the Labor Department, pointing to continued strength in the labor market. Economists polled by Reuters had forecast 215,000 claims. Unadjusted claims declined 6,756 to 208,509 last week. Filings in California jumped by 3,063. There were also notable increases in claims in Connecticut, Georgia and Oregon. The four-week moving average was unchanged too, at 214,500. Continuing claims, reported with a one-week lag, rose 2,000 to 1.812m. "Jobless claims remain well below levels that would signal a major slowdown in job growth," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics. "A strong labor market gives the Federal Reserve the room to put off rate cuts until inflation gets back on a sustainable path to 2%."

 

Bloomberg

Reuters

RTT News

US News and World Report

Existing home sales fell 4.3% in March to a seasonally-adjusted annual rate of 4.19m units, the most in over a year, as mortgage rates lurched upward amid higher inflation readings. On an annual basis, they were down 3.7%, the National Association of Realtors' report added. Total housing inventory at the end of March was 1.11m units, up 4.7% from February and 14.4% from a year ago. Sales fell across the country except in the Northeast region, which saw an increase for the first time since November 2023. Meanwhile, the median price of an existing home was $393,500 last month, an increase of 4.8% from a year earlier. “Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves,” NAR chief economist Lawrence Yun said in a release. “There are nearly 6m more jobs now compared to pre-COVID highs, which suggests more aspiring homebuyers exist in the market.”

 

CNN

Reuters

Washington Examiner

A new Senate committee report spearheaded by U.S. Senate Special Committee on Aging chair Bob Casey (D-PA) reveals how older adults fall victim to scams, resulting in significant tax bills and lost retirement savings. The report highlights the financial challenges faced by retirees in Pennsylvania, Ohio, Florida, Utah, California, and other states. Sen. Casey argues that the changes made to the tax deduction for theft losses as part of the Tax Cuts and Jobs Act of 2017 should be reversed. The report profiles victims, including Larry, a Pennsylvania retiree scammed out of $765,000 and burdened with an IRS tax bill of over $220,000. 

 

CPA Practice Advisor

A recent poll from Rightworks has found that 73% of accountants are not using artificial intelligence (AI) tools, and that 35% have no plans to do so in the future. The survey revealed that the main reason for not using AI was a lack of understanding about the technology and its benefits. Concerns about accuracy and data privacy were also cited. Only 4% of accountants claimed to be very knowledgeable about AI, while 27% were moderately knowledgeable and 49% were slightly knowledgeable. The survey also showed that the more knowledgeable accountants were about AI, the more likely they believed it would bring positive benefits. Small firms were found to be less likely to adopt AI compared to medium and large firms. Additionally, the survey found that only 22% of firms reported a high percentage of clients using cloud computing infrastructure. Many firms themselves reported struggles with implementing new technology, with a lack of commitment to cloud-based environments and connected technologies. Security concerns were cited as the main reason for hesitating to migrate to the cloud. Despite reported evidence of benefits, a large segment of the profession is not migrating due to a lack of education about technology and its benefits.

 

Accounting Today

CPA Practice Advisor

Canada will start applying a proposed tax on the world’s biggest technology companies this year. The tax would be a 3% levy on the digital services revenue a company makes from Canadian users above C$20m ($14.5m) in a calendar year. It would apply only to companies with annual worldwide revenue of more than about C$1.1bn. Alphabet and Meta Platforms are among those set to be impacted. Canada’s parliamentary budget officer has estimated the tax will raise about C$7.2bn over five fiscal years. Finance Minister Chrystia Freeland has said Canada would not enact the tax if a global tax treaty through the Organization for Economic Co-operation and Development is implemented, but so far that treaty has not been ratified by the U.S. "In view of consecutive delays internationally in implementing the multilateral treaty, Canada cannot continue to wait before taking action," Freeland’s department said in the budget. U.S. lawmakers and government officials view the tax as unfair to American firms, and have threatened to retaliate if Canada moves forward with it.

 

CPA Practice Advisor

CVC Capital Partners has approached EY in a bid to buy its Italian consulting arm, the Financial Times reported on Thursday, citing people familiar with the matter. 

 

Financial Times

Market Screener

Colorado Gov. Jared Polis has signed into law the first measure in the U.S. aimed at protecting the data found in a person's brainwaves. The law is a response to the increasing advancements in neurotechnology, which make scanning, analyzing, and selling mental data more possible and profitable. The legislation provides a framework to protect Coloradans' personal data while allowing the development of new technologies. The Neurorights Foundation, a non-profit promoting ethical neurotechnology development, supports the bill. The law focuses on consumer products outside of a hospital setting, as medical privacy laws already cover neurotechnologies used in clinical settings. Big tech firms like Facebook, Meta Platforms, and Neuralink are developing brain activity detection technology for commercial use. The U.S. FDA has approved human studies for Neuralink's brain implants. Other governments worldwide are also working on increasing consumer protections for neurotechnological products.

 

Reuters