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TIGTA has assisted the IRS in uncovering a scheme where fraudsters improperly claimed up to $3.5bn in pandemic relief tax credits. The scheme involved obtaining Employer Identification Numbers and using them to claim Employee Retention Credit and Sick and Family Leave Credits on business tax returns. TIGTA alerted the IRS, which implemented safeguards to prevent similar schemes. TIGTA's acting inspector general Heather Hill stated that their office's work saved billions of dollars by preventing improper payments. Trevor Nelson, TIGTA's deputy inspector general for investigations, highlighted their strategic use of money from the Inflation Reduction Act to identify emerging fraud schemes. “We’re strategically using our budget to invest in innovative tools and hire experienced employees with sought-after technical skills who are dedicated to protecting taxpayer dollars," he added. TIGTA Special Agents are also actively working with IRS Criminal Investigation Special Agents to hold those responsible for the scheme accountable.

 

Bloomberg Tax

Accounting Today

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Tax Notes

The Arkansas Tax Appeals Commission has ruled in favor of a taxpayer who sought relief from a Proposed Tax Assessment issued by the Department of Finance and Administration (DFA). The taxpayer, who did not file an Arkansas individual income tax return for 2021, argued that their income, consisting of social security benefits and military retirement pay, was exempt from tax. The commission agreed with the taxpayer's argument, leading to a surprising victory.

 

Bloomberg Tax

The California Department of Tax and Fee Administration (CDTFA) has published information on the use tax collection requirements for out-of-state sellers. According to the publication, out-of-state retailers engaged in business in California must register with the CDTFA and collect California use tax if they meet certain criteria, such as maintaining a physical place of business in the state, having a representative operating in the state, leasing or owning property in the state, or having total combined sales exceeding $500,000 for delivery in the state. This new requirement aims to ensure that out-of-state sellers contribute their fair share of taxes.

 

Bloomberg Tax

New Jersey business groups are opposing a proposed tax hike on large corporations to fund public transportation. The 2.5% surcharge is seen as a threat to the state's regional competitiveness and could push businesses out of state. Michele Siekerka, president and CEO of the New Jersey Business & Industry Association, stated that the tax hike would discourage companies from creating jobs or building new facilities in the state. The opposition is intensifying ahead of the state's June 30th budget deadline.

 

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Kathleen M. Quinn, a partner in Jones Walker's tax practice group, highlights the challenges faced by businesses in state transfer pricing examinations. These examinations are even more challenging due to the lack of consistency and transparency at the state level, according to Ms. Quinn. However, she notes that companies have successfully defended their transfer pricing arrangements in state disputes, providing important takeaways. Ms. Quinn advises that being proactive and establishing compliance with Section 482 Treasury Regulations can prevent unnecessary adjustments by state tax departments. She adds that educating auditors on transfer pricing policies and methods can also avoid controversy. In cases where litigation is necessary, Ms. Quinn recommends that taxpayers should prepare for the possibility and consider the implications on agreements with the IRS or foreign governments.

 

Bloomberg Tax

BILL Accounting Firm Automation Opportunity Report

Automation has become widespread across diverse industries. For accounting firms, it collects scattered information and transforms it into valuable insights, increasing productivity and empowering firms to better advise their clients.

In this report, more than 1,000 accounting firm professionals shared their opinions on the impact of financial automation on their firms. Of them, 89% said automation in financial operations makes their firm more profitable and efficient. Dive in to gain insights on:

• How automation boosts client advisory services (CAS) delivery and results
• The benefits of a unified automation for AP, AR, spend, and expense management
• The effect of automation on the competitive landscape 
• Areas of opportunity to expand financial automation

Download The Survey

 

Tax practitioners can now register for the 2024 IRS Nationwide Tax Forums, featuring over 40 sessions on tax law, ethics, cybersecurity, and more. CPAs, Enrolled Agents, and other tax professionals can earn up to 19 CE credits. The forums will be held in Chicago, Baltimore, Dallas, Orlando, and San Diego. Early bird registration is $255 per person, with standard pricing of $309. Members of certain associations can save $10 on registration. IRS Commissioner Danny Werfel encourages professionals to register soon, as some locations will fill up quickly.

 

Accounting Today

A global accounting standard-setter has launched a comprehensive review of intangibles accounting following complaints that current rules overlook assets such as intellectual property in financial statements. The International Accounting Standards Board (IASB) decided to include the project in its work plan after receiving feedback on its strategy through 2026. The board has initiated initial research to determine necessary changes, with the project potentially being completed in multiple stages. The review aims to address the concerns of investors and others who have expressed a strong desire for rule changes.

 

Bloomberg Tax

New orders for key U.S.-manufactured capital goods increased moderately in March and data for the prior month was revised lower, the Commerce Department reported Wednesday, suggesting that business spending on equipment likely remained weak in the first quarter. The value of core capital goods orders, a proxy for investment in equipment excluding aircraft and military hardware, increased 0.2% last month after a downwardly revised 0.4% advance in February. Core capital goods orders gained 0.6% year-on-year in March. Bookings for all durable goods — items meant to last at least three years and including orders for commercial aircraft — rose 2.6%, also following a downward revision. The median estimate in a Bloomberg survey of economists called for a 2.5% increase.  “Not so encouraging news from the durable goods front dampens hope of an acceleration in equipment spending,” said Nationwide financial markets economist Oren Klachkin. “This continues to be a soft spot in an otherwise strong economy.”

 

Bloomberg

Market Watch

Reuters

A new study reveals that mental illness costs the U.S. economy $282bn annually, which is equivalent to the average economic recession. This estimate is about 30% larger than previous attempts to calculate the overall cost of mental illness in the U.S. The study shows that mental illness affects people's consumption, savings, portfolio choices, and also labor supply, generating enormous annual costs. People with mental illness spend less money, are less likely to invest, and may choose less demanding jobs. The study also suggests that improving mental health services and providing treatment to young adults with mental illness could have significant economic benefits. However, reducing out-of-pocket costs for mental health services does not substantially reduce the number of people with mental disorders. The study highlights the need for policies that expand and improve mental health care to address the societal costs of mental illness.

 

U.S. News

The U.S. Chamber of Commerce has filed a lawsuit against the U.S. Federal Trade Commission (FTC) to strike down the agency's ban on employers requiring workers to sign noncompete agreements. The Chamber argues that the FTC lacks the authority to enact such rules. The lawsuit claims that the ban will lead to legal costs for companies and hinder the economy by preventing start-ups and small businesses from protecting their investments and confidential information. The FTC and supporters of the ban argue that noncompete agreements suppress workers' wages and hinder job mobility. The FTC estimates that banning noncompete agreements could increase worker earnings by up to $488bn over the next decade and lead to the creation of over 8,500 new businesses annually. Legal challenges to the rule are expected to delay its implementation. The Chamber may seek an injunction to temporarily block the ban. The lawsuit follows the first legal challenge to the FTC rule by tax service firm Ryan LLC.

 

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Reuters

Andrew Leahey warns in Bloomberg Tax that the use of remote cashiers could make it difficult for local tax authorities to audit businesses and facilitate tax evasion. He says the shift towards remote work, including remote cashiers based in the Philippines, poses challenges for tax calculation and auditing. Without physical records at the business location, local tax authorities face a daunting task in demanding records from offshore payment processors or remote checkout businesses. To counteract these challenges, Mr. Leahey suggests motivating customers to scan their receipts, creating a shadow record of transactions that can aid audits. He proposes a lottery system to incentivize customers to submit their receipts to the tax authority, reducing the ability of businesses to suppress sales.

 

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As more companies invest in artificial intelligence (AI), Luminos.AI, a new software firm, has emerged to combat AI legal risks. Luminos.AI spun off from Luminos.Law, a law firm specializing in advising companies on AI and analytics risks. The firm's custom AI risk software is now available on an enterprise platform. The potential legal risks associated with AI have grown as companies invest billions of dollars in the technology. Luminos.AI offers a range of products, including a "bias calculator" and an automated reporting tool for compliance documentation. The company, co-founded by Andrew Burt and Mike Schiller, raised $1.7m last year and is currently in the process of a second capital-raising. Other law firms have also spun off technology ventures in recent years. Luminos.AI aims to address the legal challenges of AI and ensure fairness and compliance in AI systems.

 

Reuters

China plans to boost fines for illegal accounting practices such as forgery and preparing false reports. Revisions to China's accounting laws have been submitted to the National People's Congress Standing Committee, aiming to strengthen accounting supervision.

 

Bloomberg Tax

Rider University has launched a new CPA Apprenticeship Program which allows recent accounting graduates to earn the required credits for CPA licensure at a reduced cost. The program, which is the first of its kind in New Jersey, offers partnerships with various accounting firms. Unlike other universities' programs, Rider's non-degree program provides opportunities with multiple firms. The apprenticeship combines online courses and working at least 34 hours per week with participating firms. Each course is worth six academic credits and costs $250 per credit. Evelyn A. McDowell, the university's chair for the accounting department, stated that the program offers recent graduates a low-cost alternative to advancing their careers. Rider University is currently establishing partnerships with firms and companies to find both short-term and permanent employees. 

 

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