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As the year-end approaches, financial advisors and tax professionals are preparing for significant changes due to the potential expiration of provisions from the Tax Cuts and Jobs Act of 2017. The Deloitte Tax Policy Group highlights that "the fact that Republicans will control the House, Senate and White House next year positions them to advance budget reconciliation legislation that reflects their key tax priorities." However, the complexities of the budget reconciliation process may complicate efforts to finalize tax legislation. With an estimated $4.6trn impact on clients' finances, including changes to the standard deduction and estate-tax exemptions, taxpayers must stay informed and ready to adapt to new policies. The looming expiration of key tax provisions sets the stage for a challenging fiscal landscape for President-elect Trump and the incoming Congress.

 

Accounting Today

The Treasury Department and the IRS have proposed new regulations aimed at updating the standards for tax professionals. These changes to Circular 230 are designed to reflect the evolving nature of tax practice and to enhance technological competency among practitioners. The proposed regulations will remove outdated provisions related to registered tax preparers and contingent fees, which have not been revised since 2011 and 2014. The regulations will impact various professionals, including CPAs, Enrolled Agents, and attorneys. The new rules are expected to be published in the Federal Register on December 26.

 

Accounting Today

The IRS released draft instructions for Form 6765, Credit for Increasing Research Activities, on December 20, inviting stakeholder feedback on key changes, including updates to Section G for controlled groups and business component details. The updated form also introduces new sections summarizing qualified research expenses and other business information. Stakeholders are encouraged to submit feedback via email to lbi.rt.team@irs.gov with the subject line “Instructions for Form 6765” by June 30, 2025. The revised instructions aim to enhance tax reporting consistency and streamline tax administration. For tax year 2024, reporting under Section G will remain optional, but it will become mandatory in tax year 2025 for most filers, with exceptions for certain small businesses and taxpayers with limited qualified research expenses. The final version of Form 6765 and its instructions is expected by January 2025. The changes stem from prior stakeholder comments and the IRS's commitment to effective tax resource management.

 

CPA Practive Advisor

The IRS has announced that the optional standard mileage rate for business use will increase by three cents in 2025. This rate is used to calculate deductible costs for operating vehicles for various purposes, including business, charitable, and medical uses. Effective January 1st 2025, the new rates will apply to all types of vehicles, including electric and hybrid models. While the charitable mileage rate is set by law, the business rate is determined through an annual study of vehicle operating costs. Taxpayers can choose between using the standard mileage rate or calculating actual vehicle expenses. Notice 2025-05 outlines these changes and provides necessary calculations for depreciation and vehicle valuation.

 

Accounting Today

Tax Notes

The AICPA is urging the Securities and Exchange Commission (SEC) to reject the PCAOB recently adopted standards on firm and engagement metrics. The AICPA argues that these rules could drive smaller firms out of the auditing business, negatively impacting both small and large companies. The new rules require PCAOB-registered firms auditing accelerated filers to publicly report specific metrics, which the AICPA claims will disproportionately affect smaller firms and reduce competition in the audit market. The AICPA also expressed concerns about the potential increase in audit costs for smaller companies seeking access to U.S. capital markets.

 

Accounting Today

The FASB issued an Invitation to Comment (ITC) on December 19, seeking stakeholder input on whether to pursue a project to enhance accounting and disclosure for intangibles, including acquired and internally developed assets. This initiative is part of FASB's broader research on financial reporting improvements in this area. The ITC invites feedback on the need for changes to GAAP, the specific intangibles to address, potential solutions, and their costs and benefits. FASB is also exploring whether accounting approaches should vary depending on how intangibles are acquired and how investors use information about intangibles in their decision-making. Stakeholders, including accountants, preparers, and investors, are encouraged to submit comments by May 30, 2025, to help FASB decide whether to add this topic to its technical agenda. This feedback will play a crucial role in shaping the future of intangibles reporting standards.

 

CPA Practice Advisor

The IASB has introduced amendments to enhance the reporting of nature-dependent electricity contracts, primarily power purchase agreements (PPAs). These contracts, which secure electricity from renewable sources like wind and solar, can fluctuate due to uncontrollable factors such as weather. The IASB's changes to IFRS 9 and IFRS 7 aim to improve how companies reflect these contracts in their financial statements. Key amendments include clarifying 'own-use' requirements, allowing hedge accounting for these contracts, and introducing new disclosure requirements. Andreas Barckow, Chair of the IASB, stated, “These amendments reflect our commitments to ensuring that Accounting Standards remain relevant and responsive to evolving market needs.” The amendments will take effect for annual reporting periods starting on or after 1 January 2026, with early application permitted.

 

CPA Practice Advisor

EY has been accused of facilitating a fraudulent scheme involving Brooge Energy, a UAE oil storage company, in a lawsuit filed in the Southern District of New York. Shareholders allege that EY played a "pivotal role in a years-long scheme" to defraud investors during a 2019 SPAC transaction, which initially valued Brooge at over $1bn. Following the revelation of fraud, Brooge's shares plummeted by 99%. The lawsuit claims EY failed to detect clear signs of fraud and assisted in a "round-tripping scheme" to conceal falsified revenues. Neil Richardson, an investor involved in the lawsuit, stated: "This is an astonishing story of brazen, long-running, egregious fraud." EY has denied the allegations, asserting that responsibility lies with Brooge's principal shareholders and senior officers. The US Securities and Exchange Commission previously charged Brooge with using "false invoices" to inflate revenues by up to 80%.

 

Bloomberg Law

Financial Times

Entergy Corp., a New Orleans-based electric utility, has agreed to pay $12m to settle SEC allegations of mishandled internal accounting practices. The SEC accused Entergy of failing to implement adequate controls for recording materials and supplies, despite repeated warnings from employees and consultants. “Internal accounting controls serve as a front-line defense in ensuring the accuracy and reliability of financial statements,” said Sanjay Wadhwa, acting director of the SEC’s enforcement division. As part of the settlement, Entergy will enhance its inventory management and internal controls, with oversight from an independent consultant. While not admitting or denying the charges, Entergy emphasized its cooperation with the SEC and its commitment to improving practices.

 

CPA Practice Advisor

Timothy Trifilo, a prominent Washington, D.C.-based accountant, pleaded guilty to making false statements on a mortgage application after failing to file IRS returns. With over four decades of experience, Trifilo applied for a $1.4m mortgage but submitted fake 2021 and 2022 IRS filings when the bank could not locate his actual returns. Investigators found he had not filed any returns since 2012, despite earning over $7.7m during that period.

 

Accounting Today

Specialists working in the compliance sector say that hiring good people is getting tougher, with graduates and early-career professionals gravitating toward roles they perceive as being more glamorous. The median age of compliance professionals was 45.1 years in 2023, the most recent year available, according to the U.S. Bureau of Labor Statistics. Although down from 47.7 in 2022, the field’s median age has been stuck above 45 since 2020. The median age of financial and investment analysts was 39.6 in 2023, by comparison, while the median for marketing managers was 39.7. Compliance workers were even slightly older than accountants, whose median age was 44.9. “You don’t go to school to become a compliance officer,” said John Gilmore, co-founder and managing partner of BarkerGilmore, a boutique executive search firm. There is another complication: Not many early-career workers are cut out for compliance, which requires attributes including the ability to think critically, attention to detail, business knowledge and communication skills. “Typically, those are not skills we see in young professionals,” said Natalia Gindler Corsini, managing director for Prae Venire, a management consulting firm helping companies build or enhance compliance programs. “So they have to start working in other departments and then move to the compliance department when they already have some of those skills prepared."

 

Wall Street Journal

Platform Accounting Group has announced the addition of two firms, Midwest Advisors in Naperville, Illinois, and Crossroads Advisors in Indianapolis, Indiana, expanding its footprint into the Midwest. These acquisitions bring the total to 12 firms joining Platform in 2024, with more expected in January.

 

CPA Practice Advisor

Homeowners are facing unprecedented financial strain as soaring property taxes and home insurance premiums erode affordability. Insurers have hiked rates due to escalating natural disaster losses and higher repair costs, while surging property values have pushed taxes to record levels. In September, property taxes and insurance consumed 32% of the average single-family mortgage payment, the highest on record, according to Intercontinental Exchange (ICE). Regions like Miami, New Orleans, and Syracuse see even greater burdens, with over 25% of borrowers in these areas spending more than half their mortgage payment on taxes and insurance. Nationwide, 9% of single-family mortgages face such costs, up from 4% in 2014. Retired homeowners on fixed incomes are particularly vulnerable. Rising costs are prompting some, like Janet Raggi in Florida and the Landry family in New Orleans, to consider selling their homes despite market challenges. Additionally, surging insurance premiums have led to increased mortgage delinquencies, according to research by Rice University and the Federal Reserve Bank of Dallas. With affordability eroding and housing expenses climbing, experts warn that these costs could eventually suppress home prices in high-tax and high-insurance areas. 

 

Wall Street Journal

The Delhi High Court has dismissed the Income Tax Department's claims against Western Union, affirming that the company did not have a permanent establishment (PE) in India under the India-U.S. tax treaty. The court ruled that the provision of software and liaison offices did not constitute a taxable fixed place of business. The judgment stated: “The software utilized for connecting the Indian agents to the mainframe, being intangible property, would invariably be excluded from the threshold of PE.” The court's decision followed a ruling from the Income Tax Appellate Tribunal, which had previously favored Western Union, saying that its income earned from customers outside India was not taxable under Indian law. The ruling emphasizes the importance of the India-U.S. double taxation avoidance agreement in preventing double taxation and promoting cross-border investments.

 

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