Become more informed in minutes....

Sen. Kyrsten Sinema (D-AZ) announced on Thursday evening that she will support moving forward with her party’s climate, tax and health care package, clearing the way for a major piece of President Joe Biden’s domestic agenda to move through the Senate in the coming days. To win Ms. Sinema’s backing for the Inflation Reduction Act, Democratic leaders agreed to drop a $14bn tax increase on some wealthy hedge fund managers and private equity executives that she had opposed, change the structure of a 15% minimum tax on corporations, and include drought money to benefit Arizona. Ms. Sinema insisted on the removal of a provision that would have limited the preferential tax treatment of income earned by some wealthy hedge fund managers and private equity executives. Democrats instead added a new 1% excise tax that companies would have to pay on the amount of stock that they repurchase, said one Democratic official, who disclosed details of the plan on the condition of anonymity. That provision, the official said, would ensure that the package still reduces the federal deficit by as much as $300bn. The legislation is getting passed through a budget reconciliation process, which circumvents the 60 votes usually needed to pass a bill. The Senate Parliamentarian is still combing through the text to make sure the legislation can be voted on through the reconciliation process. Sen. Chuck Schumer (D-NY) said the bill will be introduced on the Senate floor on Saturday afternoon, after which debate will begin, followed by the "vote-a-rama" process to introduce amendments. 

 

NPR

New York Times

Washington Post

IRS Commissioner Charles Rettig told Congress on Thursday that the tax collection agency would not increase audits of households earning less than $400,000 if it was given the additional $80bn proposed in the Democrats' climate and tax legislation package. The additional funding is expected to go toward hiring more enforcement agents to crack down on wealthy tax evaders and corporations and to modernize the agency’s antiquated technology. “These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans,” Mr. Rettig said. “As we have been planning, our investment of these enforcement resources is designed around Treasury’s directive that audit rates will not rise relative to recent years for households making under $400,000.” He added that better technology and customer service at the I.R.S. would make honest taxpayers less likely to be audited.

 

New York Times

National Taxpayer Advocate Erin Collins escalated her push for the IRS to adopt barcode scanning of paper tax returns, which she had directed the Service to implement by 2023, by appealing its response, which she called disappointing. Ms Collins called on the IRS during tax season to implement the kind of commonly used scanning technology already in use by many other government agencies and businesses of all kinds, such as 2-D bar coding, optical character recognition and machine-readable text. She issued a rare Taxpayer Advocate Directive last March as the IRS struggled to overcome a backlog of millions of unprocessed paper tax returns. IRS deputy commissioners Douglas O'Donnell and Jeffrey Tribiano issued a response last month to the directive, saying the IRS is still pilot testing various technologies, but without making any commitment on timing. However, in a blog post Thursday, Ms. Collins said she is appealing their decision, citing the urgent need for the scanner technology to be in place by next filing season. "The response declined to make a commitment to implement scanning technology to machine read V-coded returns, and it expressly rejected implementing scanning technology to machine read handwritten returns," she wrote. "I appreciate the IRS's efforts with the 'Lockbox Scanning Service Pilot' and encourage moving forward with scanning returns. But that pilot involves returns with which the taxpayer is making a payment. Processing delays primarily harm taxpayers who are due refunds, and I would like to see the IRS prioritize its efforts to paper-filed refund returns."

 

Bloomberg Tax

Accounting Today

Journal of Accountancy

5 Guiding Principles: A roadmap for building a successful client accounting practice

This guide was created in collaboration with CPA.com and Bill.com to offer insight on the client accounting services model as well as provide peer perspective to help you implement this model in your own firm.

Dive in and read spotlights of four progressive firm leaders who have leveraged technology such as Bill.com and proven business practices to offer sophisticated client accounting and bill pay services. Leaders share their insights on what has led to their success and increased client satisfaction.

Key Guiding Principles:

• CAS Structure and Pricing
• Standardization of Processes and Technology
• Internal Team Approach
• Marketing and Business Development
• Specialization

Download Guide

 

New filings for unemployment benefits rose last week, holding close to the highest level of the year as the U.S. labor market showed several signs of cooling. Initial jobless claims increased slightly to a seasonally adjusted 260,000 last week from a downwardly revised 254,000 the prior week, the Labor Department said Thursday. The total is close to the 2022 peak set earlier in July of 261,000 and above the 2019 prepandemic weekly average of 218,000. Continuing claims, a proxy for the total number of people receiving payments from state unemployment programs, rose by 48,000 to 1.42m in the week ended July 23rd. “The labor market remains in good shape as the summer quarter progresses but the rise in initial claims since early April is a cold breeze blowing at the hot labor market this summer,” said Stuart Hoffman, senior economic advisor at PNC Financial Services. “The modest pickup in claims suggests that turnover may be increasing in weaker firms that are struggling with slowing growth,” Jefferies economists Thomas Simons and Aneta Markowska wrote in a note. They added that seasonal adjustments could be playing a role in elevated jobless claims. The Labor Department releases its July jobs report later today.

 

CNBC

Market Watch

Wall Street Journal

The U.S. trade deficit narrowed in June, as a rise in shipments of energy products pushed up exports, while cooling consumer appetite weighed on imports. The Commerce Department said the trade gap in goods and services closed 6.2% to $79.6bn after seasonal adjustment, down from May's revised deficit of $84.9bn. Economists surveyed by the Wall Street Journal had forecast a trade deficit of $80bn for June. Exports grew 1.7% to $261bn, helped largely by higher shipments of energy and food products. Imports fell 0.3% to $340bn, reflecting sizable declines in American purchases of autos and food items. “Faltering global growth and the stronger dollar are set to hit export demand over the coming months,” said Andrew Hunter, senior U.S. economist at Capital Economics.

 

Market Watch

Wall Street Journal

Exelon CEO Chris Crane says the comprehensive climate and tax legislation package being weighed by Washington would raise taxes on big utilities and potentially stymie efforts to fight climate change. The Inflation Reduction Act includes a corporate minimum tax that would impact Exelon’s cash tax by about $300m annually, starting in 2023, Crane said. Tax incentives included in the bill are intended to boost the use of clean energy; however, efforts to transform America’s power grid will have a significant impact on utilities.  Crane’s comments signal the package may not provide enough aid for companies like Exelon that deliver electricity to homes and businesses, notes Bloomberg. “The higher tax would ultimately limit our ability to invest in infrastructure needed to accommodate the clean energy our customers want,” Crane said.

 

Bloomberg

The Securities and Exchange Commission (SEC) has sought to clarify how broker dealers and investment advisors must address conflicts of interest when providing advice and recommendations to investors. New guidance aims to spell out expectations amid industry "misconceptions," according to an SEC official who said that while all financial firms and professionals have some conflict, the "nature and expense" of these can vary. The guidance specifically clarifies brokers' and advisors' obligations around disclosing conflicts of interest under the SEC's long-standing Investment Advisor Fiduciary Standard and its Regulation Best Interest rule. The official said the steps firms take to address conflicts of interest “need to be tailored to their particular business model.”

 

Reuters

The Federal Trade Commission (FTC) under Chair Lina Khan has increased its use of unpaid experts and consultants without clear guidelines on their job responsibilities or transparency into how they were chosen. The FTC’s Inspector General, the agency’s watchdog, said in an audit that, in the latter days of the Trump administration and extending into President Joe Biden’s administration, the FTC had hired nine unpaid experts or consultants. The Inspector General said this created potential legal and compliance risks, including conflicts of interest. “The agency has leveraged unpaid consultants and experts during previous administrations; however, current FTC leadership has expanded their use,” since 2021, specifically in the agency’s Office of Policy Planning, according to the audit. “Like other federal agencies, the FTC frequently uses its authority under the law to bring on outside experts - paid, unpaid, or detailed from other agencies - to fill any subject matter gaps,” FTC spokesperson Peter Kaplan said.

 

Bloomberg

Henri Arslanian has left his role as global crypto lead at PwC to set up a digital assets fund in Dubai. Nine Blocks Capital Management has been granted provisional regulatory approval by the Gulf city. The $75m crypto hedge fund will be focused on institutional investors and is backed by $75m from Hong Kong-based hedge fund Nine Masts. Dubai’s business-friendly approach to crypto reportedly influenced Arslanian’s decision to establish his fund there. Nine Blocks has also positioned three portfolio managers in the Cayman Islands. 

 

Financial News

Financial Times

Employees who are returning to their offices are rediscovering the pet peeves that come with working alongside colleagues, reports the Wall Street Journal. Coming back to the workplace after so much time away can be a bit of a culture shock for many professionals, observes Katie Burke, chief people officer at Cambridge, Mass.-based software firm HubSpot. “There was this romanticizing of the office experience,” she said. “Now we’re seeing a return to normalcy.” Workers may need a little time to readjust to a challenging commute or a new one for those who changed jobs, added Ms. Burke. “Everyone can benefit from taking a deep breath before going in and approaching things with a little bit of kindness,” she said. “When in transition everyone tends to forget what the expected rules of the road are.”

 

Wall Street Journal