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The IRS has failed to maintain adequate oversight of its inter-agency deal with the National Archives and Records Administration (NARA), according to a new TIGTA report. The IRS pays millions to NARA every year for the storage, management, and retrieval of paper records, but due to the closures and limited capacity of NARA centers during the COVID pandemic, record requests took two to eight months to be delivered. The IRS claimed to be unaware of any delays in obtaining records. This lack of oversight has caused significant delays and inconvenience for taxpayers and highlights the need for better management of inter-agency agreements. "These closures caused records requested to take two to eight months to be delivered," said TIGTA.

 

Bloomberg Tax

An effort to overturn the Biden administration's electric vehicle (EV) tax credit rules is gaining momentum. Ways and Means Republicans have voted in committee to approve a Congressional Review Act resolution to overturn the regulations. While no Democrat on the panel supported the resolution, others in the wider House and Senate are in favor of the move. The issue at hand is the extension of two years given to automakers to address the sourcing of battery minerals.

 

Bloomberg Tax

Local income taxes account for only 5% of total local tax collections across the nation, but in the states that rely on this revenue stream, they're a vital revenue source. Maryland relies the most on local income taxes, where they provide more than 36.12% of local tax collections and 19.44% of local general revenue. It is followed by the District of Columbia, Kentucky, Ohio, and Pennsylvania. In Kansas, local income taxes were 0.01% of local general revenue and 0.2% of local tax collections.

 

Accounting Today

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Steve Gallucci, Deloitte's U.S. National Managing Partner for the CFO Program, highlights the immediate concerns of CFOs regarding ongoing labor shortages, especially in AI skills, and adapting workplace cultures to new work preferences. Deloitte’s 4Q 2023 CFO Signals survey reveals a significant shift towards hybrid work models, with 65% of CFOs planning to offer such options. The survey underscores the necessity for CFOs to adapt management styles to monitor productivity remotely and the importance of continual learning and flexibility within the finance function to stay resilient amidst rapid technological changes. Gallucci emphasizes that flexibility in work arrangements and upskilling employees are critical in retaining talent and ensuring organizational adaptability in an evolving corporate landscape.

 

CFO Journal

EY's plan to increase starting salaries by 10% for accountants is not enough to compete in the current marketplace, according to Jack Castonguay, an assistant professor of accounting at Hofstra University and vice president of content development at KnowFully Learning Group. Accounting and auditing firms need to do more to attract students to the profession. This includes raising salaries above other business fields, committing to work-life balance, and providing funding for students pursuing CPA licensure. While it's a positive step that firms like EY, KPMG, and PwC are boosting salaries, it's concerning that it took so long for them to take action. Other industries have already raised starting salaries to attract talent. Accounting salaries have been negative in real terms over the past decade, while other fields have seen raises beyond inflation. Accounting firms must compensate for the added education, work hours, and skills they demand from new hires. It remains to be seen if these salary increases are a one-time adjustment or a sustained commitment to improving the profession's attractiveness. EY's announcement does not specify how much of the $1bn will be distributed or if future hires can expect similar increases. The impact of these increases may not be seen for several years, as students have already chosen their majors. Pay increases must be higher and longer lasting to address the pipeline challenges and talent crunch in the accounting profession.

 

Bloomberg Tax

People Management Solutions, a Knoxville, Tennessee-based provider of performance management and consulting services, has hired Robyn Bryant as director of business development. She brings nearly two decades of experience in business development and proposal management, and has led successful capture efforts for environmental and engineering proposals across various federal agencies, including the US Department of Energy, National Nuclear Security Administration, and National Laboratories.

 

Consulting

Federal Reserve Chair Jerome Powell suggested to the Senate Banking Committee on Tuesday that he is focusing greater attention on when to cut interest rates now that the trade-offs the central bank is facing between bringing inflation down and maintaining a solid labor market may be shifting. “Elevated inflation is not the only risk we face,” he said in his semiannual monetary policy report. “The most recent labor market data do send…a pretty clear signal that labor market conditions have cooled considerably compared to where they were two years ago.” “The timing of the first Fed rate cut remains a difficult question to answer,” Seema Shah, chief global strategist at Principal Asset Management, said in a note. “Even with a slight downshift in economic activity and with the soft May inflation print, it is not obvious that the economy requires policy easing, and it is no wonder policymakers have been steadfast in communicating their patience with their current policy stance.” Mr. Powell heads to the House Financial Services Committee today to address the same report on the state of the U.S. economy.

 

CNN	Wall Street Journal

A solar panel maker in Georgia, Qcells, has received $230m in federal tax credits and plans to create the first end-to-end solar manufacturing chain in the U.S. The company aims to reduce reliance on China and address concerns about forced labor. However, the Qcells solar plant currently uses base components from China. Chinese filings reveal that two of Hanwha Solutions Corp.'s Chinese subsidiaries supply these components. Despite this, Qcells is committed to expanding its manufacturing capabilities in the U.S. The company's efforts align with the U.S. government's push for domestic solar production.

 

Bloomberg Tax

Small business sentiment in the U.S. unexpectedly rose in June and at a faster than expected pace, to reach its highest level so far this year. The National Federation of Independent Business (NFIB) sentiment index advanced one point to 91.5 last month, although it remains well below the series historical average of 97.9. Four of the 10 components that make up the sentiment gauge increased in June, bolstered by better inventory management. The share of firms reporting job openings they couldn’t fill fell five points in June to 37%, matching the smallest since the start of 2021. Hiring plans held steady. Inflation remained the top small business issue, with 21% of owners reporting it as their single most important problem in operating their business. "Main Street remains pessimistic about the economy for the balance of the year," NFIB chief economist Bill Dunkelberg said. "Increasing compensation costs has led to higher prices all around. Meanwhile, no relief from inflation is in sight for small business owners as they prepare for the uncertain months ahead."

 

Advisor Perspectives

Bloomberg

Nasdaq

The former finance czar of the National Rifle Association (NRA), Wilson "Woody" Phillips, has been banned for a decade from managing money for any nonprofit company in New York. This comes after a jury found him liable in a scheme to have the NRA bankroll the extravagant lifestyle of the organization's longtime chief executive, Wayne LaPierre. Phillips agreed to the ban in May and is still responsible for $2m in damages to the NRA. The settlement means that Phillips won't have to participate in the second phase of the trial in New York Attorney General Letitia James' civil lawsuit against the NRA and former top executives. The trial has shed light on the leadership, culture, and finances of the influential lobbying group. 

 

U.S. News

PwC is cutting staff across its operations in China, following an exodus of corporate clients that has diminished its revenue prospects in the country. At least 100 staffers from different teams at PwC China’s offices in Beijing, Shanghai and other locations are being let go. “In light of changes to the external environment, we are making some adjustments to better optimize our organizational structure to align with market demand,” a PwC spokesperson commented. The firm did not provide details on the number of staffers who were cut. More than 30 publicly listed companies based in mainland China, including state-owned giants PetroChina China Life Insurance, and Bank of China, have dropped PwC as their auditor this year. Regulators have been examining PwC’s role in its accounting services for Evergrande, after the developer was accused of inflating its revenue by $78bn from 2019 to 2020.

 

South China Morning Post