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  • 01/11/2022 10:08 AM | Anonymous member (Administrator)

    January 10, 2022

    By Paul Bonner

    The IRS will begin accepting and processing 2021 tax returns starting Jan. 24, the Service announced Monday.

    In News Release IR-2022-08, the IRS stated the date will allow it time to perform necessary programming and testing in advance of return filing, which it urged taxpayers and paid preparers to do electronically.

    "Filing electronically with direct deposit and avoiding a paper tax return is more important than ever this year," IRS Commissioner Chuck Rettig said in the release.

    Rettig acknowledged that the Service is still processing some tax year 2020 returns. All paper and e-filed returns with refunds owed that were received before April 2021 have been processed if they did not contain any errors or require further review; however, as of Dec. 23, 2021, there were still some 6 million unprocessed individual returns. And the Service has struggled to answer a record number of taxpayer and preparer phone calls, Rettig said.

    "In many areas, we are unable to deliver the amount of service and enforcement that our taxpayers and tax system deserves and needs," Rettig said. "This is frustrating for taxpayers, for IRS employees, and for me."

    This year, return processing may be complicated for taxpayers claiming monthly advance payments of the child tax credit, who must reconcile the total advance amount against their child tax credit for all of 2021. The IRS noted that it began late last month and is continuing to send affected taxpayers Letter 6419, 2021 Advance Child Tax Credit, which reports their total advance payments for the year. Taxpayers may also verify their advance payments on the IRS's CTC Update Portal.

    Taxpayers who received the third economic impact payment during 2021 should receive Letter 6475, Your Third Economic Impact Payment, to help them and their preparers determine whether they are eligible to receive a rebate recovery credit for missing stimulus payments.

    The IRS Free File program, which allows taxpayers with income of $73,000 or less in 2021 to self-prepare and e-file their federal return using commercial tax preparation software for no charge, will open Jan. 14.

    For more on preparing 2021 returns, see "Spotlight on Tax Season," JofA, Jan. 1, 2021.

    Returns and payments for most individuals will be due April 18, 2022, because of a weekend and Emancipation Day, a Washington, D.C., holiday. However, taxpayers who live in Maine or Massachusetts must file their returns and pay tax by April 19 due to the Patriots' Day holiday in those states. The extended due date for individual returns is Oct. 17.

    For 2020 returns, the IRS began accepting returns on Feb. 12, 2021, citing programming changes needed for tax legislation passed in late 2020.

    The Service noted Monday that by law, it cannot issue refunds for returns that involve the earned income tax credit or additional child tax credit before mid-February, although taxpayers claiming those credits may file their returns as early as Jan. 24.

    — To comment on this article or to suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.

  • 01/03/2022 9:43 AM | Anonymous member (Administrator)

    Business tax quick guide — tax year 2021

    Download and print this quick guide for use during tax season, and look for our quick guide for individual taxpayers in the January 2022 issue.

    >> DOWNLOAD NOW (PDF)

  • 12/22/2021 9:36 AM | Anonymous member (Administrator)

    December 20, 2021

    Barry C. Melancon CPA, CGMA President, CEO, American Institute of CPAs


    These two years demonstrated how tech-savvy our profession can be, given the rapid embrace of remote work solutions and changing business models. We know that a continued tech focus will propel us into the future.

    In this interview, Barry Melancon, CPA, CGMA, President and CEO of the American Institute of CPAs (AICPA) and CEO of the Association of International Certified Professional Accountants (the Association), reflects on another extraordinary year and how the profession is preparing for 2022 and beyond.

    Twelve months ago, you described 2020 as a “historic” year for the profession. How does 2021 compare?

    Around the world, accountants and finance professionals demonstrated their role as the “most trusted adviser.” The profession delivered on its purpose, meeting the demands of a constantly changing, disruptive world to drive prosperity and opportunity for those who count on us. I’m very proud of the way the profession rallied around people, businesses and communities grappling with the economic fallout of the pandemic.

    Since the start of 2020, we’ve grown, learned and evolved in extraordinary circumstances. We’ve made great strides in a short amount of time. Throughout our history, our profession has adapted. That’s how we thrived. Our work around COVID-19 is a continuation of that legacy.

    How has the Association of International Certified Professional Accountants helped the profession navigate a second year of the pandemic?

    The COVID-19 pandemic continues to cause enormous ripple effects across the globe. Many of our members, students and the accounting and finance community at large are still experiencing uncertainty, even as we make progress toward recovery. That’s why the AICPA® & CIMA®, through the Association, continue to stand behind the profession through our support with resources, guidance and advocacy work.

    In this turbulent time, staying up to speed is critical. To that end, together with CPA.com, we’ve taken steps, such as maintaining the popular bi-monthly AICPA Town Hall broadcasts to deliver real-time insights on the most salient issues the profession faces. This year, we expanded the Town Halls into a podcast series. Meanwhile, the CIMA Economic Recovery Resource Centre provides members and students access to news, resources and guidance to help them advise their organizations and customers.

    You mentioned last year that advocacy has become more essential to public policy changes than ever before. What would you say about 2021?

    We have further stepped up our advocacy efforts during 2021 to respond to the pandemic, promote economic recovery and support positive change while continuing to represent members’ interests to the government.

    It would be difficult to quickly list all of the monumental achievements from our advocacy efforts this year, but a few highlights include:

    Many describe both 2020 and 2021 as years of “great acceleration.” That is particularly true when it comes to technology. How has the Association helped encourage the adoption of technology in the profession?

    At the Association, we are helping accountants and finance professionals get in front of the rapidly changing digital landscape. We provide resources, learning, conferences and software that helps firms and business innovate and stay ahead of the curve, including:

    • In January, we acquired the Business Learning Institute, introducing new, innovative learning content for accounting and finance professionals.

    • In May, we ran our first in-person ENGAGE EUROPE conference in the U.K. Both U.S. and U.K. offerings were streamed and made accessible to worldwide audiences in May, June and July.

    • In Q3, we introduced CGMA skills badges, opening new ways for individuals to access targeted competencies within the CGMA Professional Qualification.

    • In partnership with CPA.com, we continued to enable business model evolution for firms.

      • In October, we launched the first end-to-end release of the Dynamic Audit Solution (DAS) to firms participating in the programme.

      • This month, we introduced Client Advisory Services (CAS) 2.0, a holistic approach to business transformation and change management to help firms take their advisory services to the next level.

    • As of the first of 2022, we are expanding our magazines – Journal of AccountancyThe Tax Adviser and FM magazine — switching to an enhanced, all-digital approach that will deliver more timely news and insights.

    The world is experiencing many changes beyond the disruptions the pandemic caused. What are some of the biggest trends you believe are affecting the profession?

    We’re seeing accelerated change across many areas. This presents challenges, but also growth opportunities:

    • There is a renewed emphasis on human capital as the “Great Resignation” continues to affect organizations of all sizes, including our firms and businesses. We know the strength of our profession depends on our people. To retain and attract staff, leaders should put people before profit, focusing on mental health considerations and the many advantages of diversity, equity and inclusion programs. We must continue creating opportunities that help grow our people’s skills and abilities, which includes reinvesting in our talent.

    • Our pipeline is changing. As technology powers exceptional and accelerated change, we’re seeing a profession-wide shift. Accountants must have more diverse and valuable skill sets. That’s why we’re committed to evolving the CPA license. In 2021, in partnership with the National Association of State Boards of Accountancy, we released the CPA Evolution Model Curriculum. We also continued to expand our CGMA Finance Leadership Program globally, opening a new pathway to the CGMA 100% online.

    • Sustainability is a mainstream issue, and the sustainability call to action affects all finance and accounting professionals. We own the processes, systems, data, management information and reporting that support a transition to sustainable businesses, and we support sustainable decision-making through our business analysis and assurance of both financial and non-financial data. At the Association, we take our commitment to sustainability seriously. We have signed a statement of commitment under the Prince of Wales Accounting for Sustainability Project Accounting Bodies Network to achieve net-zero greenhouse gas emissions as soon as operationally possible and publish a net-zero emissions pathway within the next 12 months. In addition, we believe corporate reporting must evolve to remain fit in a post-pandemic world. That’s why we played a key role in establishing the new International Sustainability Standards Board (ISSB), announced at COP26 in November.

    What should members keep in mind as we begin 2022?

    If we’ve learned anything in the past two years, it’s that we’re ready for anything, even the unimaginable. This year, as we’ve always done throughout our history, our profession harnessed that resilient spirit and passed it on to our firms, clients, local and national economies and society as a whole. Now, as we look forward to a brighter — yet still uncertain — future, we must move forward with deeper resolve.

    There is much work ahead of us with still a long way to go to economic recovery. Yet, the profession is poised for success because of the changes we’re adopting and the challenges we’ve overcome. We will continue to lead recovery efforts around the pandemic and do what it takes to build a better future.

  • 12/20/2021 11:25 AM | Anonymous member (Administrator)

    December 20, 2021

    By Anirban Sen and Pamela BarbagliaKane Wu

    LONDON/HONG KONG, Dec 20 (Reuters) - Global merger and acquisition (M&A) activity shattered all-time records in 2021, comfortably erasing the high-water mark that was set nearly 15 years ago, as an abundance of capital and sky-high valuations fuelled frenetic levels of dealmaking.

    The value of M&A globally topped $5 trillion for the first time ever, with volumes rising 63% to $5.63 trillion by Dec. 16, according to Dealogic data, easily surpassing the pre-financial-crisis record of $4.42 trillion in 2007.

    "Corporate balance sheets are incredibly healthy, sitting on $2 trillion of cash in the U.S. alone -- and access to capital remains widely-available at historically low costs," said Chris Roop who co-heads North America M&A at JPMorgan (JPM.N).

    Technology and healthcare, which typically account for the biggest share of the M&A market, led the way again in 2021, driven partly by pent-up demand from last year when the pace of M&A activity fell to a three-year-low due to the global financial fallout from the COVID-19 pandemic.

    Companies rushed to raise funds from stock or bond offerings, large corporates took advantage of booming equity markets to use their own stock as acquisition currency, while financial sponsors swooped on publicly listed companies.

    Moreover, robust corporate earnings and an overall bright economic outlook gave chief executives the confidence to pursue large, transformative deals, despite potential headwinds such as inflationary pressures.

    "Strong equity markets are a key driver of M&A. When stock prices are high, that usually corresponds with a positive economic outlook and high CEO confidence," said Tom Miles, co-head of Americas M&A at Morgan Stanley (MS.N).

    Overall deal volumes in the United States nearly doubled to $2.61 trillion in 2021, according to Dealogic. Dealmaking in Europe jumped 47% to $1.26 trillion, while Asia Pacific rose 37% to $1.27 trillion.

    "While China cross-border activity has been modest, corporates from other Asian countries have stepped up to buy global assets. We expect to see this trend continue, especially for deals in Europe and the United States," said Raghav Maliah, Goldman Sachs' (GS.N) global vice chairman of investment banking.

    A number of the year's biggest transactions -- AT&T Inc's (T.N) $43 billion deal with Discovery Inc (DISCA.O) and the $34 billion leveraged buyout of Medline Industries Inc -- were announced during the first half of the year. [nL3N2N4326} read more

    But the pace of dealmaking showed no signs of slowing in the second half.

    On Nov. 21, KKR (KKR.N) made a bid approach for Italy's biggest telecoms operator, Telecom Italia (TLIT.MI), valuing it at roughly $40 billion including net debt in what would rank as the biggest ever private equity buyout in Europe should it go ahead, and the second largest globally. read more

    Easy availability of financing drove private equity deals, with volumes more than doubling from last year to a record $985.2 billion, according to Dealogic.

    "Investors are deploying cash at an unprecedented pace which means that, on a global basis, asset valuations have peaked to historic levels," said Luigi de Vecchi, chairman of Europe, Middle East and Africa banking capital markets advisory at Citigroup (C.N).

    "The question is whether the prices being paid now will continue to make sense over time."

    Pressured to make their businesses greener and more climate-friendly, company executives have been hunting for targets with the right climate credentials.

    "Along with technology and digital transformation, sustainability is here to stay and is a key focus for most boardrooms," said Citi's de Vecchi.

    Reuters Graphics

    Reuters Graphics

    For an interactive graphic, click here: https://tmsnrt.rs/329m9We

    BUMPER PAYDAY

    After a year of lockdowns, Wall Street's top investment banks pushed their dealmakers to meet more clients in person to win lucrative mandates to merge companies or defend them against raids by activist investors.

    "This year we're set to exceed $100 billion in global investment banking fees," said Berthold Fuerst, Deutsche Bank's (DBKGn.DE) global co-head of M&A.

    "There has been unprecedented demand for almost every single investment banking product," he said.


    For an interactive graphic, click here: https://tmsnrt.rs/329m9We

    BUMPER PAYDAY

    After a year of lockdowns, Wall Street's top investment banks pushed their dealmakers to meet more clients in person to win lucrative mandates to merge companies or defend them against raids by activist investors.

    "This year we're set to exceed $100 billion in global investment banking fees," said Berthold Fuerst, Deutsche Bank's (DBKGn.DE) global co-head of M&A.

    "There has been unprecedented demand for almost every single investment banking product," he said.

    After the record-breaking year, bankers are now anticipating a bumper bonus round in early 2022.

    Breaking up corporate empires and conglomerates also proved to be a lucrative business for investment banks.

    In the second half of the year, General Electric , Johnson & Johnson (JNJ.N) and Toshiba (6502.T) were among large corporates that announced plans to split up their core businesses and spin off several units. read more

    The dealflow is showing no sign of slowing down as companies and investors rush to sign deals ahead of possible interest rate hikes.

    Borrowing costs are widely expected to inch up in the coming months with the U.S. Federal Reserve indicating it will increase rates next year to combat soaring inflation. Nonetheless, bankers expect dealmaking activity to remain robust.

    "I don't think upward movement in interest rates alone is going to be the catalyst that sidetracks the M&A market," said Morgan Stanley's Miles.

    Top deal advisers are concerned about the fallout from the U.S. Federal Trade Commission's (FTC) increasingly adversarial stance towards merger activity over the past year, with Nvidia's proposed $40 billion takeover of British chip designer Arm among the latest deals it is trying to block. read more

    "The FTC and Department of Justice are already taking more time than ever before to evaluate deals, so companies pursuing M&A must be ready to discuss their deals with regulators up front, at any time," said Krishna Veeraraghavan, an M&A partner at law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP.

    He added that companies would need to wait longer to get deals through - up to a year and a half versus the usual 6-12 months - and should go into a merger "willing to litigate".

    For all the headwinds, the year ahead still offers plenty of opportunities as the market for special purpose acquisition companies (SPACs) has recently reopened, with new listings in Europe, after coming under regulatory scrutiny in the United States.

    "With private equity and with the dry powder in the SPAC world we expect the momentum to continue well into 2022," said Philipp Beck, head of EMEA M&A at UBS (UBSG.S).

  • 12/16/2021 9:30 AM | Anonymous member (Administrator)

    Wed, Dec 15, 2021

    By Greg Iacucri

    The tax season is fast approaching — and the IRS has its eye on crypto investors.  

    Form 1040, which U.S. taxpayers use to file an annual income tax return, has a question about “virtual currency” near the top of the first page.

    Investors must report taxable 2021 transactions involving bitcoin, ethereum, dogecoin and other cryptocurrencies to the federal government.

    1040 tax return crypto trade

    Such transactions include getting compensation in crypto, rewards for crypto mining or free coins via “Airdrops” or “hard forks” (when a cryptocurrency splits into multiple branches and creates a new coin), according to Shehan Chandrasekera, an accountant and head of tax at CoinTracker.

    Converting crypto to cash, buying goods or services with it and converting one coin to another also qualify, he said.

    Asking about crypto transactions isn’t new, but the IRS has placed more emphasis on such tax reporting in recent years.

    The move comes as the White House and Democratic legislators aim to crack down on tax cheats. The crypto economy contributes to the so-called tax gap via lax reporting requirements that help facilitate tax evasion, according to a U.S. Department of the Treasury report issued earlier this year.

    A new $1.2 trillion bipartisan infrastructure law requires annual tax reporting by digital currency brokers starting in 2023.

    It also comes as cryptocurrencies have become more popular among investors. Tesla CEO and crypto enthusiast Elon Musk said this week the automaker would accept dogecoin as payment for some of its merchandise.

    ″[The IRS] is trying to capture the tax revenue in that growing market,” Chandrasekera said. “Every year, there’s a new wave of people coming into crypto who think it’s not taxed.”

    The IRS first explicitly asked taxpayers about their crypto dealings for 2019 taxes. However, it posed the question on a Schedule 1 form, which not all taxpayers use. (That form reports certain types of income, such as unemployment benefits or rental income, that doesn’t appear on the main 1040.)

    The following year, the IRS placed the crypto question front-and-center on the 1040 — where it remained for the 2021 tax year.

    However, the 2021 question is worded differently than it was for 2020. It asks taxpayers: “At any time during 2021, did you receive, sell, exchange or otherwise dispose of any financial interest in any virtual currency?”

    Last year’s phrasing encompassed some non-taxable transactions, like simply holding crypto or sending holdings from one digital wallet to another, Chandrasekera said. The change in wording translates to a narrower set of transactions, he said.

    “This year, the question only asks about things that could lead to taxable events,” he said.

  • 11/22/2021 1:22 PM | Anonymous member (Administrator)

    November 19, 2021

    By Alistair M. Nevius, J.D.

    The House of Representatives on Friday morning passed H.R. 5376, the Build Back Better Act, by a vote of 220–213. The bill encompasses a wide range of budget and spending provisions and has been the focus of protracted negotiations for the past several weeks. For more on the nontax provisions of the bill, see, "House Passes Build Back Better Act With Universal Paid Leave."

    The vote on the bill was held after the Congressional Budget Office (CBO) released its cost estimate for the bill. The CBO estimates the bill will cost almost $1.7 trillion and add $367 billion to the federal deficit over 10 years. Adding in $207 billion of nonscored revenue that is estimated to result from increased tax enforcement in the bill, the net total increase to the deficit would be $160 billion. 

    The bill contains a wide variety of tax provisions, designed to provide incentives to taxpayers and to raise revenue to pay for the spending in the bill. H.R. 5376 now goes to the Senate for consideration; its fate there cannot be predicted.

    One nontax provision in the bill is the provision for four weeks of paid leave benefits for caregiving leave. These paid leave benefits would not be considered gross income to the recipient for tax purposes under a new Sec. 139J.

    Among the many tax provisions in the bill (as found in House Rules Committee Print 117-18) are the following:

    One year extension of expanded child tax credit; permanent extension of refundability

    The changes to the child tax credit enacted by the American Rescue Plan Act (ARPA), P.L. 117-2, for 2021 would be extended through 2022. This would include the requirement that the IRS make advance payments of the credit throughout 2022. Taxpayers whose adjusted gross income (AGI) exceeds $150,000 for joint filers, $112,500 for heads of household, or $75,000 for other taxpayers, would not be eligible for advance payments.

    The bill would extend the refundability of the child tax credit beyond 2022.

    The bill would also implement new rules to avoid fraud. For payments of advance payment to taxpayers who file joint returns, one-half will be credited to each individual filing the joint return.

    Extending expanded earned income tax credit

    The bill would extend the changes to the earned income tax credit that were enacted by ARPA through 2022. The increase in the earned income and phaseout amounts would be indexed for inflation in 2022.

    SALT deduction cap

    The bill would increase the Sec. 164(b) limitation on the deduction for state and local taxes from $10,000 to $80,000 ($40,000 for married taxpayers filing separately and for trusts and estates) but would extend the limitation through 2031.

    Expanded premium tax credit

    The bill would increase the amounts for premium assistance in Sec. 36B through 2025. The bill would also extend through 2025 the rule that allows the premium tax credit to certain taxpayers whose household income exceeds 400% of the poverty line. The bill would also modify the employer-sponsored coverage affordability test in the premium tax credit through 2025.

    The bill would exclude a portion of lump-sum Social Security benefit payments when determining household income for purposes of the credit. The bill would also exclude the first $3,500 of income of dependents who have not reached the age of 24.

    Through 2025, the bill would also allow certain low-income employees who are offered employer-provided health coverage to claim the credit. The bill would also make permanent the Sec. 35 health coverage credit, which is currently scheduled to expire at the end of 2022.

    15% minimum tax on profits of large corporations

    The bill would impose a 15% minimum tax on the profits of corporations that report over $1 billion in profits to shareholders. Any corporation (other than an S corporation, regulated investment company, or real estate investment trust) that for any three-year period has average annual adjusted financial statement income (as defined in new Sec. 56A) over $1 billion and, in the case of corporations with foreign parents, has annual adjusted financial statement income in excess of $100 million, would pay a tax of 15% of its adjusted financial statement income for the year over the amount of its corporate AMT foreign tax credit.

    1% surcharge on corporate stock buybacks

    The bill would impose a tax equal to 1% of the fair market value of any stock of a corporation that the corporation repurchases during the year, effective for repurchases of stock after Dec. 31, 2021. The provision would apply to any domestic corporation the stock of which is traded on an established securities market.

    Limitation on interest expense deduction

    The bill would add a new Sec. 163(n) that limits the amount of net interest expense of certain domestic corporations (or foreign corporations engaged in a U.S. trade or business) that are members in an international financial reporting group. The provision limits the interest expense deduction to an "allowable percentage" of 110% of the domestic corporation's net interest expense.

    FDII and GILTI changes

    The bill would reduce the applicable percentage in Sec. 250(a) for the foreign-derived intangible income (FDII) deduction from 37.5% to 24.8% and the applicable percentage for the global intangible low-taxed income (GILTI) deduction from 50% to 28.5%, resulting in an effective FDII rate of 15.8% and an effective GILTI rate of 15%. The bill would also allow the FDII deduction to be taken into account when determining a net operating loss deduction.

    Sec. 951A would be amended to have the GILTI provisions apply on a country-by-country basis, based on controlled foreign corporation taxable units.

    Foreign tax credit limitation

    The bill would amend Sec. 904 to apply the foreign tax credit limitation on a country-by-country basis, by taxable unit. Taxable units would include the taxpayer corporation itself, each foreign corporation of which the taxpayer is a shareholder, interests held by the taxpayer in a passthrough entity, and any branch of the taxpayer. The bill would also repeal the carryback of the foreign tax credit. The foreign tax credit changes will apply to tax years beginning after Dec. 31, 2022.

    Country-by-country minimum tax on foreign profits of US corporations

    The bill would modify the Sec. 59A base-erosion and anti-abuse tax to gradually increase the applicable percentage from 10% to 12.5% in 2023, 15% in 2024, and 18% after 2024. Amounts would not be subject to the base-erosion and anti-abuse tax if they were subject to an effective rate of foreign tax of at least 15% (or 18% after 2024).

    Small business stock and high-income taxpayers

    The bill would amend Sec. 1202 to disallow the 75% and 100% exclusion of gain from the sale of stock if the taxpayer's AGI is over $400,000 or if the taxpayer is a trust or estate.

    Wash-sale rules

    The bill would amend Sec. 1091 to make commodities, foreign currencies, and cryptoassets subject to the wash-sale rules.

    Net investment income tax

    The bill would amend Sec. 1411 to apply the tax to net investment income derived in the ordinary course of a trade or business for taxpayers with taxable income over $400,000 (single filers), $500,000 (married taxpayers filing jointly or surviving spouses) or $250,000 (married taxpayers filing separately).

    Excess business losses

    The bill would make permanent the Sec. 461 limitation on excess losses of noncorporate taxpayers.

    High-income surcharge

    The bill would create a new Sec. 1A, imposing a surcharge (in addition to any other income tax imposed) on high-income individuals, estates, and trusts. The surcharge tax would equal the sum of 5% of the amount of the taxpayer's AGI that exceeds $10 million ($5 million for married taxpayers filing separately; $200,000 for an estate or trust), plus 3% of the amount of the taxpayer's AGI that exceeds $25 million ($12.5 million for married taxpayers filing separately; $500,000 for an estate or trust).

    Green energy incentives

    The bill covers a wide variety of new and existing green energy incentives, which it generally arranges as two-tiered incentives, providing either a base rate or a bonus rate. The bonus rate is five times the base rate, and it would apply to projects that meet certain prevailing wage and apprenticeship requirements.

    The bill extends the production tax credit for production of energy from renewable sources and the Sec. 48 investment tax credit for certain energy property. The incentive for solar and wind energy under Sec. 48 is increased.

    Taxpayers are given the option to elect to be treated as having made a payment of tax equal to the value of the credit they would otherwise be eligible for under various energy credits, rather than opting to carry the credit forward.

    The bill also provides various other green energy production tax incentives, including a nuclear power production credit and a credit for production of clean hydrogen.

    Individual taxpayers would be eligible for various green energy and energy-efficiency incentives under the bill. The bill extends the Sec. 25C nonbusiness energy property credit to property placed in service before the end of 2031. It also modifies and extends the credit.

    The bill would extend the Sec. 25D credit for residential energy-efficient property through 2033 (it is currently scheduled to expire after 2023). It would a refundable credit for years after 2023. Qualified battery storage technology expenditures would be made eligible for the credit. The Sec. 45L credit for new energy-efficient homes would be extended through 2031 and would be increased and modified.

    The bill extends the Sec. 48C qualified advanced energy property credit through 2031 and provides a new investment tax credit worth up to 25% for advanced manufacturing facilities. The bill also creates a credit for the production of solar polysilicon wafers, cells, and modules and wind blades, nacelles, towers, and offshore wind foundations.

    The bill also creates an emissions-based incentive for electricity generating facilities. Taxpayers are able to choose between a production tax credit under new Sec. 45BB or an investment tax credit under new Sec. 48F.

    The bill also creates a technology-neutral tax credit for the domestic production of clean fuels.

    Electric vehicle tax credits

    The bill provides for a refundable income tax credit of up to $8,500 for new qualified plug-in electric drive motor vehicles. The credit would be available for qualified electric vehicles that cost up to $80,000 (for vans, SUVs, and trucks) or $55,000 (for other vehicles). The bill would also provide a credit of up to $7,500 for two- or three-wheeled plug-in electric vehicles. The credit would phase out for taxpayers with AGI over $500,000 (married taxpayers filing jointly) or $250,000 (single taxpayers). A smaller credit would be available for the purchase of qualifying used electric vehicles. The bill also provides a credit for the purchase of certain new electric bicycles.

    The bill would provide a credit for any qualified commercial electric vehicle placed in service by a taxpayer. The credit would equal up to 30% of the basis of a fully electric vehicle or 15% of the basis of a hybrid vehicle.

    The bill also extends the credit for the purchase of a qualified fuel cell motor vehicle and the alternative fuel vehicle refueling property credit through 2031.

    The bill eliminates the temporary suspension of the exclusion for qualified bicycle commuting benefits and increases the maximum benefit from $20 per month to $81 per month.

    Retirement plans

    The bill prohibits further contributions to a Roth or traditional IRA for a tax year if the contributions would cause the total value of an individual's IRA and defined contribution retirement accounts as of the end of the prior tax year to exceed (or further exceed) $10 million. The limitation would apply to individuals with income over $400,000 (single filers and married filing separately), $425,000 (heads of household), or $450,000 (married taxpayers filing jointly).

    If an individual's combined traditional IRA, Roth IRA, and defined contribution retirement account balances generally exceed $10 million at the end of a tax year and the individual meets these same income thresholds, a minimum distribution would be required for the following year.

    These provisions would be effective for tax years beginning after Dec. 31, 2028.

    The bill prohibits all employee after-tax contributions in qualified plans and after-tax IRA contributions from being converted to a Roth IRA regardless of income level, effective for distributions, transfers, and contributions made after Dec. 31, 2021.

    The bill also eliminates Roth conversions for both IRAs and employer-sponsored plans for single taxpayers (or taxpayers married filing separately) with taxable income over $400,000, married taxpayers filing jointly with taxable income over $450,000, and heads of household with taxable income over $425,000 (all indexed for inflation). This provision applies to distributions, transfers, and contributions made in tax years beginning after Dec. 31, 2031.

    Housing credits

    The bill would increase the 9% housing credit and small state minimums under the low-income housing credit for the years 2022–2025 and makes other changes to the credit. It also creates a new neighborhood homes credit to encourage rehabilitation of deteriorated homes in distressed neighborhoods. The new credit would be administered by the states, and rehabilitated homes would have to be owner occupied in order for investors to receive the credit.

    IRS

    The bill would repeal the Sec. 6751(b) requirement for written supervisory approval of IRS penalties. The bill would also provide more funding for IRS enforcement, technology, and customer service.

    AICPA advocacy on the bill

    The AICPA has been advocating on important issues to the profession and tax policy and submitted several comment letters on the tax provisions in the Build Back Better legislation and other legislation under consideration. The AICPA submitted to Congress comments on the House Ways and Means Committee version of the bill and comments on the Rules Committee version, as well as comments on the minimum tax on book income and comments on proposed Subchapter K partnership taxation changes. In addition, the AICPA recently submitted to Congress its tax legislative compendium suggestions of noncontroversial technical and simplification proposals for consideration in the legislation.

  • 11/16/2021 1:50 PM | Anonymous member (Administrator)

    November 6, 2021

    By Alistair M. Nevius, J.D., and Ken Tysiac

    The employee retention credit will be terminated early and broker reporting of cryptoasset transfers will be required as a result of legislation (H.R. 3684) that passed the House of Representatives late Friday and is headed to President Joe Biden's desk to be signed into law.

    Editor’s note: President Joe Biden signed the bill into law on Nov. 15.

    Known as the Infrastructure Investment and Jobs Act, the legislation was approved in the House by a 228–206 vote after passing the Senate by a 69–30 vote in August.

    There are relatively few tax provisions in the infrastructure legislation, but more extensive changes may be coming in a fiscal year 2022 budget reconciliation bill that remains under consideration by Congress. Those would include extensions of recent changes to the child tax credit and the earned income tax credit; an expanded premium tax credit; relief from the $10,000 state and local tax deduction cap; corporate and international tax changes; and limits on the interest expense deduction.

    Employee retention credit

    The infrastructure legislation ends the employee retention credit (ERC) early, making wages paid after Sept. 30, 2021, ineligible for the credit (except for wages paid by an eligible recovery startup business).

    The ERC was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, and amended by the Consolidated Appropriations Act, 2021, P.L. 116-260. The American Rescue Plan Act, P.L. 117-2, enacted March 11, made the ERC available to eligible employers for wages paid during the third and fourth quarters of 2021; however, H.R. 3684 would repeal the fourth-quarter extension. The IRS issued guidance on claiming the credit in the third and fourth quarters of 2021 (Notice 2021-49), but noted in that guidance that it is watching this legislative development.

    Cryptoasset reporting

    Section 80603 of the legislation will impose new cryptoasset information reporting requirements on brokers. The Sec. 6045(c)(1) definition of "broker" is expanded to include anyone who for consideration effectuates "transfers of digital assets on behalf of another person." For these purposes, "digital asset" is defined as "any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology."


    The legislation is set to amend Sec. 6045A to require brokers to provide information returns reporting any transfers of digital assets to accounts that are not maintained by a broker.

    Disaster relief

    The legislation will modify the automatic extension of certain deadlines for taxpayers affected by federally declared disasters in Sec. 7508A, which was enacted in the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, P.L. 116-94. The definition of a disaster area in Sec. 7508A(d)(3) would be amended to mean "an area in which a major disaster for which the President provides financial assistance under section 408 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5174) occurs." Currently, that paragraph cross-refers to the definition in Sec. 165(i)(5)(B).

    Other tax provisions

    The legislation includes other tax provisions, including extension of various highway-related taxes, and extension and modification of certain superfund excise taxes. It also would allow private activity bonds for qualified broadband projects and carbon dioxide capture facilities.  

  • 10/20/2021 10:44 AM | Anonymous member (Administrator)

    In an effort to assist members that are planning on doing single audits the North Dakota CPA Society has added a resource page to the member center on single audits. This site includes upcoming webinars, AICPA resources, and other recordings that can help with the single auditing process. Check it out here

  • 10/13/2021 9:43 AM | Anonymous member (Administrator)

    October 12, 2021

    By Ken Tysiac

    The AICPA Auditing Standards Board sharpened the audit profession's focus on risk-based auditing Tuesday with the release of a new standard on audit risk assessment.

    Statement on Auditing Standards (SAS) No. 145Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, is designed in the simplest terms to help auditors determine which areas pose the greatest risks of material misstatement in an audit engagement and spend more of their time performing procedures in those areas.

    One of the driving forces for developing this SAS stemmed from deficiencies in the auditor's risk assessment procedures identified by practice monitoring programs in the United States and worldwide.

    The new standard is designed to enhance the requirements and guidance for identifying and assessing the risks of material misstatement, particularly the areas of understanding the entity's system of internal control and assessing control risk.

    The standard also:

    • Includes extensive guidance regarding the use of information technology and the consideration of general IT controls;
    • Revises the definition of significant risk;
    • Includes a new requirement to separately assess inherent risk and control risk;
    • Includes new guidance on maintaining professional skepticism; and
    • Includes a new "stand-back" requirement that is intended to drive an evaluation of the completeness of the identification of significant classes of transactions, account balances, and disclosures by the auditor.

    "The auditor's risk assessment drives almost every part of the audit," AICPA Chief Auditor Jennifer Burns, CPA, said in a news release. "As a result, the evaluation of risks sits at the core of audit quality. SAS No. 145 supports the performance of quality audits by providing additional clarity and guidance in identifying and evaluating risks of material misstatement, while considering the evolving nature of business."

    Resources available to assist members as they read and consider the new standard include an At a Glance summary and an upcoming webcast at no charge to AICPA members.

    SAS No. 145 takes effect for audits of financial statements for periods ending on or after Dec. 15, 2023.

  • 10/04/2021 10:42 PM | Anonymous member (Administrator)

    The U.S. has seen historic levels of federal funding in response to the COVID-19 pandemic. Various laws, including the CARES Act and the American Rescue Plan Act of 2021 have provided billions of dollars to American businesses, state and local governments and not-for-profits. While this funding has provided relief, especially for nonprofits, it may cause complications for many recipients.

    Does your client need a single audit?

    Much of the new pandemic funding is subject to single audit rules. Not all recipients of this funding will need a single audit. However, when a non-federal entity spends $750,000 or more of federal awards in a fiscal year, a single audit is required.

    Many recipients of pandemic funding have never had a single audit before and may not know what is required. Your existing clients may need a single audit for the first time or you may begin working with new clients who have never even had a financial statement audit before. Here are some tips for you to help your clients through the evolving single audit process.

    Ask clients what funding they have received.

    Talk to your clients about what type of funding they have received from the beginning of the pandemic in 2020 to the present. In some cases, you may consider helping them review their grant agreements to identify what is needed on their end, and then on your end as the auditor. Additionally, you could email clients with news related to the funding they’ve received or update your website with the most current information. The sooner your clients know about important and relevant information, the better prepared they are and the better audit you can perform — so it is a win-win.

    Encourage your clients to be proactive and ask questions about funding they have received. For example, one controller contacted her CPA as soon as she knew her organization would receive funding. She knew this funding had stipulations but didn’t know yet that a single audit would be required. Finding out early in the process was a huge benefit.  But many organizations may be unaware of all the requirements in the funding they have received.

    Communicate openly with your clients.

    This is a time when having open lines of communication with your clients is especially important. Learning whether your clients have reviewed and truly understand the guidelines for the type of funding they received is key, as well as that they have procedures in place to comply.

    Also, clients need to know — even if they are under the $750,000 threshold — that administrative and other requirements of federal funding apply even if a single audit is not needed. For example, the funds may only be spent for certain purposes. This is an important concept for clients to understand.

    Be aware of audit quality concerns.

    Some first-time single audit clients may be concerned with audit costs because they are required to undergo an additional audit. While cost is always one consideration, in this situation, it is also important to focus on the experience of the firm to make sure they are getting the highest-quality audit possible.

    Also, as auditors, you have a duty to the public to perform high-quality audits. Single audits have a significant public interest component as they involve taxpayer dollars and federal agencies rely on them as part of their administrative responsibilities for determining compliance with the requirements of federal awards. Because of this, audit quality should always be at the forefront of every auditor’s mind.

    Because of the complexity of single audits and the necessity of specialized knowledge of their rules and compliance requirements, you should consider whether you should accept a single audit engagement if you do not have experience performing them. Perhaps you could consider performing the financial statement audit, but other options for the single audit might be to refer your clients to someone else in your organization with the appropriate experience or to another firm that specializes in single audits. Alternatively, if you have some experience but not much, you could consider engaging another firm to perform a pre-issuance review or other types of consultative assistance to help ensure a high-quality audit. You can use the AICPA’s Peer Reviewer Search tool to find an auditor to refer your clients to, or to look for consultative assistance. Additionally, the AICPA’s Governmental Audit Quality Center (GAQC) has a listing of its member firms with contact information on its Find A Member page.

    Make time for continuing education and pay attention to developments.

    Firms should ensure auditors receive the required training for all specialization areas. For example, generally accepted government auditing standards (referred to as the Yellow Book) require auditors who perform single audits to maintain their competency through CPE hours and topics listed in the 2018 Yellow Book.

    If you take on a single audit, there is single audit learning available through the North Dakota CPA Society and the AICPA, among other sources, to help you gain the fundamental knowledge you need. Regarding the new COVID-19 funding, you may want to pay close attention to any training provided by federal agencies.

    Additionally, you can access the AICPA’s GAQC website, in particular its COVID-19 Resource page, which outlines many resources. You may also want to contact other firms on their single audit and pandemic-related resources. It’s useful to speak to your peers about what they’re doing and learn from their experiences. Keeping on top of things is important.

    Looking Ahead

    The pandemic has drastically changed work in many industries, and the accounting profession is no different. The next few years will see many more single audits being performed by more public accounting firms across the country.

    Keeping up with all these changes while continuously striving to be that trusted adviser for your clients is tough. In these times, in addition to all the other tips above, it is especially important to be mindful of staff well-being. Organizations need to provide support to staff so they can remain engaged and avoid burnout. Focusing on well-being can enable staff to do their jobs better, which allows them to better serve their clients and, ultimately, contributes to enhancing audit quality.

    These are challenging times in the single audit arena for sure. But the tips above should help provide a pathway to success. 

     

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