Weekly Digest – May 19, 2022
It’s graduation season once again, time for celebrating our grad’s, visiting with family and friends and once again enjoying these beautiful spring days. I am happy to take my walks on the beach and share my “photo of the week” …
I am hoping you are enjoying the weather and have some great plans to safely visit and celebrate!
We are seeing stock market fluctuations daily, those caused by negative news regarding the company, poor financial results or performance for the quarter and now current events which are also further effecting the supply chain. I am again reminded that “Pigs Get Slaughtered” and “You Can Never Time the Market”. Just this week saw Bitcoin continue its tumble, negating any gains it made over the weekend. The world’s most famous cryptocurrency has continued to lose value following the collapse of so-called stablecoin TerraUSD.
IRS Destroys 30 Million Paper Returns
The tax community was angered on Friday when an audit revealed that the IRS destroyed millions of paper-filed information returns. Critics worry the move will trigger more error notices that the agency won’t be able to verify, although the IRS has reported that taxpayers wont be affected.
IRS audit Rates Plummet, Especially for Wealthy Taxpayers
he Internal Revenue Service has been auditing fewer taxpayers since 2010, according to a new report, but audit rates have been plunging the most for higher-income taxpayers.
A report released Tuesday by the Government Accountability Office found that in recent years, the IRS audited taxpayers with incomes below $25,000 and those with incomes of $500,000 or more at higher-than-average rates. However, audit rates have dropped for all income levels — with audit rates falling the most for taxpayers with incomes of $200,000 or more.
IRS officials blamed the decline in audit rates on staffing decreases and the fact that it takes more staff time and expertise to handle complex higher-income audits.
Resolve Tax Debt With the Help of an Expert
We are currently working on several cases for both businesses and individuals who have fell behind on paying their tax liabilities either in full or timely.
- Start with getting all delinquent returns ready to file; being in tax compliance is key to any negotiation
- Offer in Compromise, voluntary disclosure or requests for limited lookback for tax liability reduction can be obtained under certain circumstances.
- Sometimes just getting penalty reduction or elimination may be the path to bringing your tax bill under control
- Short-term installment agreements have been extended 120 to 180 days, we see that the IRS is trying to work more with those who owe
The IRS May be Stepping Up Reviews of Pandemic Tax Breaks
The GAO Report to Congressional Committees, released Tuesday, examined the impact of the various pandemic relief laws passed by Congress since 2020, including the CARES Act and the Families First Coronavirus Response Act. Provisions in those laws established paid sick and family leave credits, the Employee Retention Credit and payroll tax deferrals. The IRS implemented those complex provisions despite facing delays caused by facility closures and other challenges. As we have seen the IRS continued to revise the relevant employment tax returns and guidance. With so much confusion and uncertainty over implementation “A comprehensive and cohesive compliance plan would help guide IRS efforts to ensure that it adequately identifies and addresses compliance risks,” said the report.
States’ Use of American Rescue Plan Money
President Biden urged state and local leaders to use American Rescue Plan funds to invest in public safety immediately. “Spend this money now that you have. Use these funds we’ve made available to you to prioritize public safety. Do it quickly before the summer when crime rates typically surge,” Biden said Friday. “Taking action today is going to save lives tomorrow, so use the money. Hire the police officers. Build up your emergency response systems. Invest in proven solutions.”
The pandemic relief fund passed by Democrats provides $350 billion directly to cities, counties and states.
- In the Tri-State Area, Newark is investing $19 million in supportive programs and Trenton will use $10 million to modernize emergency radio communications and 911 systems.
- Bridgeport, Connecticut, plans to use some of the money on re-entry employment programs for formerly incarcerated individuals.
- But in some cases cash left over from the nearly $200 billion federal pandemic aid package doled out last year has trickled down to some niche projects that are raising eyebrows.
Gas prices of $5/gallon could become the norm
The price of gas hit a new record high on Monday, reaching $4.48/gallon. Prices have increased 40 cents in a month, and are now 27% higher than they were the day before Russia invaded Ukraine.
Considering Purchasing a New Home; Be Aware of Interest Rate Fluctuations
The Federal Reserve will attempt to engineer a cooling of the economy to achieve lower prices without hitting a recession by steadily hiking interest rates if necessary. The move is reminiscent of the 1990s when the Feds last successfully tempered the economy. I spoke with one of my bankers just yesterday who summarized the almost daily changes in mortgage rates. It seems that although spring is the season for buying and selling homes it will be a bit more stressful as interest rates fluctuate and buyers pre-qualify for mortgages with various fixed and variable options.
Stock Market Could Fall Further in the Event of Recession
Goldman Sachs lowered its year-end S&P 500 price target for the third time this year, citing slower economic growth and higher-than-expected interest rates. Experts say the stock market could fall another 11% in a recession.
JetBlue Appealed to Spirit Shareholders to Accept Their Takeover Bid
On Monday, JetBlue launched a hostile takeover of Spirit Airlines, offering $30/share in an all-cash offer. Spirit Airlines maintains they will pursue a $2.9 billion cash-and-stock offer to merge with fellow discount airline Frontier.
Paying By Installment Gains Traction
Many Americans, especially among young consumers are taking advantage of “buy now, pay later” offerings available almost everywhere you shop, but Harvard researcher Marshall Lux warns of the pitfalls of paying for household goods on installment.
Fuel Cost Surge Increases Prices Across All Industries
Skyrocketing natural gas prices lead to higher manufacturing and transportation costs across many US industries, and the situation is expected to get worse as the US exports more gas to Europe to make up for deficits imposed by Russian sanctions.
- IRS resources for stimulus payments:
- Use the Get My Payment tool to check on EIP payment status
- Eligibility and general information about Economic Impact Payments
- A list of frequently asked questions for stimulus payments
- IRS information about the Advance Child Tax Credit Payments
- Portal to update information
- A list of frequently asked questions on the advance Child Tax Credit Payments
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- Our Covid-19 Resource Center with relevant blog posts, videos and prior weekly newsletters
- Payroll, HR and benefits company Gusto has put together An Employer’s Guide to Navigating the Coronavirus
- Accounting Today has a special page for articles on COVID-19
- Intuit QuickBooks has a dedicated page to help small businesses
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- Fast Company has a listing of the best productivity apps for 2020
- The New York Times has an online newsletter on K-12 and higher education
- The Wall Street Journal has a collection of articles on education
- The Louvre has digitized 482,000 artworks from its collection
- PC Magazine explains how to carry your vaccination card on your phone
- How to create a strong password
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!
If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started.