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Like the song: “It’s summertime and the living is easy…” I’m not singing, but I am finally feeling like its summer!  Without the pressure of tax deadlines, I actually enjoy coming to work.  The longer daylight hours make it easy for me to “putter” in my garden a bit before going to the office. During our weekly huddle we continue to share stories of recent social events and plans for vacations.  We are working together on a group project that is going really well, while also meeting with clients to go over tax plans and 2024 business projections.  And this is definately a hint:  We just love when our clients drop off files and goodies. don’t worry, he left our office with a hug and fresh picked blackberries and cukes…

It’s “conference season” for us tax professionals and I’ve been attending seminars and conferences and as the tax nerd that I am, I’m enjoying learning new things and sharing information with my peers.  Yesterday I attended the Chinese American Society of CPA’s (CAS-CPA) 2nd annual symposium as an attendee and speaker.  It was great to catch up with friends…

I’m not sure what the best part of the day was…

Obviously someone knows how to order, our dinner was like a Chinese Banquet, great food, great conversation.

As Craig says, we are taking our show on the road. This was our 2nd presentation on this critical topic Beneficial Ownership Reporting (BOI) under the Corporate Transparency Act (CTA) (we are scheduled for 2 more, maybe 3); we have such a good time as a panel and sharing our knowledge with our peers…

It wouldn’t be MY blog post without at least one sunrise photo from the beach….

I am hoping for some great weather this weekend so I can work on my garden, pick blackberries, herbs and cukes.  I hope you have some great plans too.

WEEKLY TAKE-AWAY

I set aside time blocks to reply to emails so I can focus on the situation and research the answer when necessary.   My spelling is terrible and sometimes the “tone” of my comment or reply is a bit “off. While I usually save these emails so I can double check them before sending, it’s been my practice to set them as “reply all”.  What if I hit send too soon; not good. During one of our zoom meetings this week Monica showed me her system.  She hits reply and then deletes the recipient, writes her email and saves it as a draft.  A bit latter she proofs it, adds the recipients, changes “good morning to “good afternoon” and hits send.  I love this suggestion and altered my system this week. Hopefully you are not still at work after 5 so “good morning does not get changed to “good evening”.

TAX ISSUES/TAX PLANNING

 The IRS Has a Larger  Budget for High Income Audits

High-Income Taxpayer IRS Audits must have been featured on the  news wire recently, as my blog last week focused on this and included a link to an article from AccountingToday.com.  It’s not new news for tax and accounting professionals, though.

As reported by FinanceYahoo.com:  “Anyone on the receiving end of an IRS audit will say there’s never a good time to open up the books for Uncle Sam’s revenue agents.  That’s never felt more true, say people who’ve witnessed the Internal Revenue Service in action recently.  IRS auditors have more questions, more staff and are acting more assertive, according to lawyers and accountants who advise very upscale clients on taxes.

In 2022’s Inflation Reduction Act, the IRS landed billions of dollars in funding over a decade to make sure rich households, partnerships and corporations were paying all of their owed taxes. The funding was intended to revive sagging audit rates at an agency that’s been slowly sapped of money and people over the past decade.

Since then, the agency has been publicizing its efforts to collect back taxes from delinquent millionaires and to rake in tax returns that millionaires failed to file.”

We tax professional are aware that the IRS has some “pet” projects as well and have seen that the IRS recently stepped up on their audits of questionable employee retention tax credits taken (ERTC).  Those as ERTC taken may have been a result of the ERTC Mills I have spoken about in the past.  The IRS did have a voluntary disclosure program with some reduced penalty and repayment benefits (IRSVDP); this program ended in March of 2024. We recommend that those of you who are concerned that your credit was not supportable or not legitimate may want to have a specialist review your situation (we have several law firms we are comfortable referring you to).  You can read more about the ERC rules and IRS -VDP in my February 16th and February 23rd bog posts.

IRS Warns of Clean Energy Tax Credit Scam

Last week the Internal Revenue Service issued IR-2024-182 warning cautioned taxpayers to beware of a new scam involving the purchase of clean energy tax credit.  One of our clients recently received an IRS Clean Energy Audit notice; when the tax credit claim is legitimate, their documentation supports the credit (as in the case with our client).  The rules and required supporting documentation are very specific.  Remember the clean energy tax credits were enacted to encourage homeowners and businesses to invest in solar power and clean energy vehicles; if it sounds too good to be true, it probably is.

“The Internal Revenue Service today warned taxpayers not to fall victim to a new emerging scam involving buying clean energy tax credits.

In this latest scam, the IRS is seeing instances where unscrupulous tax return preparers are misrepresenting the rules for claiming clean energy credits under the Inflation Reduction Act (IRA).

The transferability provisions of the IRA enable the purchase of eligible federal income tax credits from investments in clean energy to offset a buyer’s tax liability. The IRS has seen taxpayers file returns using unscrupulous return preparers who are claiming purchased clean energy credits that the taxpayer is ultimately unable to benefit from.

The scam is generally targeting individuals who file Form 1040. The preparers file returns that have individuals improperly claiming IRA credits that offset income tax from sources such as wages, Social Security and retirement account withdrawals.

Individuals purchasing tax credits under the IRA are subject to the passive activity rules for any purchased credits. Generally, this means they can only use purchased credits to offset income tax from a passive activity. Most taxpayers do not have passive income and a passive income tax liability. Most investment activities are not considered passive.

“This is another example where scammers are trying to use the complexity of the tax law to entice people into claiming credits they’re not entitled to,” said IRS Commissioner Danny Werfel. Taxpayers should be wary of promoters pushing dubious credits like this and others. The IRS is watching out for this scam, and we urge people to use a reputable tax professional before claiming complex credits like clean energy.”

The IRS noted individual taxpayers claiming inappropriate credits risk future compliance action by the IRS and are responsible for repaying the inflated credit, plus interest and possible penalties.

Individual taxpayers considering purchasing clean energy credits under the IRA should consult a trusted tax professional for advice on whether they are eligible to purchase credits and claim the tax benefits. They should also understand how the limitations under the passive activity rules, and other portions of the tax code, may apply to their particular tax situation.

More information about clean energy can be found on the Inflation Reduction Act of 2022 page on IRS.gov.”

ECONOMY

Inflation Hit its Lowest Level Since March 2021 Last Month

As per this recent article in Forbes.com:  “A key inflation measure fell to its lowest level in more than three years last month, but there’s still plenty of work remaining to get price increases down to the historically acceptable level.

Business Owners Believe Employees With AI skills Will Save Them Time

This recent article in SmallBizTrends.com reports:  “AI is making an undeniable impact on the business landscape. And one way that many small businesses are looking to grow in this area is by hiring employees with knowledge of this technology. According to the latest Small Business Index from MetLife and the U.S. Chamber of Commerce, 71 percent of small businesses believe that hiring workers with existing AI skills would save them time.

This insight makes sense, since AI has the capabilities to cut down on the time requirements for several important tasks, from drafting communications to creating media to share in marketing campaigns. But since it’s such an emerging technology, many small business owners don’t currently possess the skills to make the most of these tools. So hiring people who understand how to use it can allow businesses to reap these benefits without creating extensive training programs or learning how to use the technology themselves.”

Echoes of Dotcom Bubble Haunt AI-Driven US Stock Market

As reported in this recent article from Reuters.com:   “A U.S. stock rally supercharged by excitement over artificial intelligence is drawing comparisons with the dotcom bubble two decades ago, raising the question of whether prices have again been inflated by optimism over a revolutionary technology.

US Economy Adds 206,000 Jobs in June as Labour Market Shows Signs of Cooling

As reported in this recent article from BusinessMatters.Co.UK:  “The US economy added 206,000 jobs in June, signalling a slight cooling in the labour market, according to the latest data from the Bureau of Labor Statistics (BLS).

This figure aligns closely with economists’ expectations and represents a modest decline from the revised 218,000 jobs added in May.

June’s unemployment rate edged up to 4.1%, marking the first time in over two years that it has surpassed 4%. This 0.1% increase from May indicates a gradual easing in labour market conditions.

Earlier reports this week had already suggested a cooling trend. Payroll processor ADP reported that private sector employment grew by 150,000 jobs in June, down from 157,000 in May. Additionally, the executive outplacement firm Challenger, Gray & Christmas noted 48,786 job cuts in June, a reduction from May’s 63,816 but still a near 20% increase compared to June of the previous year.

The monthly jobs report, a key indicator for both Wall Street and policymakers in Washington, comes as the Biden administration faces challenges with public perception of its economic management. The labour market’s resilience has been a crucial counterpoint amid broader economic concerns.”

GENERAL RESOURCES

• 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 prior blog posts, videos and prior weekly newsletters
• Entrepreneur put together a listing of free tech resources for remote work
• The Consumer Financial Protection Bureau has warnings about COVID-related scams
• 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
• 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 here for you.

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

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Contact us if you have tax concerns, tax minimization questions or want to discuss the next steps for your business success and financial goals.