Episodes

  • Say "I do" to engagement letters

    Say "I do" to engagement letters
    Nov 15 2024
    This podcast discussion with Michael Reese, Risk Control Consulting Director (Accountants) — CNA Insurance, centers around the importance of engagement letters for tax practitioners. Michael emphasizes the role engagement letters play in setting expectations, providing clarity and mitigating risks during engagements. He also reviews the necessity of having clear, documented agreements to minimize disputes and liability issues. What you’ll learn from this episode: The importance of engagement lettersCommon risks in tax engagementsThe role of client education and communication in managing riskHow to handle quality control under deadline pressure AICPA resources Annual Tax Compliance Kit — Engagement letters, organizers, checklists and practice guides help you manage your tax season workflow. Say "I do" to engagement letters — Uncover the importance of establishing parameters of client relations and detail the scope of services to be provided. Other resources Frequently Asked Engagement Letter Questions — The Accountants Risk Control team at CNA, the endorsed underwriter of the AICPA Professional Liability Insurance Program, summarizes answers to frequently asked questions. Transcript April Walker: On today's podcast, listen to hear how you can manage your risk with engagement letters. Hello, everyone, and welcome to the AICPA’s Tax Section Odyssey Podcast, where we offer thought leadership on all things tax facing the profession. I'm April Walker, a Lead Manager from the Tax Section. And I'm here today with Michael Reese. Michael is a risk control director with CNA. Michael Reese: Good morning, April. April Walker: Thanks for joining me today. Here at the AICPA, we work really closely with Michael and his team on lots of things and lots of projects. But I'm especially grateful for the partnership that we have with his team for Tax engagement letter templates. Speaking of engagement letters, they are now currently available to Tax Section members. Of course, I will put a link in the show notes so that you're able to access those. April Walker: Today, we're going to talk about some common questions that we get, and I'm sure that you also get Michael on Tax Engagement Letters and just generally how to manage your risk as a tax practitioner. Welcome, Michael, and thank you for joining me. Michael Reese: Thank you. Hopefully, what I can provide will be of use to your listeners. These are questions we often get as well. I do want to confirm that, but it's a very important topic. Glad we're talking about it here today. April Walker: I'm positive that they will be helpful. Sometimes people get answers to questions that they don't really want to hear, but they're important for them to hear. Michael Reese: Exactly. April Walker: Just to start off, I'm wondering why you think it's crucial for tax practitioners to have an engagement letter in place not only for every engagement but before they actually start the work. Michael Reese: April, I think there's two primary answers to this question. First, setting expectations and then setting guardrails in case something goes wrong. From a practice standpoint, it's very important for both the practitioner and the client to know what's going to happen and what work is being done. Your engagement letter hopefully is going to clearly state, "This is what you've asked us to do. This is what we're doing. This is what we collectively need to do to get this completed. This is the info we need and when we need it," etc. If a practitioner doesn't have this, then they run the risk of a client coming back later and either adding services, sometimes without the added fee, or complaining that a service has not been performed. There needs to be that clarity upfront. For professional liability reasons, having that clarity helps limit your duty of care to the agreed-upon scope. This way, in the event of a dispute, the practitioner has a strong argument for avoiding liability related to items for which they had no responsibility. That leads me to the second answer involving guardrails. Ideally, the engagement letter is going to set out the agreed-upon rules if something goes wrong. Dispute resolution is not really something CPAs focus on until they are in the middle of one, but we routinely talk to tax practitioners who are in the middle of an engagement with a problem and they don't have the signed letter to fall back on. If that letter is in place before the work starts, you now have options if something goes wrong, whereas without the letter, you don't. Now, I'm not ignoring the fact that getting a signed letter back can be a challenge, especially for 1040 clients. But I know there are practitioners out there that have a strict process. No letter, no work. Remember, the onus is on the client because they do need your help. Otherwise, they aren't showing up to your office. If they want the service, then they need to work with you. April, I would say put it ...
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    31 mins
  • Analysis, clarity and a quiz: A preview of the National Tax Conference

    Analysis, clarity and a quiz: A preview of the National Tax Conference
    Oct 17 2024
    The AICPA & CIMA National Tax Conference will take place on November 11 and 12 in Washington, DC. Join Brandon Lagarde, Tax Partner at EisnerAmper, and April Walker, Lead Manager on AICPA & CIMA’s Tax Practice & Ethics team, to learn more about what to expect from the upcoming conference. Conference sessions will feature topics such as: The impact of election results on tax legislation: Investigate the potential legislative outlook based on the recent election results and how it might affect tax policies.Tax Cuts and Jobs Act (TCJA) expiring provisions: Provisions of the TCJA are scheduled to sunset at the end of 2025; learn more about how to prepare and explore planning opportunities.Practical tax strategies: Sessions at the conference will cover various tax tactics, including gifting and income tax planning strategies, for clients who are not currently subject to estate tax.Ethical dilemmas in tax practice: A session will discuss common ethical dilemmas faced by tax practitioners and provide insights on how to handle them.The future of tax practice: Investigate the importance of transforming tax practices with year-round advisory services and how to implement these changes in a tax firm. AICPA resources AICPA & CIMA National Tax Conference — For tax practitioners, there’s no better place to get immersed in current events than the AICPA & CIMA National Tax Conference; in-person and virtual options are available. Reimagining your tax practice — Join us for free upcoming live roundtable sessions to tackle today’s top practice management issues with insights and tips from pioneers in the tax community. TCJA expiring provisions — This detailed, downloadable resource offers an in-depth look at the expiring provisions under the TCJA and other recent legislation. It categorizes changes across individual tax, estate and gift tax and business tax provisions, organized by year of expiration. Transcript Neil Amato: Welcome back to the Journal of Accountancy podcast. This is Neil Amato with the JofA. I'm excited to be joined for today's episode by two top flight tax experts in this special collaboration episode with the Tax Section Odyssey podcast with our guests, we're discussing the AICPA & CIMA National Tax Conference which begins November 11th in Washington. Those guests, April Walker, lead manager with the tax practice and ethics team and host of the aforementioned Tax Section Odyssey. Also Brandon Lagarde, tax partner at EisnerAmper and Chair of the Tax Conference Planning Committee. We have a lot to get to. We're excited to have you on. First, a quick welcome, April and Brandon, thanks for being repeat guests on the JofA podcasts. April Walker: Thanks so much for having me Neil. I'm excited to be here. Brandon Lagarde: It's very exciting to be here Neil. Thank you for having me. Neil Amato: Yeah, we're glad to have you both on as I said, the Tax Conference is November 11th, less than a week after election day. Brandon for you first, tell me what you're looking forward to about this event which is at the Omni Shoreham Hotel in Washington? Brandon Lagarde: Yeah. I'm looking forward to just go into DC. It's going to be a week after the election, hoping that we know who the president will be and what the makeup of Congress will be at that time. Again, it's going to be a great atmosphere, a great opportunity to go to the nation's capital, to hear from some of the best tax minds out there. Neil Amato: April, I know you're a repeat attendee at that conference. You're also running sessions, recording podcasts, taking part in panels. What do you look forward to from the event? April Walker: It's always a busy conference for me and I love being in DC and it's very exciting for me to be there, like Brandon said right after the election. Speaking of that, really what I'm looking forward to most is hearing more about what the potential legislation outlook could look like based on those results, based on those election results. I think we'll hear more about we've talked a lot about the Tax Cuts and Jobs Act, the TCJA, that it potential expiration, what that means. We'll really be able to dig into that at the conference. I'm excited about that. Neil Amato: It's almost like we planned this. My next thing was going to be the TCJA. Some of the provisions of that Act, the Tax Cuts and Jobs Act, are scheduled to sunset at the end of 2025. Clearly, there is a lot of uncertainty about the provisions right now as we record and the first part of October. But I imagine that topic is going to be a popular one at the conference. Brandon, What do you think? Brandon Lagarde: Yes, absolutely and that's why, again, being there at the heart of it all after the election and getting to hear from presenters and speakers about just what the future holds for tax professionals, end of 2024 is going to be really important for us. 2025 is going to be incredibly important for tax practitioners to understand and remind ...
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    16 mins
  • Demystifying IRS guidance on digital assets

    Demystifying IRS guidance on digital assets
    Oct 3 2024
    This podcast conversation with digital asset specialist Kirk Phillips, CPA, CMA, CFE & CPB, Managing Director — Global Crypto Advisors, focuses on demystifying IRS Rev. Proc. 2024-28, which provides guidance on transitioning from universal basis tracking for holders of digital assets and a safe harbor deadline of Jan. 1, 2025, to determine how to allocate any unused basis in digital assets. Phillips shares recommendations for tax practitioners around communicating with clients and the need for careful planning and documentation to meet the safe harbor provisions. What you’ll learn from this episode: Understand more about Rev. Proc. 2024-28 and what it means for holders of digital assets. Hear about the safe harbor provisions provided in the revenue procedure.Learn the importance of the Jan. 1, 2025, deadline for making a reasonable allocation of unused basis.Find out about the challenges of documenting and reconciling cost basis related to digital assets.How to communicate and prepare individuals and businesses for the upcoming changes related to reporting of digital asset transactions. AICPA resources Digital assets and virtual currency tax guidance and resources — Sharpen your tax knowledge on digital asset and understand the tax complexities and strategies involved with virtual currency and cryptocurrency. AICPA advocacy resources AICPA makes recommendations for digital asset transactions regulations, March 7, 2024 Other resources Rev. Proc. 2024-28 — Guidance to allocate basis in digital assets to wallets or accounts as of January 1, 2025 Final Regulations 2024-07-09 — Gross proceeds and basis reporting by brokers and determination of amount realized and basis for digital asset transactions Transcript April Walker: Hello everyone, and welcome to the AICPA's Tax Section Odyssey podcast, where we offer thought leadership on all things tax facing the profession. I'm April Walker, a lead manager from the tax section, and I'm here today with Kirk Phillips. Kirk is a CPA and it has a lot of other designations behind his name. But he's also more importantly for today's discussion, a specialist in the world of digital assets and crypto. [He's] been in it for a long time. Our goal today, Kirk, is to demystify some of this latest guidance that we've gotten from the IRS. We're definitely not going to be able to demystify all of it in the time we're just going to spend today. But there are some important deadline related items, so we want to make sure we're covering those. Kirk is on the AICPA's Digital Asset Tax Task Force. And for the past few months, we've actually been meeting weekly, which is unusual for a task force. Because really we've been discussing one thing, Revenue Procedure 2024-28. What it actually said, what it meant. Just really delving into that, the details of all of that. That's going to be the topic of what we're going to talk about today. What that means for tax practitioners and holders of digital assets. Especially like I said, there are deadlines around this safe harbor. Kirk, to start off. Welcome. Let's talk about I mentioned the deadline and let's talk about the significance of that January 1, 2025 deadline for making that reasonable allocation of unused basis. That's what the Rev Proc says. Talk to us a little bit about what that means, what you're thinking about, what practitioners should be doing now to prepare for that date. Kirk Phillips: Sure. Thank you so much April for having me on the podcast. I love talking digital assets and crypto, whether it's tax-related or otherwise. I'm excited to help demystify this Rev Proc. One of the key things here is that and why this is so important is we both have a short timeline. Because we're already nearing the last quarter of the year 2024. It's also very challenging - it's a onetime exercise that we have to go through and on a short timeline. That's why this is critical and that's why we're here today to talk about that. One of the key things here is that prior to this Rev Proc that the taxpayers would do their accounting for the digital asset transactions, which would be their trading or their sales, and it could be other related transactions as well. But basically they would do all the accounting on a universal basis. The question is, what does universal basis mean? Universal basis means that whether you have one wallet or one exchange account or you've got 37 wallets and six exchange accounts or even something more crazy than that, you would for the most part, more than 99% of the time people would use specialized tax software because that's really the only way to get the job done. You would connect all those things and or import your transactions into the software and it would essentially co-mingle all those transactions. I like to say as if it was one wallet or as if it was a single exchange. But it's not simply for the tracking purposes, all the transactions are simply dumped together and you perform one ...
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    28 mins
  • Harnessing Technology: The Future of Tax Advisory

    Harnessing Technology: The Future of Tax Advisory
    Sep 19 2024
    In this episode David Snider, Founder and CEO — Harness Wealth, discusses the transformative role of technology in tax practices, exploring how tools like practice management software can enhance client relationships and streamline operations. David shares insights on what he sees as three phases of technology adoption in the tax industry and offers practical advice for firms looking to advance their tech capabilities. Tune in to learn how embracing technology can lead to a more efficient, client-focused tax practice. What you’ll learn from this episode: What David thinks are the three phases of a firm’s technology journey.How leveraging technology can streamline tax practice management.How practice management software can enhance efficiency and client experience.Why regularly communicating with clients can strengthen relationships.The importance of allocating time and resources to implement new technologies. AICPA resources Adding AI into your tax practice — Artificial intelligence (AI) is certainly a hot topic of late. Listen to hear Jason Staats and Ashley Francis talk about the latest information in this area and where you should move forward and where you should proceed cautiously in this Reimagining Your Tax Practice archived session. Transitioning to a tax-focused CPA financial planner — Tax return compliance is continuing to become more of a commodity. Your clients see you as their trusted adviser and ask about a range of topics that affect their financial well-being. In this Reimagining Your Tax Practice archived session, learn more about practitioners who offer financial planning services and how that has impacted their practices. Transforming Your Business Model…Technology — The Private Companies Practice Section (PCPS) is developing tools around technology designed to help firms not only identify elements of their current business model that may be holding them back but also offering solutions to help them adapt in this changing environment. Upcoming event Tech stack wars in 2024 — With the amount of technology products out in the market, how do they perform in reality? Join our next tech stack wars challenge on Oct. 16, 2024, to hear about the latest in technology for tax practices. Other resources Harness Wealth — Learn more about how Harness Wealth strives to provide the next generation of builders confidence in the path to their best financial future. Transcript April Walker: On today's podcast, listen to hear more about leaning into technology for your tax practice. Hi everyone and welcome to the AICPA Tax Section Odyssey podcast, where we offer thought leadership on all things tax facing the profession. I'm April Walker, a lead manager from the Tax Section and I'm here today with a repeat guest. His name is David Snider. He's the Founder and CEO of Harness Tax. Welcome back, David. David Snider: It's a pleasure to be here. Thank you April. April Walker: David, I'd love for you to start. Tell us a little bit about yourself and tell us a little bit about Harness Tax and where you see yourself in this world of tax. David Snider: Thank you for having me. Yes, so Harness has a platform for routine tax advisors that are looking to make their relationship with their clients more seamless and insightful. What that really means is a practice management solution that's tied into a much broader set of offerings. That includes business development to help advisors with leads, a concierge team to help with support, as well as a broader network of resources to help guide advisors and give them the resources of bigger firms. April Walker: Wonderful. I feel since we talked in Spring of 2022, if it's possible, I feel like the importance of technology is even more important. Maybe that's just me being dramatic, but let's start off just by pretty broad question like, how do you see technology transforming the way tax advisors interact with their clients? David Snider: Absolutely. I think about it being in the second of three inevitable phases. I think the first was the first stage, which is very typical across industries. My background was spending, now 12 years, building tech enabled services, software solutions, first at Compass, a real estate advisory firm, and now at Harness. Before that in the middle, spent a lot of time at Bain Capital looking at different disruptive technologies. And so that first phase that we went through, very similar to a lot of industries, adoption of email, adoption of technologies that clients can actually submit core documents digitally and not just in paper. The ability with the early software to actually complete and file electronically. That really is table stakes. If you look at the data, it's 99% of advisors have an Efin, etc. The second phase that we're really still in the early to mid innings of is the software collaboration phase. What that looks like is work-flow automation, ways of interacting with clients to create leverage for ...
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    24 mins
  • Global Tax Trends: What CPAs Need to Know Now

    Global Tax Trends: What CPAs Need to Know Now
    Sep 5 2024
    This Tax Section Odyssey podcast episode takes a deeper dive into the Organisation for Economic Co-operation and Development’s (OECD) initiative on Base Erosion Profit Sharing (BEPS) 2.0 which sets to reform the internation tax system with Pillar 1 and 2 tax regimes. In addition to the complexity of such international regulations, the political landscape for U.S. implementation is uncertain, and potential action is needed from Congress. Cory Perry, Principal, National Tax — Grant Thorton Advisors, and Vice Chair of the AICPA’s International Technical Resource Panel (TRP), highlights that while many U.S. companies may not face larger tax bills if these regimes are adopted in the U.S., the administrative and compliance challenges are significant. The AICPA has submitted comment letters to the OECD, Treasury, and the IRS, focusing on simplification and clarification of rules. AICPA resources OECD BEPS 2.0 - Pillar One and Pillar Two — The OECD BEPS 2.0 sets out to provide a tax reform framework allowing for more transparency in the global tax environment. What you need to know about BEPS 2.0: Pillar One and Pillar Two | Tax Section Odyssey — The OECD BEPS 2.0 project is an international effort to reform the international tax system that addresses transfer pricing, profit allocation and tax avoidance. Advocacy Comments to Treasury on tax issues of OECD Pillar Two, Feb. 14, 2024 Comments to Treasury on Amount B of OECD Pillar One, Dec. 12, 2023 Other resources OECD BEPS — Inclusive Framework on Base Erosion and Profit Sharing Transcript April Walker: Hello everyone and welcome to the AICPA's Tax Section Odyssey podcast, where we offer thought leadership on all things tax facing the profession. I'm April Walker, a lead manager from the tax section and I'm here today with my colleagues Reema Patel and Lauren Pfingstag. They are colleagues here with me at the AICPA. They are international experts and legislative experts. We'll get into more of that as we're discussing. I'm also delighted to have with me Cory Perry. Cory is a principal with Grant Thornton Advisors and their national tax office. He's also, and more importantly for our discussion today but probably not more importantly for his day-to-day, the Vice Chair of the AICPA's International Tax Resource panel and Chair of the OECD taskforce. That's what we're going to be talking about today. If you are a follower and listener of this podcast, you might recall a few episodes ago we did a higher-level background on OECD's tax regimes — Pillar 1 and Pillar 2 — just laying the groundwork. Today we're going to talk more about why we think you need to be familiar with these concepts. Even though for today they may not be relevant for any of your current clients. We're also going to delve into the political landscape and where we are today and what that could mean for the US tax system related to international tax legislation. Reema, I'm going to let you take it away for the next little bit. Reema Patel: Thanks, April, Cory, welcome. I know a lot of us have been hearing about the OECD Pillar 1 and Pillar 2 for awhile now. Many countries have also implemented it this year and some are implementing it next year. I guess the most basic question we can start with is, who should care and pay attention to this? Cory Perry: Absolutely. It's a wide impact in tax, but it only impacts the largest of the large companies. I would say it has a high threshold, 750 million of consolidated revenue and two of the four preceding years and you have to be taxed, want more than one jurisdiction. We are talking about very large companies but these days, even middle market companies are easily starting to bump up against that threshold. We're not just talking about the Fortune 100. We're talking about middle market and above companies that should care and think about these rules. Obviously accountants that serve those types of companies, those larger companies. I think many of those companies themselves not even be fully aware that they're subject to these rules or may not have fully thought through how they're going to comply. The other thing I would add, there is a bit of a misconception out there that this is a corporate multinational problem. Although that is primarily where it is, it also impacts pass-throughs, partnerships and S corps that are parents within these groups can be equally subject to these rules. Rules don't always necessarily apply at that level, but they are applied to the group as a whole. I know there's a number of practitioners out there that have clients that have grown over time and might have reached this level. It's by no means going to be the majority, certainly going to be a large minority, but I suspect many will have clients out there that might be impacted or if you're in-house at your company might be impacted. Reema Patel: Like you said, it is for large corporations currently with consolidated ...
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    25 mins
  • Chevron doctrine overturned: Implications for tax professionals

    Chevron doctrine overturned: Implications for tax professionals
    Aug 22 2024

    In this joint episode, Neil Amato, host of the Journal of Accountancy podcast and Melanie Lauridsen, VP of AICPA Tax Policy and Advocacy discuss two recent Supreme Court decisions.

    The Supreme Court ruling in Loper Bright Enterprises v. Raimondo overturned a 40-year-old precedent of deference referred to as the Chevron doctrine, affecting future rulemaking by eliminating the need for judges to defer to agency interpretations of ambiguous statutes. In Corner Post, Inc. v. Board of Governors of the Federal Reserve System, the Supreme Court ruled to alter the statute of limitations for challenging regulations, starting the clock when a plaintiff is injured rather than when the regulation is enforced.

    These decisions introduce significant uncertainty for the accounting profession, particularly regarding IRS regulations and long-standing rules and emphasize the need for CPAs to stay informed and adaptable as the implications of these rulings unfold.

    AICPA Resources

    Melancon: Supreme Court decisions are ‘big deal’ for tax pros, The Tax Adviser, Aug. 1, 2024

    Supreme Court overrules 40-year-old Chevron doctrine, The Tax Adviser, June 28, 2024

    Supreme Court decision on Chevron doctrine will affect tax pros, Journal of Accountancy, June 24, 2024

    For a full transcript of the episode, see Tax Section Odyssey on the AICPA & CIMA website.

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    15 mins
  • PTET refund roadmap — Expert insights with Dave Kirk

    PTET refund roadmap — Expert insights with Dave Kirk
    Aug 1 2024
    On this episode of the Tax Section Odyssey podcast episode, Dave Kirk, National Tax Partner — EY, and Chair of the AICPA’s Pass-through Entity Tax Task Force, discusses the complexities surrounding state tax refunds related to the pass-through entity tax (PTET) and delves into the challenges posed by the lack of IRS guidance, the application of the tax benefit rule and varying state regulations. Dave emphasizes the importance of consistency in handling these refunds and advises practitioners to involve taxpayers in decision-making due to the inherent uncertainties and risks. AICPA resources FAQ on the Federal Taxation of State Income Tax Refunds for PTET Payments — FAQ guidance on the federal taxation of state income tax refunds for PTET payments. AICPA list of taxpayer and practitioner considerations for whether to elect into a state pass-through entity (PTE) tax — Various issues should be considered when deciding whether a taxpayer can, and should, elect into a state PTE tax. Pass-through Entity (PTE) Taxes States’ Legislation and Tax Authorities’ Information and Guidance — A state-by-state PTE matrix tracking and linking to legislative updates, guidance, as well as other relevant information. State and Local Tax (SALT) Roadmap and Resource Center — Browse the reference library for the latest guidance and tools to address your state and local tax needs including tax rates, due dates, nexus, PTE tax and more. Transcript April Walker: On today's podcast, listen to learn more about how to handle refunds related to the pass-through entity tax. Hello everyone and welcome to the AICPA's Tax Section Odyssey podcast, where we offer thought leadership on all things tax facing the profession. I'm April Walker, a Lead Manager from the Tax Section and I'm here today with a repeat guest, Dave Kirk. Dave's with National Tax at EY. He is the knower of a lot of things, but specifically today we're going to talk about PTET. Dave, let's start off with, I think when we chatted before, we talked about pass-through entity tax fun with that, we're delving into a very specific issue related to it. Let's first talk about the challenges. There are so many challenges around this, the lack of guidance around PTET, but today we're going to talk about refunds and there isn't guidance really. How has that impacted our practitioners? Dave Kirk: First of all, thanks for having me again. Being the leader of the PTET Task Force for the AICPA and having to deal with this for E&Y nationally, I've probably spent 500 hours of my life on this that I'm not getting back. It's just that each state is different. You could probably group states together. It usually requires a case-by-case analysis on how the deduction was taken, when the deduction was taken, and how much money the taxpayer is getting back. The [IRS] Notice 2020-75 only talked about taking the deduction. There was not one word in that notice talking about refunds. You're right, April, there is no formal guidance from the IRS on PTET refunds. But this is also not the first time in US history where a state government has given money back to a taxpayer. Our federal tax system, as we currently know, it has only been around for 110 years or so. We do have guidance scattered throughout that last century of payments of taxes, deductions for taxes and recoveries. You might call it the common law of refunds that we would use in the absence of anything specific coming out of the government on how to deal with this. Walker: Tax benefit rule, right? It's been around for a little bit. Kirk: Yeah. There's two aspects of the tax benefit rule. There's the exclusionary aspect of it, and that's been codified about 40 years ago into Sec. 111 of the code. Then there's also the inclusionary aspect which kind of says, hey, you got a benefit for a payment back in a prior year and you have got that payment returned. That should be something, that should be Sec. 61, gross income. But where the complexity arises is, first of all, you can tell whether something is taxable or not taxable based on whether you got a benefit for it in a prior year. Okay, great. That's relatively straightforward, and I say relative with some emphasis there. But then you'd go down a very slippery slope really quick once you do determine that a PTET refund is taxable, because then you have to ask yourself, what characteristics does that taxable refund have? That is a morass that I don't think that the government ever really envisioned. I'm not envisioning any sort of guidance coming out of the government within the next 12 months on this. Walker: The last count, we have 50 states. Like you said, you can group them maybe, but each state was allowed with the IRS notice to develop their own regime which causes all kinds of fun. Which again, we won't get into specifically today. But like you said, it seems like we could the tax benefit rule and thoughts around that, or how we are going to try ...
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    26 mins
  • Unraveling the IRS's ERC processing path

    Unraveling the IRS's ERC processing path
    Jul 19 2024
    If you're advising businesses on their pending ERC claims, this is a must-listen for practical guidance on navigating the process and setting the right expectations. Tune in to hear Chris Wittich and Dan Chodan, two experts immersed in Employee Retention Credit (ERC) matters for four years, discuss the IRS's upcoming actions for sorting and processing pending ERC claims by risk level. High-risk claims are likely to be denied, medium-risk claims require more detailed review, and low-risk claims will be processed starting soon. The IRS moratorium on processing claims filed after September 14, 2023, is still in place. Businesses with pending ERC claims are facing critical choices about amending income tax returns due to statute limitations. The speakers advise open communication with clients about the limited options available and the importance of understanding the ethical responsibilities as tax preparers. Based on the current backlog at the IRS for ERC claims, it is important to manage client’s expectations around the processing time as the impact of potential changes in legislation. Related resources Previous Tax Section Odyssey episodes discussing the Employee Retention Credit (ERC): · Sifting through ERC questions | Tax Section Odyssey · ERC suspended: What happens next | Tax Section Odyssey · Employee retention credit and professional responsibilities | Tax Section Odyssey ERC guidance and resources — The rules to be eligible to take this refundable payroll tax credit are complex. This AICPA resource library will help you understand both the retroactive 2020 credit and the 2021 credit. Employee Retention Credit (ERC): Fact or Fiction? — Use this guide to educate yourself and others on common misconceptions surrounding the ERC. Employee Retention Credit Decision Tree — Download the ERC decision tree to help you with various decision points when working with clients to protect yourself/your firm from significant risk. IRS resources · IR-2024-169 — IRS news release on June 20, 2024, discussing the next stage of ERC work · IR-2023-169 — IRS news release on Sept. 14, 2023, ordering the immediate stop to new ERC claim processing. · IRS ERC resource center — IRS hub for ERC information, including links to guidance, FAQs and the latest news. Transcript April Walker: On today's podcast, we're going to talk about the IRS's next steps for ERC and what that means for you. Hello everyone, and welcome to the AICPA's Tax Section, Odyssey podcast, where we offer thought leadership on all things tax facing the profession. I'm April Walker, a lead manager from the Tax Section, and I'm here today with two repeat guests. I'm happy to have with me, Chris Wittich. He is also known as @ravenoustiger. He is a partner at Boyum Barenscheer in Minnesota. I'm also delighted to have Dan Chodan. Dan is a tax partner at Trout CPA in Pennsylvania. Welcome to the both of you. Dan Chodan: Thanks for having us. April Walker: Chris, let's set the stage for what we know now. We're recording on July 2. [Let’s talk about] what we recently heard from the IRS late last week and what we know now about the IRS processing of claims or what they're telling us. Chris Wittich: On June 20th, IRS had a press release, and there was a lot of good information in there, the first time in quite awhile. I think we've gotten some insight as to what they're doing with these ERC claims. Right off the bat, they differentiate, and they say they're putting claims in three different buckets, and it certainly falls in the red, yellow and green. In my mind, the red category, the IRS is saying between 10-20% of the claims fall into what they describe as the highest risk group. They've said that a lot of these are going to be just straight-up denied in the coming weeks, so that red they're just seeing these claims. They're looking at them. They're saying these are not good claims at all. I would suspect those are like the employees don't exist, the businesses don't exist. They're claiming more in credits than they paid in wages, stuff like that. The IRS is saying 10-20% of all the claims they have, I would expect to get adjusted or denied entirely, and they're going to start working on that soon. The next category is the biggest category, and that's the yellow, as I would describe it. So they're saying between 60 and 70% of claims show an unacceptable level of risk. That's their term, not mine. That's two-thirds of the claims. They think the risk is so high that it's unacceptable and we're not exactly sure what factors they're using to determine that, but in their own words, they're going to be doing more thorough reviews, compliance reviews of those claims. Which again, that's the vast majority of the claims. The third category is a green zone. They're saying between 10 and 20% of the claims show a low-risk, and they don't say...
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    34 mins