Western CPE Blog
Breaking tax and accounting news and analysis from the experts at Western CPE.
CALIFORNIA CORNER: IRS Extends California Disaster Relief Again!
By: On October 16, 2023, the IRS issued IR-2023-189, further postponing tax deadlines for most California taxpayers to Nov. 16, 2023. In the wake of last winter’s natural disasters, the normal spring due dates had previously been postponed to October 16.As a result, most individuals and businesses in California will now have until November 16 to file their 2022 returns and pay any tax due. Fifty-five of California’s 58 counties—all except Lassen, Modoc and Shasta counties—qualify. IRS relief is based on three different FEMA disaster declarations covering severe winter storms, flooding, landslides, and mudslides over a period of several months.Eligible returns …
To The Window; To The Wall – IRS Contractor Littlejohn Pleads Guilty for Leaking Data Crawl
Charles Littlejohn, a former IRS contractor, has pleaded guilty to leaking certain high-profile individuals’ tax returns to the media after conducting an illegal data crawl. Former President Trump’s tax return information was reportedly in the mix. The Department of Justice (DOJ) said in an October 12 press release that Littlejohn (not to be confused with the could-be-debated rapper Lil Jon) while working at the IRS as a government contractor stole the tax returns of “a high-ranking government official.” Littlejohn accessed the tax returns on an IRS database after using broad search parameters designed to conceal the true purpose of his …
IRS Releases Clean Vehicle Credits Guidance Package
The IRS has issued a significant package of guidance for the transfer of new and previously owned clean vehicle credits. Under the Inflation Reduction Act (P.L. 117-169), consumers can choose to transfer their new clean vehicle credit of up to $7,500 and their previously owned clean vehicle credit of up to $4,000 to a car dealer starting in 2024. IRS Guidance Drop The IRS guidance drop, which addresses the mechanics of transferring clean vehicle credits from a taxpayer to an eligible entity for vehicles placed in service after Dec. 31, 2023, includes the following: Proposed regulations (REG-113064-23);Revenue Procedure 2023-33; and Fact Sheet …
How Hard Is an Accounting Degree and Is It the Right Path for You?
If you’re considering a career in the realm of numbers, spreadsheets, and financial statements, accounting may be the perfect fit for you. Below, we delve into the complexities, tasks, and potential rewards of pursuing an accounting degree, providing aspiring accountants with the insights they need. If that’s you, stay tuned—we’ve got you covered. The Rigorous Journey: How Hard Is an Accounting Degree? Earning an accounting degree is not a straightforward task. If you find yourself asking, “How hard is an accounting degree?”, you’re asking a question many accounting students ponder. The rigorous accounting program demands a solid understanding of business …
Understanding the Paramount Importance of Professional Skepticism in Auditing
The importance of professional skepticism in ensuring the highest standard of audit quality can’t be overstated. Governed by professional standards and guidelines set by the Assurance Standards Board and other regulatory bodies, auditors are required to infuse a high degree of professional skepticism throughout the audit process. What Exactly is Professional Skepticism? If you’re asking “what is professional skepticism?”, it’s worth noting that it encompasses a questioning mind combined with a critical assessment of audit evidence. This mindset is crucial in obtaining reasonable assurance about whether financial statements are free of material misstatement. The exercise of professional skepticism enhances the …
A&A Alert: AICPA Releases Quality Management Resource
By: Jeff Sailor, CPA
The AICPA on September 26 finalized their long-anticipated resource to assist with implementation of the new System of Quality Management Standards. The practice aid materials were released on October 2. New Quality Management System Mandate SQMS No.1, issued in June 2022, requires all firms with an Audit & Accounting practice to implement a new system of quality management by December 15, 2025. This not only includes firms which perform audits, but firms which perform any A&A engagements including audit, review, compilation or preparation engagements. Thus, virtually ALL firms will have to update their systems and the changes are significant. This …
IRS Expands Tax Pro Account Features
Hey, tax pros — have you checked out the IRS’s upgrades to its online Tax Pro Account tool? The IRS announced last Friday its expansion of Tax Pro Account features, now providing you with access to new services to help clients. New additions to the digital self-service Tax Pro Account portal include:management of active client authorizations on file with the Centralized Authorization File (CAF) database (tax pros can now send Power of Attorney (POA) and Tax Information Authorization (TIA) requests directly to a taxpayer’s individual IRS Online Account);the ability to view client’s tax information, including balance due amounts; andeasier withdraw …
FinCEN Extends BOI Reporting Deadline for Certain Companies
The Financial Crimes Enforcement Network (FinCEN) today issued proposed regulations to extend the deadline for certain entities to file their initial beneficial ownership information (BOI) reports. Under the amendment to FinCEN’s BOI Reporting Rule, it is now providing 90 days for reporting companies created or registered in 2024 to file their initial reports, instead of 30 days.The proposed rule would not make any other changes to the final BOI Reporting Rule:reporting companies created or registered before January 1, 2024, would have until January 1, 2025, to file their initial BOI reports with FinCEN, andentities created or registered on or after January 1, 2025, …
Capitol Hill Connection: Federal Gov’t Shutdown Looms
A federal government shutdown looms as lawmakers on Capitol Hill struggle to reach consensus on fiscal year 2024 appropriations. In other words, Congress has just four days to get it together on the funding front before the lights go out on October 1. A senior congressional aide told Western CPE on September 25 that a “clean” continuing resolution (CR) is expected to pass just in the nick of time this week to keep the government’s doors open, which will likely run through mid-November or December. Typically, CRs are used as a stopgap measure to continue the level of government funding at …
FinCEN Issues BOI Reporting Guide for Small Businesses
On 9/18/23, Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a guide to help small businesses comply with a new beneficial ownership information (BOI) reporting rule set to begin in 2024. The controversial final rule issued by FinCEN on September 30, 2022, implements Section 6403 of the Corporate Transparency Act (CTA), an anti-money laundering law aimed at those seeking to conceal their ownership of corporations, LLCs, or other entities in the U.S. to facilitate money laundering, tax fraud, and other illegal acts.According to FinCEN, the new Small Entity Compliance Guide: Describes each of the BOI reporting rule’s provisions in simple, easy-to-read language; Answers …
CMA vs MBA: A Guide to Career Paths for Accountants
Deciding between a CMA (Certified Management Accountant) and an MBA (Master of Business Administration) is a common conundrum for accounting and finance professionals. Both the CMA credential and the MBA degree offer promising career prospects in the business administration and financial management sectors. This guide aims to decode these academic and professional paths, from the CMA exam to MBA programs, to help you align your education with your desired career path. What is CMA? The Certified Management Accountant (CMA) is a globally recognized certification that focuses on management accounting and financial management. To earn the CMA certification, candidates must pass …
CALIFORNIA CORNER: FTB Issues Guidance Regarding Payments Made Following Disaster Relief
In a Tax News Flash issued September 15, 2023, the California Franchise Tax Board (FTB) has warned taxpayers and tax professionals about combining payments due October 16, 2023. The disaster declarations from the winter storms that were applicable to most counties of California extended the due date for multiple personal and business entity tax payments covering two tax years. To ensure your clients’ payments are processed timely and accurately, please submit separate payments for each payment type and do not combine payments for different tax years. As an example, be sure that payments for 2022 tax year liabilities are made …
IRS Stops All New ERC Processing to Combat Fraud
The IRS has stopped processing all new employee retention credit (ERC) claims in an effort to combat rampant fraud associated with the program. The IRS announced the immediate moratorium on processing all new ERC claims on 9/14/23, which is expected to be in place through at least the end of the year.The move ordered by IRS Commissioner Danny Werfel comes after growing concerns from the IRS and tax pros alike that a substantial share of new claims from the aging program are ineligible and fraudulent, ultimately putting businesses at financial risk by being pressured and scammed by aggressive promoters and …
IRS Readies Boost in Partnership, High-Income Audits Using AI
The IRS has announced the rollout of a sweeping, historic effort to redirect its focus of taxpayer examinations on high-income earners, partnerships, and large corporations. The shift in the agency’s attention to more complex audits comes as a result of increased funding provided to the IRS under the Inflation Reduction Act (IRA) (P.L. 117-169).Key variables in the IRS’s new audit equation include:Prioritization of high-income cases.The IRS will intensify work on nearly 1,600 identified taxpayers with total positive income above $1 million that have more than $250,000 in recognized tax debt.Expansion of pilot focused on largest partnerships leveraging Artificial Intelligence.With the …
BREAKING: IRS Issues Much-Anticipated Section 174 Guidance
Happy Friday before September 15, tax pros. With stellar timing, the IRS has issued much-anticipated guidance intended to clarify the application of § 174, as amended by the 2017 law commonly known as the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97).The guidance in Notice 2023-63 provides a preview of the Treasury Department and IRS’s intent to issue proposed regulations addressing:Capitalization and amortization of specified research or experimental (SRE) expenditures under § 174, as amended;Treatment of SRE expenditures under § 460; andApplication of § 482 to cost sharing arrangements involving SRE expenditures. Background Generally, TCJA’s amendment to § 174 requires …
IRS Issues FAQ for Pass-Through Entities to Report Negative Amounts on Schedules K-2/K-3
ICYMI: In case you missed it this week, the IRS has issued a frequently asked question (FAQ) in Fact Sheet 2023-20 to provide guidance to pass-through entities e-filing Schedules K-2 and K-3 on reporting negative amounts.For tax year 2022, the schema for e-filing Schedule K-2 and K-3 do not permit negative values for certain line items in Part II. Thus, the FAQ issued this week provides guidance to pass-through entities about how to report these amounts. STAY TUNED Stay updated with more breaking tax-related developments by subscribing to Tax Bytes with Jessica Jeane, J.D. SUBSCRIBE TODAY
Employee Retention Credit (ERC) – What Tax Pros Need to Know
By: The Employee Retention Credit (ERC) enacted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) was a blessing for many businesses during the COVID-19 pandemic, providing much needed financial assistance to help keep staff on payroll. When Congress changed the law allowing Paycheck Protection Program (PPP) borrowers to retroactively claim the ERC under the Consolidated Appropriations Act, 2021 (P.L. 116-260), which included the Taxpayer Certainty and Disaster Relief Act of 2020 (TCDRA), the flood gates opened, and many more businesses were eligible for the ERC. ERC – Not for the Faint of Heart Determining ERC eligibility and …
How to Become a CPA Without an Accounting Degree: A Comprehensive Guide
The dream of becoming a Certified Public Accountant (CPA) often conjures images of rigorous accounting courses and an intensive focus on numbers. But what if you don’t have a degree in accounting? Can non-accounting majors take the CPA exam and become a CPA without an accounting degree? The answer is a resounding YES. With the right guidance, you can maneuver through the educational labyrinth to fulfill CPA requirements even without an accounting background. Understanding the CPA Requirements Firstly, let’s clarify that a bachelor’s degree is generally a prerequisite. This degree doesn’t have to be in accounting, but you will need …
IRS Extends New $145,000 401(k) Catch-Up Contribution Rule by Two Years
By: The IRS issued Notice 2023-62, extending the effective date for a new SECURE Act 2.0* Roth catch-up contribution rule for eligible participants with more than $145,000 in compensation. Under this new rule, catch-up contributions for such participants must be made to a designated Roth account (DRA). Notice 2023-62 extends the effective date from 2024 to 2026. *SECURE Act 2.0 was enacted as Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117-328, 136 Stat. 4459 (2022). Notice 2023-62 also corrected a SECURE Act 2.0 error, which unintentionally repealed IRC Section 402(g)(1)(C). IRC Section 402(g)(1)(C permits catch-up contributions. How We …
Your Ultimate Guide to Becoming a Certified Internal Auditor (CIA): Navigating the Path to Excellence
If you’re a stickler for detail and possess an analytical mind, you may be a great fit for an auditing specialization. To enhance your career, the Certified Internal Auditor (CIA) designation is the next logical step. The certification not only gives you a competitive edge but also broadens your career opportunities and increases your earning potential. Achieving a Certified Internal Auditor (CIA) designation is now the gold standard of excellence in the field of internal auditing. In an increasingly complex and regulated business landscape, internal auditors play a pivotal role. Their expertise in ensuring compliance, assessing risks, and enhancing operations …