Global debt rising

Posted 4/19/2018

The International Monetary Fund has warned that the global economy is in more debt than it was before the financial crisis, and that risks to global financial stability have increased. Total debt levels globally came in at a record $164tn in 2016, amounting to 225% of global GDP. Vitor Gaspar, director of the fiscal affairs department at the IMF, said the findings, taken together with the business cycle upswing, meant that governments should build buffers and cut public debt levels to face "challenges that will unavoidably come in the future.” He added: "The United States is the only country where the public debt-to-GDP ratio is forecast to go up, from 108% of GDP in 2017 to 117% in 2023."

CNBC

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IRS offers guidance on “blended” tax rates

Posted 4/17/2018

The IRS has issued a notice to corporate taxpayers to provide more information about the tax rates they will be paying as they transition to the new tax law. Under the recently enacted Tax Cuts and Jobs Act, a corporation with a fiscal year that includes January 1st 2018 is supposed to pay federal income taxes using a blended tax rate and not the flat 21 percent tax rate under the TCJA that would generally apply to taxable years beginning after December 31st 2017.

Accounting Today

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IRS updates inflation adjustments for new tax law

Posted 4/16/2018

With tax deadline day for 2017 returns falling tomorrow, the IRS has updated the annual inflation adjustments for the 2018 tax year, to reflect changes from the recent tax reform law. For 2018, the foreign earned income exclusion will be $103,900. The maximum earned income credit amount will be $6,431 for taxpayers who have three or more qualifying children, for 2018. Further, participants who have self-only coverage in a Medical Savings Account, the plan needs to have an annual deductible of no less than $2,300, but not more than $3,450. For self-only coverage, the maximum out-of-pocket expense amount is $4,550. For tax year 2018, participants with family coverage, the floor for the annual deductible is $4,550, and the deductible cannot be more than $6,850.

Accounting Today

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PICPA offers feedback on Taxpayer First Act

Posted 4/13/2018

The Pennsylvania Institute of CPAs says that while it supports many elements in the IRS reform bills published by the House Ways and Means Committee earlier this week, it also has concerns with provisions on debt collection and identity theft. PICPA said it “fully supports” the proposed establishment of an independent appeals process that would allow taxpayers to appeal tax disputes, and also indicated support for a more comprehensive customer service strategy that would include establishing metrics and benchmarks. However, it expressed disagreement with the establishment of income thresholds for referral to private debt collection, specifically the exemption of low-income individuals from private debt collection unless such a taxpayers’ dependents or other debts are causing insolvency, and proposed public-private stakeholder partnerships to address ID theft refund fraud.

Accounting Today

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New PCAOB takes fresh look at auditor independence

Posted 4/12/2018

The PCAOB, replete with new members, is re-examining the issue of whether auditors need new guidance on their required communication with audit committees regarding independence. The Board’s latest standard-setting agenda contains a newly initiated research project on whether the board should consider issuing guidance or revising Rule 3526, which governs when and in what manner auditors should discuss with audit committees their adherence to independence requirements under Rule 3520. The issue will be examined by a full five-member board, with Duane DesParte bringing it up to full membership again, under Chairman William Duhnke. The other members are Kathleen Hamm, a former leader at regulatory advisory services firm Promontory Financial Group, J. Robert Brown, who was teaching corporate and securities law at the University of Denver law school when he was tapped, and James Kaiser, a retired PwC audit partn er.

Compliance Week

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New ethics code for accountants

Posted 4/12/2018

The International Ethics Standards Board for Accountants has published a new Code of Ethics, a revised framework for professional accountants to use to identify, evaluate, and address threats to compliance with the fundamental principles and independence. The new code, effective June 2019, offers revised “safeguards” provisions designed to be better aligned to threats to compliance, stronger independence provisions regarding long association of personnel with audit clients, and new guidance to emphasize the importance of understanding facts and circumstances when exercising professional judgment.

Journal of Accountancy

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IRS auditing only half of giant corporations

Posted 4/10/2018

During fiscal 2017, the IRS audited just over half of the companies it would define as “corporate giants”, compared to almost all of them in 2010. A study from Syracuse University’s Transactional Records Access Clearinghouse found that 54% of companies with $20bn or more in assets were audited, compared to 76% in 2016 and 96% in 2010. The 331 audits that were conducted of the corporate giants last year uncovered $10.4bn in federal taxes that had not been previously reported. The reduction in audits is largely due to budget cuts at the IRS, which have severely reduced the number of available IRS revenue agents who could audit both corporations and individuals.

Accounting Today

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Oregon’s S Corps to benefit from new state tax bill

Posted 4/9/2018

Oregon Gov. Kate Brown plans to sign a bill disconnecting the state’s tax code from a federal tax provision that grants pass-through entities - including S corporations, LLCs and various business partnerships - an additional 20% deduction on state income taxes. Democrats have argued that the federal law gives some entities an additional, unfair tax break, on top of already-existing state benefits. Republicans, meanwhile, have warned that the disconnect effectively creates a 20% tax increase for affected businesses.Gov. Brown said on Friday she will convene a one-day special legislative session to address inequities in the tax code.

US News & World Report

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TIGTA: Make EITC form simpler

Posted 4/6/2018

A new report from TIGTA has urged the IRS to modify Form 1040, to make it easier for more people to claim the Earned Income Tax Credit (EITC). An estimated 5m potentially eligible taxpayers are not claiming the EITC each year, amounting to $7.3bn in unclaimed benefits, on an annual basis. The Inspector General says that making changes to Form 1040 - such as eliminating Schedule EIC, "Earned Income Credit," and adding sections for necessary eligibility information, such as the ages of children and the duration of residency - could increase EITC participation. TIGTA also recommended establishing a specific objective for increasing EITC participation rates for eligible taxpayers, along with related performance measures to determine whether the established objectives have been achieved.

Accounting Today

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NAEA sets out priorities for URS reform

Posted 4/4/2018

The president of the National Association of Enrolled Agents has written to the House Ways and Means Committee, and the Senate Finance Committee, with a series of recommendations for how to reform the IRS, based in large part on concepts developed by its membership. James Adelman said that the agency should prioritize oversight, governance, management, workforce and budget, taxpayer services and dispute resolution, future state and practitioners.

Accounting Web

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