September 2023 / United States

11 Settembre 2023

Financial Accounting Standards Board Votes to Implement New Crypto Accounting Standards

The Financial Accounting Standards Board (FASB) unanimously voted (7-0) to implement new accounting rules requiring companies that hold or invest in cryptocurrency to use fair-value accounting standards (FASB Topic 820) for measuring assets and liabilities at their current market value.

Additionally, under the new rules, companies holding or investing in cryptocurrency will need to:

  • present the aggregate amount of crypto assets separately from other intangible assets that are measured using other measurement bases;
  • present gains and losses on crypto assets in net income and present those gains and losses separately from the income statement effects of other intangible assets, such as amortization or impairments; and
  • classify crypto assets received as non-cash consideration during the ordinary course of business that are converted nearly immediately into cash as operating flows.

The new rules are effective for fiscal years beginning after 15 December 2024. However, companies can begin implementing the rules before the effective date.

12 Settembre 2023

IRS to Shift Enforcement Focus to Large Corporations, Partnerships, High-Earners

The Internal Revenue Service (IRS) has announced that it will be paying more attention to high-income earners, partnerships, large corporations and promoters who are abusing US tax law.

The shift in focus is due to funding from the Inflation Reduction Act (IRA) which will allow the IRS the means to increase audit rates on the wealthy, partnerships, and other high earners who have experienced sharp drops in audit rates over the past decade due to lack of funding.

To help carry out the audits the IRS plans to leverage its improved technology along with Artificial Intelligence (AI) which is intended to detect tax cheating, identify emerging compliance threats, and improve case selection tools to avoid "no-change" audits.

The IRS stated it will not increase audit rates of taxpayers earning less that USD 400,000 and focus on taxpayers with total positive income above USD 1 million that have more than USD 250,000 in recognized tax debt. This focus builds on past success in which the IRS collected USD 38 million from more than 175 high-income earners. The IRS plans to contact about 1,600 taxpayers that owe hundreds of millions of dollars in taxes.

15 Settembre 2023

IRS Stops Processing Employee Retention Credit (ERC) Claims

Amid rising concerns about a flood of improper Employee Retention Credit claims, the Internal Revenue Service announced on 14th September an immediate moratorium through at least the end of the year on processing new claims for the pandemic-era relief program to protect honest small business owners from scams.

IRS Commissioner Danny Werfel ordered the immediate moratorium to run through at least Dec. 31 following growing concerns inside the tax agency, from tax professionals as well as media reports that a substantial share of new claims from the aging program are ineligible and increasingly putting businesses at financial risk by being pressured and scammed by aggressive promoters and marketing.

The IRS continues to work previously filed Employee Retention Credit (ERC) claims received prior to the moratorium but renewed a reminder that increased fraud concerns means processing times will be longer. On July 26, the agency announced it was increasingly shifting its focus to review these claims for compliance concerns, including intensifying audit work and criminal investigations on promoters and businesses filing dubious claims. The IRS announced that hundreds of criminal cases are being worked, and thousands of ERC claims have been referred for audit.

The IRS emphasizes that payouts for these claims will continue during the moratorium period but at a slower pace due to the detailed compliance reviews. With the stricter compliance reviews in place during this period, existing ERC claims will go from a standard processing goal of 90 days to 180 days – and much longer if the claim faces further review or audit. The IRS may also seek additional documentation from the taxpayer to ensure it is a legitimate claim.

The IRS is developing new initiatives to help businesses who found themselves victims of aggressive promoters. This includes a settlement program for repayments for those who received an improper ERC payment; more details will be available this fall.

In addition, the IRS is finalizing details that will be available soon for a special withdrawal option for those who have filed an ERC claim but the claim has not been processed. This option – which can be used by taxpayers whose claim hasn't yet been paid– will allow the taxpayers, many of them small businesses who were misled by promoters, to avoid possible repayment issues and paying promoters contingency fees. Filers of these more than 600,000 claims awaiting processing will have this option available. Those who have willfully filed fraudulent claims or conspired to do so should be aware, however, that withdrawing a fraudulent claim will not exempt them from potential criminal investigation and prosecution.

As part of the wider compliance effort, the IRS is working with the Justice Department to address fraud in the ERC program as well as promoters who have been ignoring the rules and pushing businesses to apply.

The IRS has trained auditors examining ERC claims posing the greatest risk, and the IRS Criminal Investigation division is actively working to identify fraud and promoters of fraudulent claims for potential referral for prosecution to the Justice Department.

Source: IRS.gov

6 Settembre 2023

IRS accepting applicants for the 2024 Compliance Assurance Process

The Internal Revenue Service today announced the opening of the application period for the 2024 Compliance Assurance Process (CAP) program, which will run from Sept. 6 to Oct. 31, 2023.

The IRS will inform applicants if they're accepted into the program in February 2024.

Launched in 2005, CAP employs real-time issue resolution through transparent and cooperative interaction between taxpayers and the IRS to improve federal tax compliance by resolving issues prior to the filing of a tax return.

To be eligible to apply for CAP, new applicants must:

  • have assets of $10 million or more,
  • be a U.S. publicly traded corporation with a legal requirement to prepare and submit SEC Forms 10-K, 10-Q and 8-K and
  • not be under investigation by, or in litigation with, any government agency that would limit the IRS's access to current tax records.
Source: IRS.gov