Holiday Scams, Corporate Transparency Act, and 2025 Tariff Plan
Probity Tax Recovery is a tax consulting firm specializing in tax credits and incentives for small to mid-sized businesses. We work with business owners and their CPAs to identify tax credits and incentives while saving them time and money. As of November 1, 2024, Probity began operating as a division of MS Consultants. Read more about the exciting news here.
Tax Policy/News:
The Internal Revenue Service (IRS) has launched its 9th annual National Tax Security Awareness Week, cautioning taxpayers and tax professionals about increased risks of identity theft and scams during the holiday season. Cybercriminals are known to exploit this period of heightened online activity to steal sensitive personal and financial information.
Key threats include phishing emails and smishing texts that impersonate the IRS or legitimate organizations, aiming to deceive individuals into revealing confidential data. The IRS underscores that it does not initiate contact through email, text messages, or social media to request personal or financial information.
To protect against these risks, the IRS advises taxpayers to use strong, unique passwords, enable multi-factor authentication on accounts whenever possible, keep security software up to date, and avoid clicking on unsolicited links or attachments in emails and texts. Monitoring financial accounts for suspicious activity and reporting suspected scams promptly are also essential steps.
By following these precautions, taxpayers can better safeguard their personal information during the holiday season and as the tax filing season approaches.
November 26: House, Senate GOP Battle Over Length of Trump Tax Cut Extension
Republicans in the House and Senate are at odds over how long to extend the 2017 Trump-era tax cuts, which are set to expire at the end of 2025. The House GOP favors a four-year extension, citing concerns over the federal deficit and the potential fiscal strain of a longer extension, arguing that a shorter timeline would provide flexibility for revisiting tax policy under changing economic conditions.
In contrast, Senate Republicans are pushing for a ten-year extension, advocating for long-term stability in tax policy to support businesses and economic growth. They emphasize that businesses rely on predictability for planning investments and expansions.
The divide also reflects differing political strategies. House Republicans believe a shorter extension might appeal to moderate voters and fiscal conservatives, while Senate leaders see the longer extension to secure a significant legislative victory and lock in Trump’s tax policy achievements.
The tax cuts, a hallmark of Trump’s 2017 Tax Cuts and Jobs Act, include reduced corporate tax rates and lowered individual income tax brackets. The debate over their extension is expected to intensify as Congress negotiates other fiscal measures, including potential revisions to the Inflation Reduction Act and broader budgetary priorities.
No final decision has been reached, and the outcome will likely depend on negotiations between the chambers and the influence of external economic and political factors leading up to 2025.
Economic News/Policy:
December 3: Corporate Transparency Act Blocked Nationwide by Texas Court
A federal judge in Texas has issued a nationwide injunction against the Corporate Transparency Act (CTA), halting its enforcement across the United States.
The CTA, effective January 1, 2024, requires most U.S. companies to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) to combat financial crimes.
The court's decision stems from concerns over the constitutionality of the CTA, particularly regarding Congress's authority to enact such legislation. This ruling introduces significant uncertainty for businesses striving to comply with the CTA's reporting requirements.
The U.S. Department of Justice is expected to appeal the decision, but until a higher court overturns the injunction, the CTA's enforcement remains suspended nationwide.
Companies are advised to stay informed about ongoing legal developments and consult legal counsel to navigate compliance obligations during this period of uncertainty.
November 27: Trump's Latest Tariff Plan and Its Implications for the U.S. Economy
President-elect Donald Trump has announced plans to implement significant tariffs on imports from Mexico, Canada, and China as a strategy to combat illegal immigration and drug trafficking.
The proposed tariffs include a 25% tax on goods from Mexico and Canada, and an additional 10% on Chinese products.
Economists warn that such measures could lead to higher consumer prices and potential job losses in sectors reliant on these imports, such as energy, automobiles, and food.
While tariffs are intended to protect domestic industries, they often result in increased costs for consumers and may provoke retaliatory actions from affected trade partners, further impacting U.S. businesses and farmers.
Despite evidence suggesting that previous tariffs have not significantly restored domestic jobs, these policies are viewed as political tools aimed at securing support among voters in manufacturing regions.
November 26: IRS Faces Potential $20 Billion Funding Loss Without Congressional Action
The Internal Revenue Service (IRS) is at risk of losing $20 billion in enforcement funding due to legislative constraints, prompting U.S. Treasury officials to urge Congress to release the frozen funds.
This financial uncertainty arises amid anticipated budget cuts under the incoming Trump administration, which has signaled intentions to reduce IRS resources.
Deputy Treasury Secretary Wally Adeyemo warned that without these funds, the IRS would face significant operational challenges, including a reduction in audits of high-income individuals and large corporations, potentially increasing the federal deficit by $140 billion over the next decade.
The funding in question is part of the Inflation Reduction Act, aimed at enhancing tax enforcement and compliance. However, legislative language has effectively frozen these resources, necessitating prompt congressional intervention to ensure the IRS can maintain its enforcement capabilities and support fiscal responsibility.
Technology:
November 30: AI and the R&D Revolution
Artificial intelligence (AI) is reshaping research and development (R&D), offering unprecedented tools for innovation and efficiency in industries such as pharmaceuticals, energy, and materials science.
In pharmaceuticals, AI has drastically accelerated drug discovery by simulating molecular interactions, cutting costs and reducing timelines for developing new therapies. Materials science has similarly benefited, with AI-enabled simulations allowing researchers to test countless material combinations virtually, leading to breakthroughs in creating stronger, lighter, or more durable substances.
The energy sector is also leveraging AI for optimizing renewable energy systems, improving energy storage solutions, and enhancing grid management. Companies integrating AI into their R&D processes report faster innovation cycles, higher success rates in experiments, and significant cost savings.
Despite its transformative potential, challenges remain, including the high cost of implementation and concerns over data privacy and algorithmic bias. However, as AI tools become more accessible and sophisticated, their impact on R&D is expected to deepen, unlocking solutions to complex global challenges.
November 27: Emerging AI Technologies Exhibit Triple-Digit Growth in 2024
In 2024, emerging artificial intelligence (AI) technologies such as generative AI (GenAI), large language models (LLMs), and federated learning have experienced substantial growth, with compound annual growth rates (CAGRs) exceeding 100%.
According to data from Elsevier’s Scopus database, publications on generative AI surged from four in 2019 to 4,821 in 2024, marking a CAGR of 313.3%. Similarly, research on LLMs expanded from 72 publications in 2019 to 15,522 in 2024, achieving a CAGR of 215.9%.
Despite indications that the initial hype surrounding GenAI may have peaked, the technology continues to attract significant attention. Patent activity in AI also remains robust. As of October 2024, Intel Corporation led with 1,499 AI patents across 1,389 unique patent families, focusing significantly on machine learning applications. Samsung Electronics followed with 1,002 patents, emphasizing neural networks.
These trends underscore the dynamic evolution of AI technologies, highlighting both the rapid advancement of emerging fields and the maturation of established ones. The diverse growth patterns and concentrated patent activities suggest that the AI sector is fragmenting into distinct maturity phases, moving beyond a singular hype cycle.
Energy and Environmental Policy/News:
December 2: Inflation Reduction Act Changes "Not a Day 1 Priority" for Trump, Congress: Crux
The incoming Trump administration and Republican-controlled Congress are unlikely to fully repeal the Inflation Reduction Act (IRA) of 2022.
However, according to a report by Crux, a digital tax credit marketplace, certain provisions—particularly those related to electric vehicle subsidies and energy efficiency incentives—may be targeted for modification or phase-out beginning in 2025. These components are considered politically vulnerable due to their expense and lack of popularity among Republicans.
Despite potential legislative changes, current clean energy projects might still benefit from existing IRA investment and production tax incentives through the Internal Revenue Service's "safe harbor" provision. This allows projects that have commenced work or incurred at least 5% of the project cost to qualify under existing tax laws.
During his 2024 campaign, President-elect Donald Trump criticized the IRA, labeling it the "Green New Scam," and expressed intentions to retract unspent funds, particularly those allocated for electric vehicles and offshore wind power.
Nonetheless, experts suggest that comprehensive alterations to the IRA would likely coincide with broader legislative efforts, such as the potential extension of the 2017 Tax Cut and Jobs Act, which is set to expire at the end of 2025. The future of the IRA remains uncertain, with its various incentives and tax credits subject to political negotiations and legislative processes in the forthcoming years.
The Biden-Harris Administration has allocated $30 million under the Bipartisan Infrastructure Law to address interconnection delays in the U.S. power grid by leveraging artificial intelligence (AI). Through the Artificial Intelligence for Interconnection (AI4IX) program, the Department of Energy (DOE) aims to streamline the interconnection application process, reducing delays that currently stretch up to seven years.
AI will help automate the review of applications, detect deficiencies, and notify applicants of specific issues for timely resolution. This approach addresses challenges such as incomplete or insufficient documentation, a primary cause of delays, and aids in modernizing grid infrastructure. For example, AI tools will flag missing site control documents, a frequent hurdle due to varying property laws and project requirements.
AI4IX complements other DOE initiatives, including the Grid Resilience and Innovation Partnership (GRIP) Program and the Interconnection Innovation e-Xchange (i2X) Transmission initiative, which collectively target 60% of the U.S. population. These efforts align with the Administration’s broader goals to enhance grid reliability, lower costs, and integrate clean energy solutions.
The first funding application deadline is January 10, 2025, with informational sessions scheduled for December 5 and December 17, 2024. DOE anticipates making funding decisions in Winter 2025.
November 25: What Trump's Treasury Pick Means for Clean Energy Tax Credits
President-elect Donald Trump has nominated hedge fund manager Scott Bessent as Treasury Secretary, a move that could significantly impact clean energy tax credits established under the Biden administration's Inflation Reduction Act (IRA).
Bessent has previously criticized the IRA, labeling it a "doomsday machine for the budget," aligning with Trump's intent to rescind unspent funds from the act.
As Treasury Secretary, Bessent would have the authority to modify or eliminate tax provisions designed to promote renewable energy and emerging technologies such as hydrogen, carbon capture, and electric vehicles.
While outright repeal of these tax credits may face challenges due to bipartisan support, the administration could implement changes that affect the allocation of funds to sectors like clean hydrogen, which is awaiting final guidance on tax credit applications.
Additionally, Bessent's role would be pivotal in executing Trump's proposed tariff increases, potentially impacting industries ranging from solar energy to steel.
For Fun:
November 27: Antimatter to Be Transported Outside a Lab for First Time
In a groundbreaking initiative, CERN physicists are set to transport antimatter outside laboratory confines for the first time, a move that could revolutionize fundamental physics research.
Antimatter, which annihilates upon contact with regular matter, has traditionally been confined to specialized lab environments due to containment challenges. The upcoming transport will be made possible by advanced containment technology, including the use of magnetic and electrostatic traps that prevent contact with matter.
One team aims to transport antimatter to a dedicated facility designed for high-precision experiments, enabling more accurate studies of antimatter’s properties, such as its interaction with gravity. Another team will focus on how antimatter interacts with various materials, potentially paving the way for innovations in energy systems and particle physics applications.
The project represents a major step forward in antimatter research, as transporting it safely and reliably opens opportunities for external facilities to collaborate on experiments. This effort could help answer longstanding questions about the fundamental asymmetry between matter and antimatter in the universe.