IRS Taxpayer Visits, OECD Tax Rule, and Heat Wave
Tax Policy/News:
July 24: IRS Ends Unannounced Taxpayer Visits To Protect Agents' Safety
The Internal Revenue Service is stopping most unannounced visits to taxpayers' residences and businesses by its revenue officers after a rising number of threats has put its employees' safety at risk.
Instead, the IRS said Monday that it will send an appointment letter, formally known as a 725-B, to taxpayers and schedule a follow-up meeting when a matter needs to be discussed.
In some limited cases revenue officers will still need to make unannounced visits, such as when the agency needs to serve a summons or subpoena, or when there's an enforcement action like the seizure of assets at risk of being removed from the U.S. But those instances typically only occur a few hundred times a year, as opposed to the tens of thousands of unannounced visits that IRS revenue officers have generally needed to make every year.
The change comes amid a rising level of threats against IRS agents, especially after passage of last year's Inflation Reduction Act, which included an extra $80 billion over 10 years for IRS taxpayer service, technology and enforcement.
"The revenue officers work to resolve outstanding account balances by collecting unpaid taxes and unfiled tax returns,” said IRS Commissioner Danny Werfel.
“Following my arrival as IRS commissioner four months ago, and the creation of the new IRS strategic operating plan in April, we're taking a fresh look at how the IRS operates to better serve taxpayers and the nation. Making this change to end unannounced visits is a commonsense step,” Wefel continued.
"There is nothing more important than keeping our federal employees safe on the job, which is why we commend IRS leadership for this decision halting all unannounced taxpayer visits," said NTEU national president Tony Reardon in a press release Monday.
The IRS will be replacing the unannounced visits with mailed 725-B letters to schedule in-person meetings.
Under the old policy, the IRS typically assigned about 100,000 cases to revenue officers each year, but he didn't have a specific number of unannounced visits that occurred.
The Internal Revenue Service warned taxpayers today to be on the lookout for a summer surge of tax scams as identity thieves continue pounding out a barrage of email and text messages promising tax refunds or offers to help 'fix' tax problems.
The IRS is also receiving reports of emails urging people to "Claim your tax refund online," and text messages that the person's tax return was "Banned" by the IRS. These scams are riddled with spelling errors and awkward phrasing, but they consistently try to entice people to click on a link.
As part of the Security Summit effort, the IRS has been working in partnership with state tax administrators, tax professionals and the nation's tax industry to warn people about identity theft risks, including the ongoing push by scammers to trick people into sharing personal information through email, texts and phone calls.
At the same time, the IRS and Security Summit continue to warn taxpayers against the most recent wave of activity involving tax scammers.
The IRS warns that taxpayers shouldn't be fooled by these messages for many reasons. For example, these emails are routinely riddled with spelling errors and factual inaccuracies, like this example:
"Dear Tax Payer, We hope this message finds you well. We are writing to inform you abount [sic] an important matter regarding your recent tax return filing. Our record indicate [sic] that we have received your tax return for the fiscal inconsistencies or missing information that require your attention and clarification. You will receive a tax refund of $976.00 , [sic] We will process this amount once you have submitted the document we need for the steps to claim your tax refund."
The IRS never initiates contact with taxpayers by email, text or social media regarding a bill or tax refund.
July 20: House Republicans Introduce Bill To Deter OECD Tax Rule
House Republicans on the tax-writing Ways and Means Committee have introduced legislation aimed at curbing an international tax agreement backed by the Biden administration from taking hold.
Rep. Ron Estes, R-Kansas, joined by Ways and Means Committee chairman Jason Smith, R-Missouri, and other colleagues, introduced the Unfair Tax Prevention Act to discourage foreign countries from implementing the Organization for Economic Cooperation and Development's Pillar Two Under Taxed Profits Rule.
If a country moves forward with a UTPR surtax on American workers and businesses, the Unfair Tax Prevention Act would impose a reciprocal tax measure that would apply as long as the foreign country's surtax remains in place.
The bill would define "Foreign-owned exterritorial tax regime entities" as foreign-controlled entities connected with entities operating in jurisdictions with extraterritorial taxes aimed at U.S. business operations, including the UTPR surtax.
On Wednesday, the House Ways and Means Committee held a hearing on the OECD tax rules.
The OECD released a report Monday indicating it's nevertheless making progress on ratifying its global tax deal after releasing an outcome statement last week by 138 countries on how its two-pillar plan is addressing the tax challenges of a digital economy.
"The Two-Pillar Solution will provide stability for the international tax system, making it fairer and work better in an increasingly digitized and globalized world economy," OECD Secretary-General Mathias Cormann said in a statement last week.
Economic News/Policy:
July 25: U.S. consumer confidence jumps to a two-year high as inflation eases
U.S. consumer confidence shot to the highest level in two years this month as inflationary pressures eased and the American economy continued to show resilience in the face of dramatically higher interest rates.
The Conference Board, a business research group, said its consumer confidence index rose to 117 in July from a revised 110.1 in June.
The index measures both Americans' assessment of current economic conditions and their outlook for the next six months.
The future expectations index rose to 88.3 in July, clearing the recession threshold of 80 recorded in June.
Economists closely monitor Americans' spirits because consumer spending accounts for around 70% of U.S. economic activity.
Confidence has come back, in fits and starts, over the past year as inflation eased in the face of 10 interest-rate hikes by the Federal Reserve.
"Expectations for the next six months improved materially, reflecting greater confidence about future business conditions and job availability,'' said Dana Peterson, the Conference Board's chief economist."This likely reveals consumers' belief that labor market conditions will remain favorable.
July 25: IMF raises global growth forecast despite China’s recovery ‘losing steam’
The IMF kept its 2024 growth forecast unchanged at 3%. In terms of inflation, the Fund also expects an improvement from last year.
Core inflation, which strips out volatile items, is seen declining more slowly to 6% this year, from 6.5% last year.
"The global economy continues to gradually recover from the pandemic and Russia's invasion of Ukraine. In the near term, the signs of progress are undeniable," Pierre-Olivier Gourinchas, the chief economist of the IMF, said in an accompanying blogpost Tuesday.
"In the United States, excess savings from the pandemic-related transfers, which helped households weather the cost-of-living crisis and tighter credit conditions, are all but depleted. In China, the recovery following the reopening of its economy shows signs of losing steam amid continued concerns about the property sector, with implications for the global economy," Gourinchas said.
The U.S., the world's largest economy, is set to grow 1.8% this year and 1% in 2024, according to the IMF. In China, gross domestic product is seen falling from 5.2% this year to 4.5% for 2024.
Among Europe's major economies, Germany is the only one where the IMF has cut its growth expectations for this year.
The Fund sees the German economy contracting by 0.3% this year, that's a reduction of 0.2 percentage points from April's forecast.
Energy and Environmental Policy/News:
July 24: One year in, U.S. climate law is already turbocharging clean energy technology
One year in, U.S. climate law is already turbocharging clean energy technology In less than a year the Inflation Reduction Act has prompted investment in a massive buildout of battery and electric vehicle manufacturing across the states.
The U.S. climate law that passed one year ago offers a 30% discount off this installation via a tax credit, and that's helping push clean energy even into places where coal still provides cheap electricity.
One target of the law is cleaner transportation, the largest source of climate pollution for the U.S. Siemens, one of the biggest tech companies in the world, produces charging stations for EVs.
Derrick Flakoll, North America policy associate at Bloomberg NEF, pointed out that sales at the largest manufacturer of solar panels in the U.S., First Solar, skyrocketed after the law passed, creating a big backlog of orders.
"The IRA accelerates the implementation of hydrogen at scale by about four to five years," making the U.S. competitive with Europe, he said.
Canada has announced a matching policy and Europe has its own measures to attract manufacturing, similar to the IRA. "European and Japanese automakers are trying to think about how to change supply chains in order to try and compete," said Neil Mehrotra, assistant vice president and policy advisor at the Federal Reserve Bank of Minneapolis and contributor to a report about the U.S. law published by the Brookings Institution.
The law is supposed to reduce the emissions of the U.S. - the country most responsible for greenhouse gasses historically - by as much as 41% by 2030, according to a new analysis by Princeton researchers.
Technology:
July 19: AI Is Not The Enemy Of Accounting, But An Enabler Of Progress
While artificial intelligence is by no means a new technology, its parameters are constantly shifting, thanks to the introduction of new AI tools, thereby revolutionizing what AI makes possible.
Like people in most other industries, professionals in the accountancy world have questioned how AI tools like ChatGPT will impact their roles, specifically whether the technology is a threat to their jobs.
While AI does have the ability to take on some aspects of an accounting professional's role, there's no reason to fear the worst just yet.
This is the opinion of the South African Institute of Professional Accountants, having expressed its stance on AI as an enabler of innovation in the profession and a gateway for accountants to enhance their skills in areas relevant to the fourth industrial revolution.
SAIPA endorses the use of ChatGPT and other AI chatbots as a means for professional accountants in conducting research and gathering data to support management with decision-making and problem-solving.
Looking at AI from a more positive perspective in this way reveals a number of advantages for the accounting professional with a future-focused mindset - that is, one who hopes to remain relevant by keeping their skills, experience and services in adherence to the ever-changing demands of modern businesses.
AI is a handy and increasingly necessary companion for professional accountants navigating accounting and business in the digital age.
ICYMI:
July 25: Recent Deadly Heat Waves Fueled By Climate Change, New Research Finds
A new study finds climate change is making heat waves more common.
The life-threatening heat waves that have baked U.S. cities and inflamed European wildfires in recent weeks would be "virtually impossible" without the influence of human-caused climate change, a team of international researchers said Tuesday.
"Without climate change we wouldn't see this at all or it would be so rare that it would basically be not happening," said Friederike Otto, a climate scientist at Imperial College London who helped lead the new research as part of a collaborative group called World Weather Attribution.
The researchers found that greenhouse gas emissions are not only making extreme heat waves - the world's deadliest weather events - more common, but that they've made the current heat waves hotter than they would have otherwise been by multiple degrees Fahrenheit - a finding, Otto said, that wasn't surprising.
Bernadette Woods Placky, chief meteorologist at Climate Central, who wasn't involved in the research but had reviewed its findings, concurred with the findings, adding, "we know we're adding more greenhouse gasses to our atmosphere and we continue to add more of them through the burning of fossil fuels. And the more heat that we put into our atmosphere, it will translate into bigger heat events."
Heat waves in Europe last summer killed an estimated 61,000 people - most of them women - according to a recent study published in the journal Nature.
"Dangerous climate change is here now," said Michael Wehner, a senior scientist at Lawrence Berkeley National Laboratory who studies how climate change influences extreme weather and has published work on the 2021 heat dome.
For Fun:
July 25: NASA’s Webb Space Telescope Detects Water Vapor in Rocky Planet-Forming Zone
New measurements by NASA's James Webb Space Telescope have detected water in vapor form in the planetary system PDS 70, situated 370 light-years away from Earth. Measured at distances of less than 100 million miles from the system’s star, This is the first detection of water in the terrestrial region of a disk already known to host two or more protoplanets.
New data gathered by NASA's James Webb Space Telescope's MIRI have detected water vapor in the system's inner disk, at distances of less than 100 million miles from the star - the region where rocky, terrestrial planets may be forming.
The detection of water vapor implies that if rocky planets are forming there, they will have water available to them from the beginning.
A second possibility is that ice-coated dust particles are being transported from the cool outer disk to the hot inner disk, where the water ice sublimates and turns into vapor.
“We’ve seen water in other disks, but not so close in and in a system where planets are currently assembling. We couldn’t make this type of measurement before Webb,” said lead author Giulia Perotti of the Max Planck Institute for Astronomy (MPIA) in Heidelberg, Germany.
“This discovery is extremely exciting, as it probes the region where rocky planets similar to Earth typically form,” added MPIA director Thomas Henning, a co-author on the paper.
Another question raised by the discovery is how water could survive so close to the star, when the star's ultraviolet light could break apart any water molecules.