Employee Retention Tax Credit, SEC Climate Disclosure Rules, the Offshore Wind Farm
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 you time and money. Schedule a free consultation with a member of our team here.
Tax Policy/News:
The Internal Revenue Service (IRS) is urging businesses to review the guidelines for the Employee Retention Credit (ERC) before the approaching March 22 deadline to avoid potential compliance issues due to improper claims.
Following aggressive marketing tactics that led to misleading filings for ERC, the IRS has intensified compliance actions, including audits and investigations.
To assist businesses affected by misinformation, the IRS has introduced a limited-time offer, available until March 22, allowing employers to correct improper claims at a reduced cost.
IRS Commissioner Danny Werfel emphasized the importance of taking prompt action to rectify any questionable claims to avoid penalties and interest in the future.
The IRS offers voluntary disclosure programs and claim withdrawal processes for businesses to address erroneous claims and mitigate potential repercussions.
However, failure to rectify incorrect claims by the deadline may result in significant financial liabilities and additional compliance measures.
Businesses are urged to consult trusted tax professionals and utilize IRS resources to ensure ERC eligibility and proper claim procedures.
Economic News/Policy:
March 16: 5 sticking points in the fight to avert a shutdown
Lawmakers are currently in a critical phase as they strive to finalize the last six full-year government funding bills before the shutdown deadline this Friday, amidst a divided Congress that has only recently completed the first batch of fiscal 2024 funding bills.
Among these, the Homeland Security funding bill is considered the most challenging, primarily due to deep partisan divisions over border and immigration issues, with contentious debates over border wall construction and the "remain in Mexico" policy.
Additionally, earmarks have become a significant point of contention, especially concerning the annual Health and Human Services (HHS) funding bill, with Republicans divided over the use of earmarked dollars for community projects.
The funding for the UNRWA, amid allegations of staff involvement in Hamas's attack on Israel, and election security are other major sticking points, alongside discussions about a potential pay raise for members of Congress, highlighting the complex array of issues lawmakers must navigate to avoid a government shutdown.
March 14: Fed's cautious approach to cutting rates reinforced by new inflation reading
Fresh evidence of persistent inflation, highlighted by the Labor Department’s Producer Price Index released Thursday, is expected to reinforce the Federal Reserve's cautious stance on rate cuts and could prolong the period of elevated interest rates in 2024.
Stifel's Lindsey Piegza noted the challenge for the Fed to justify near-term rate reductions given the sticky nature of inflation, suggesting a potential policy shift in the second half of the year.
The Producer Price Index rose 0.6% from January to February, surpassing expectations, with core prices up 0.3% month-over-month and 2% year-over-year.
Despite these figures, odds of a rate cut in June slipped slightly, reflecting shifting investor expectations amidst ongoing inflation concerns.
Former Fed official Jim Bullard remarked on the significance of the PPI data, acknowledging its impact but suggesting it wouldn't dramatically alter the Fed's overarching strategy.
With Fed Chair Jay Powell emphasizing the need for sustainable inflation decline before easing monetary policy, the Fed is anticipated to maintain the benchmark policy rate at its upcoming meeting, with potential adjustments to interest rate projections in light of persistent inflation.
Technology:
March 13: Europe’s world-first AI rules get final approval from lawmakers. Here’s what happens next
European Union lawmakers finalized approval of the Artificial Intelligence Act, setting in motion world-leading regulations expected to take effect later this year.
The legislation, passed by the European Parliament after five years of proposal and negotiation, aims to establish a comprehensive framework for regulating artificial intelligence (AI) technology.
The AI Act adopts a risk-based approach, categorizing AI applications as low-risk or high-risk based on their potential impact, with stringent requirements imposed on high-risk systems like medical devices or critical infrastructure.
Provisions also address generative AI models, mandating detailed summaries of training data and adherence to copyright law.
The law, expected to officially come into effect by mid-2026, includes strict enforcement measures, with fines of up to 35 million euros or 7% of a company's global revenue for violations.
While Brussels' AI regulations set a precedent globally, other countries, including the United States and China, are also moving to establish AI governance frameworks.
March 13: AI could lead to human extinction, says report commissioned by US State Department
A report commissioned by the US State Department and conducted by AI startup Gladstone has highlighted the potential for artificial intelligence (AI) to lead to human extinction through the development of bioweapons, cyber-attacks, autonomous robots, and loss of control over AI systems.
Published in October 2022, the report underscores the "catastrophic risks" posed by artificial general intelligence (AGI), which could surpass human capabilities across various domains.
Experts within the field have expressed diverse opinions on these findings, with some viewing the risks as real and imminent, while others argue that the concerns are overblown and warn against stifling innovation through excessive regulation.
Gladstone's action plan calls for slowing down the AI race by establishing regulations and creating an AI safety task force, aiming to balance the need for safety with the pursuit of technological advancement.
However, the effectiveness of such measures remains a topic of debate among AI researchers and industry stakeholders, reflecting the complexity and urgency of addressing AI's potential risks.
Energy and Environmental Policy/News:
March 15: US appeals court temporarily pauses SEC climate disclosure rules
The U.S. Securities and Exchange Commission's (SEC) new climate disclosure rules for public companies were temporarily paused by the New Orleans-based 5th U.S. Circuit Court of Appeals.
This pause comes as a response to a lawsuit from Liberty Energy Inc. and Nomad Proppant Services LLC, which challenges the rules' legality.
These regulations, part of President Joe Biden’s climate change strategy, mandate detailed reporting on greenhouse gas emissions and climate-related risks, aiming to standardize disclosures.
Critics argue these rules exceed the SEC's authority and could impose over $4 billion in compliance costs, while supporters claim they provide essential information to investors.
The pause raises questions on the rules' future amidst broader legal challenges from Republican-led states and business groups.
March 14: The United States has its first large offshore wind farm, with more to come
America's inaugural commercial-scale offshore wind farm, South Fork Wind, is now operational, marking a significant milestone for the industry and setting a precedent for future developments.
Situated 35 miles east of Montauk Point, New York, this 12-turbine project, a collaboration between Ørsted and Eversource, signifies a crucial step in the nation's transition to clean energy.
With New York Governor Kathy Hochul inaugurating the facility, the turbines are now supplying clean power to the local grid, underscoring the urgency of addressing climate change.
This achievement highlights the critical role offshore wind plays in national and state efforts to achieve carbon-free electricity systems. The Biden administration's approval of six offshore wind projects and New York's commitment to additional ventures signify the growing momentum in renewable energy.
Hochul emphasized that South Fork is just the beginning, with plans to power over 1 million homes through upcoming projects. With Ørsted and Eversource already focusing on Revolution Wind off Rhode Island and Connecticut's coasts, and New York negotiating contracts for larger wind farms, such as Sunrise Wind, the industry is poised for substantial growth.
Despite past challenges, including financial feasibility concerns and supply chain disruptions, industry leaders anticipate a brighter future, with 2024 heralding a year of action in building clean energy infrastructure and fulfilling climate goals.
ICYMI:
March 13: Climate change is trapping Texans in an arid ‘fortress of solitude,’ expert says
Texas is facing significant climate and development challenges, exacerbated by its unique geography and rapid population growth, according to state climate scientist Jay Banner.
Speaking at South By Southwest in Austin, Banner highlighted the state's predicament of balancing a nearly doubling population by 2070 with increasing climate-related risks such as extreme heat, drought, and water scarcity.
Texas's development is contributing to its vulnerability, with more concrete and asphalt reducing the natural replenishment of aquifers and exacerbating heat through urban heat island effects.
The state is also expected to experience a dramatic increase in days over 100 degrees Fahrenheit, which will put additional strain on water resources and energy demand.
Banner suggests a multi-faceted approach to adaptation, including the integration of renewable energy in housing, rainwater capture, and the reuse of grey water for non-potable purposes such as irrigation and toilet flushing.
These measures, while challenging for existing infrastructure, are deemed more straightforward for new developments.
However, Banner stresses the importance of collective action and optimism in addressing these climate challenges, indicating that individual efforts alone will not suffice to mitigate the impending environmental impacts on Texas.
For Fun:
March 13: How the Solar Eclipse Will Impact Electricity Supplies
The total solar eclipse on August 21, 2017, significantly impacted North American solar power generation, foreshadowing similar challenges for the upcoming eclipse on April 8, 2024, which will traverse from Texas to Maine, affecting solar power due to the Moon obscuring the Sun.
Solar eclipses result in a temporary decline in solar power generation due to the obstruction of sunlight.
Grid operators face the challenge of managing this drop in energy production by relying on reserves and adjusting power distribution to prevent strain on transmission lines and potential blackouts.
Additionally, the article highlights the broader trend of increasing reliance on solar power globally and the need for renewable energy sources during eclipses.
Despite the decrease in solar and wind power generation during such events, grid operators mitigate the impact by ramping up production at nonrenewable energy plants, albeit at the cost of increased carbon emissions.
Overall, the article underscores the importance of careful planning and coordination by grid operators to maintain stable electricity supply during solar eclipses while acknowledging the spectacle these events offer to observers.