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.

FINCEN FILING: Beginning this year, most small companies have a NEW small business filing requirement with FinCEN call the Business Ownership Information Report, that can be time confusing. Failure to file or erroneous filings can result in jail time and up to $10,000 in fines. Our team can handle the filing for you with minimal effort on your end. To get started, schedule a time to speak with us here.

Tax Policy/News:

October 11: IRS Provides Tax Relief for Hurricane Helene and Milton Victims

The IRS extended tax deadlines to May 1, 2025, for those affected by Hurricanes Helene and Milton, automatically applying the relief to designated disaster areas across the Southeast. 

This extension includes filing delays for 2023 and 2024 returns but requires 2023 tax payments without penalty. 

The provisions support special tax treatments, like casualty loss deductions and penalty-free withdrawals from retirement plans. 

Additionally, affected taxpayers can request free copies of previously filed tax returns to aid in disaster recovery, with more specifics available on the IRS website for eligible locations and guidelines.

October 10: IRS Accelerates Work on Employee Retention Credit Claims

The IRS is currently processing 400,000 Employee Retention Credit (ERC) claims, totaling around $10 billion, as it works through a backlog fueled by aggressive marketing and improper claims. 

Efforts include separating legitimate claims from ineligible ones, aided by a new consolidated claim process for third-party payers to correct errors efficiently. 

The IRS also reopened the ERC Voluntary Disclosure Program through November 22, allowing businesses to rectify improper claims without penalties. 

Meanwhile, audits and investigations into potentially fraudulent ERC claims continue, with resources provided to help taxpayers ensure eligibility.

October 9: Senators Introduce Bill to Improve IRS Customer Service

Senators Bill Cassidy and Mark Warner introduced bipartisan legislation aimed at enhancing IRS customer service, supported by the AICPA. 

The Improving IRS Customer Service Act would create an online dashboard for refund wait times, expand electronic access to tax information, add callback options, and streamline installment plans for economically vulnerable taxpayers. 

The bill targets transparency and efficiency in IRS interactions, particularly for those facing financial hardship. 

This legislation has received endorsements from groups like the National Taxpayers Union, who highlight its potential to increase public confidence in tax administration.

Economic News/Policy:

October 10: IRS Projects Significant Increase in Tax Gap

The IRS reported a widening tax gap, with taxes owed versus paid estimated at $696 billion for tax year 2022, an increase from prior years largely due to economic expansion. 

The bulk of the gap results from underreporting on filed returns, amounting to $539 billion, while non-filing and underpayment contribute $63 billion and $94 billion, respectively. 

IRS Commissioner Danny Werfel emphasized the need for sustained funding to enhance compliance and enforcement, particularly following the additional resources provided by the Inflation Reduction Act.

Technology:

October 14: Apple Study Exposes Deep Cracks in LLMs' "Reasoning" Capabilities

Apple researchers have tested over 20 large language models (LLMs) to reveal a fundamental flaw in their "reasoning" abilities, especially when faced with slight alterations in standard benchmark tests like GSM8K, often used to assess mathematical reasoning. 

Small changes, such as swapping names or numbers, reduced accuracy by up to 9.2%, while adding irrelevant details led to drastic accuracy drops up to 65.7%. 

These results indicate that LLMs rely on pattern matching rather than true logic, causing major failures when interpreting complex or altered prompts. 

Researchers highlighted that future advances may require integrating genuine symbolic manipulation, not just expanding data size, to avoid fragile, inconsistent reasoning in LLMs.

October 13: The Promise and Perils of Synthetic Data

Synthetic data, generated by AI to train other AI models, is gaining traction as companies like Anthropic, Meta, and OpenAI turn to it to sidestep increasing data scarcity and high annotation costs. 

However, experts caution that synthetic data introduces risks of compounding biases and hallucinations, potentially degrading model quality over time. 

While synthetic data can help expand datasets affordably and rapidly, issues like annotation quality, sample diversity, and feedback loops—where a model’s flaws are reinforced through repeated training on AI-generated data—require careful human oversight. 

A 2023 study found that over-reliance on synthetic data can lead to diminished model diversity and increased error rates, particularly if biases are present in the original dataset. 

Consequently, firms like Microsoft, Google, and Nvidia are combining synthetic data with carefully curated real data and filtering methods to maintain accuracy. While synthetic data holds promise, experts argue that robust human-in-the-loop systems remain essential to avoid degradation and ensure long-term model efficacy.

October 10: Lawmakers Urge IRS Direct File to Loosen ID.me Requirements

Senators Elizabeth Warren, Ron Wyden, and Rep. Katie Porter are pressing the IRS to ease ID verification requirements in its Direct File system, citing accessibility and privacy concerns tied to ID.me’s facial recognition software. 

They argue that the stringent measures disproportionately affect underserved communities, creating a barrier not typically faced with private tax preparation services. 

Lawmakers also emphasize that equitable access to tax services necessitates uniform, accessible security protocols, and call on the IRS to consider alternative verification methods for Direct File users.

Energy and Environmental Policy/News:

Oct 13: Biden Visits Florida Post-Hurricanes, Announces Energy Aid

President Joe Biden traveled to hurricane-hit Florida, surveying damage in St. Petersburg and Tampa, and pledging $612 million for energy projects. 

His visit included an aerial tour of impacted areas and meetings with officials such as Energy Secretary Jennifer Granholm and FEMA Administrator Deanne Criswell. 

Joined by local leaders and Republican lawmakers, Biden observed recovery efforts and highlighted the bipartisan response to disaster relief. 

Biden emphasized resilience in his remarks, announcing $94 million for two Florida companies to bolster power grids and restore electricity to over 200,000 residents still affected.

For Fun:

October 14: Study Finds COVID-19 Increases Risk of Type 2 Diabetes in Children and Teens

New research indicates that children infected with COVID-19 are 50% more likely to develop Type 2 diabetes compared to those with other respiratory infections, with a doubled risk for those with obesity. 

Using records from 600,000 youth, the study tracks diabetes onset six months post-infection, emphasizing the need for preventive public health measures. 

Though the study does not account for vaccination status, experts suggest vaccinations and lifestyle changes as protective measures. 

The findings underscore COVID-19’s potential long-term impact on pediatric health, necessitating further research into the virus's effects on autoimmune responses.

October 7: New Study Uncovers How the Brain Clears Waste Linked to Alzheimer’s

Oregon Health & Science University researchers have visualized the brain’s waste-clearance system in living humans, shedding light on how cerebrospinal fluid flows through specialized "glymphatic" channels to flush out cellular waste. 

Using a tracer in patients undergoing advanced MRI for surgery, they observed the fluid’s movement through channels linked to blood vessels, mirroring waste-clearing patterns previously seen only in mice. 

This discovery may lead to methods for measuring glymphatic function in humans, potentially enabling sleep-focused or medication-based treatments to reduce waste buildup linked to neurodegenerative diseases like Alzheimer’s.

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