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.

ERC Update

September 23: The Clock is Ticking on Voluntary ERC Disclosures, IRS Warns

The IRS has issued a warning to businesses that improperly claimed the Employee Retention Credit (ERC), emphasizing the need for voluntary disclosures before enforcement actions begin. 

With billions of dollars at stake, the agency has ramped up its review efforts as part of a larger crackdown on fraudulent ERC claims. 

The IRS is urging businesses to proactively address any inaccuracies by filing amended returns, as voluntary disclosures could result in reduced penalties. 

The agency has also increased scrutiny of ERC promoters who aggressively marketed the credit, often leading businesses to claim ineligible amounts. 

Those who fail to come forward may face significant fines, penalties, and interest. The IRS’s focus underscores the importance of timely compliance as the deadline for voluntary disclosures approaches.

Informational: IRS’s Voluntary Disclosure Program for Employee Retention Credit

The IRS’s Voluntary Disclosure Program offers businesses that improperly claimed the Employee Retention Credit (ERC) a chance to correct their filings without facing the full extent of penalties. 

This initiative encourages employers to come forward and amend their returns if they mistakenly claimed the credit, particularly those who may have been misled by aggressive ERC promoters. Participants in the program can potentially reduce penalties and avoid harsher enforcement actions. 

The IRS has also warned that those who fail to voluntarily disclose may face audits, interest, and substantial penalties once the agency fully ramps up its ERC enforcement efforts. 

This program reflects the IRS's continued scrutiny of ERC claims as part of its broader campaign to identify and address fraud and abuse related to pandemic relief programs.

September 16: Employee Retention Credit Uncertainties Prompt Taxpayer Litigation

Ongoing confusion surrounding the Employee Retention Credit (ERC) has led to an increase in taxpayer litigation, as businesses face challenges in claiming the credit amid ambiguous IRS guidelines. 

Many disputes center on the eligibility criteria, particularly regarding the "full or partial suspension of operations" due to COVID-19 and the revenue reduction thresholds. 

Some businesses that claimed the credit in good faith now face IRS audits, penalties, or demands for repayment. 

Taxpayers are suing to clarify the credit's scope and protect their claims, arguing that the IRS’s guidance was insufficient or misleading. 

The rising legal battles highlight the broader uncertainty businesses face as they navigate retroactive credits and complicated tax regulations, with some experts calling for clearer rules and stronger IRS communication to prevent further disputes.

Tax Policy/News:

September 20: IRS Chief Counsel to Combine Large and Small Business Divisions

The IRS Office of Chief Counsel has announced plans to merge its divisions handling large and small business cases, a move aimed at improving efficiency and fostering a more cohesive approach to tax enforcement and guidance. 

The restructuring will integrate legal teams working on cases of varying scales, allowing for better resource allocation and more consistent interpretation of tax laws across different types of businesses. 

By streamlining these divisions, the IRS expects to expedite case resolutions and enhance collaboration between legal experts dealing with complex tax issues, particularly in areas like transfer pricing and international tax. 

This reorganization is part of a broader effort to modernize the IRS and improve its responsiveness to both taxpayers and tax professionals.

September 19: Taxpayer Advocate Acknowledges Shortcomings, Plans Improvements in TAS

The National Taxpayer Advocate Erin Collins has admitted to several inefficiencies within the Taxpayer Advocate Service (TAS) and outlined a series of planned reforms. 

Collins highlighted issues such as delayed response times and inadequate staffing, which have hindered TAS’s ability to assist taxpayers effectively. A key challenge is managing the high demand for TAS services, with Collins noting that current resources are insufficient to meet growing needs. 

In response, Collins has proposed several improvements, including hiring more staff, upgrading technology, and improving training programs to better address taxpayer concerns. 

Moreover, the agency plans to streamline its processes and expand outreach to ensure taxpayers are more aware of the available services. These reforms aim to reduce delays, improve communication, and ensure faster resolution of taxpayer issues.

Economic News/Policy:

September 23: Congress Faces High-Stakes Showdown as Government Shutdown Looms

With a government shutdown imminent, Congress remains at a political impasse over the federal budget, struggling to pass a stopgap measure before the October 1 deadline. 

House Speaker Kevin McCarthy faces challenges from within his own party, as hardline Republicans demand deeper spending cuts. In contrast, Senate leaders are seeking bipartisan cooperation to avert the shutdown, although progress has been slow. 

The deadlock has raised concerns about potential disruptions to federal services, including military pay, national parks, and social safety programs. 

Additionally, the looming shutdown could impact financial markets and strain the U.S. economy at a time of already high inflation and interest rates. Lawmakers continue negotiations, but the path to a resolution remains uncertain.

September 18: What the Fed’s Half-Point Interest Rate Cut Means for Business Owners

The Federal Reserve's recent half-point interest rate cut has significant implications for business owners, offering potential relief amid an uncertain economic environment. 

Lower borrowing costs will make it cheaper for businesses to finance operations, expand, or invest in new projects, which is especially critical for small and medium-sized enterprises. 

However, while the cut may boost borrowing, it also signals concerns about slowing economic growth, which could dampen consumer spending and demand for certain goods and services. 

Business owners should also prepare for potential inflationary pressures, as lower rates could drive higher demand in some sectors, pushing prices upward. 

Overall, the rate cut presents both opportunities and challenges for businesses, depending on their financial strategies and market conditions.

Technology:

September 19: Biden-Harris Administration Awards Nearly $5 Million to Small Businesses for Quantum and AI Research

The Biden-Harris administration has awarded nearly $5 million in grants to 17 small businesses to advance research in quantum technology and artificial intelligence (AI). 

The funding, part of the National Institute of Standards and Technology’s (NIST) Small Business Innovation Research (SBIR) program, aims to support innovative projects that have the potential to enhance U.S. leadership in cutting-edge fields. 

These projects include efforts to improve quantum computing infrastructure, AI-driven data analysis, and cybersecurity measures. 

The grants reflect the administration’s commitment to fostering technological innovation while promoting small business growth. 

These initiatives are expected to drive advancements in both quantum and AI, critical areas for maintaining competitiveness in the global technology landscape. The investments also align with broader efforts to modernize key industries and strengthen national security through advanced technology.

September 19: House Bill Seeks to Bolster AI R&D Efforts at the Department of Energy

A new bill introduced in the U.S. House of Representatives aims to enhance the Department of Energy’s (DOE) artificial intelligence (AI) research and development efforts. 

The proposed legislation would allocate additional funding and resources to expand the DOE’s capabilities in AI, focusing on advancing energy efficiency, cybersecurity, and climate research. 

Lawmakers behind the bill believe that bolstering AI research at the DOE is essential for the U.S. to remain a leader in global technological innovation, particularly as AI becomes increasingly integrated into critical infrastructure. 

If passed, the bill would encourage greater collaboration between the DOE, private sector, and academia to accelerate breakthroughs in AI applications for the energy sector. 

The initiative reflects growing recognition of AI’s transformative potential in addressing key challenges, including clean energy transition and national security concerns.

Energy and Environmental Policy/News:

September 20: Biden Administration Unveils $3 Billion for Battery Manufacturing Projects

The Biden administration has announced $3 billion in funding for new battery manufacturing and recycling projects, a move designed to bolster the domestic supply chain for electric vehicle (EV) batteries. 

The investment is part of the administration’s broader strategy to promote clean energy and reduce reliance on foreign materials, particularly from China. 

This funding will support the development of advanced battery technologies, improve domestic production capacity, and create jobs in the green energy sector. 

It also aligns with the administration’s goals to reduce carbon emissions and increase EV adoption by making battery components more accessible and sustainable. 

The initiative reflects the growing importance of battery technology in achieving the U.S.'s clean energy objectives and securing its competitive edge in the global EV market.

September 18: Biden Administration Revives EV Charger Tax Credit

The Biden administration has reinstated a tax credit for electric vehicle (EV) chargers, aiming to accelerate the development of a nationwide charging infrastructure. 

The revised incentive provides up to $1,000 for residential installations and up to $100,000 for commercial charging stations, particularly benefiting businesses looking to install multiple chargers. 

The credit aligns with broader efforts to encourage EV adoption and meet the administration’s goal of a 50% reduction in U.S. greenhouse gas emissions by 2030. 

Critics argue that more aggressive measures are needed to meet these ambitious climate targets, but the tax credit is expected to support continued growth in the EV market and enhance accessibility, especially in underserved areas. 

The program reflects the administration’s push for sustainable transportation solutions while supporting economic growth in the clean energy sector.

September 18: Norway Reaches Milestone as EVs Outnumber Gas-Powered Cars

Electric vehicles (EVs) now outnumber gasoline-powered cars in Norway, marking a significant achievement in the country’s push towards green transportation. 

EVs now account for over 50% of all vehicles on Norwegian roads, largely due to the country’s comprehensive tax incentives, subsidies, and strong government support for electric mobility. 

Norway has been a global leader in EV adoption, aiming to become the first nation to phase out the sale of new gasoline and diesel vehicles by 2025. 

This milestone reflects the effectiveness of policy-driven efforts to reduce emissions, as well as growing consumer preference for sustainable vehicle options. 

The success of EVs in Norway also highlights the importance of infrastructure, including widespread access to charging stations, in supporting large-scale electric mobility transitions.

For Fun:

September 23: Octopuses and Fish Caught on Camera Hunting as a Team

New footage captured by divers reveals that octopuses, typically solitary hunters, sometimes collaborate with fish in coordinated hunting efforts. 

The study, published in *Nature Ecology & Evolution*, documents 13 instances of cross-species hunting in the Red Sea, where the big blue octopus (Octopus cyanea) worked with fish such as goatfish and blacktip groupers to capture prey. 

The octopus often plays a central role in directing the group's movements, demonstrating a level of cognitive decision-making. Researchers observed complex group dynamics, with certain fish adopting specific roles to maximize hunting success, while opportunistic fish sometimes freeload, only to be "punched" by the octopus in response. 

This behavior raises intriguing questions about interspecies cooperation and group leadership in marine environments, offering new insights into the social intelligence of octopuses. Further research aims to explore these dynamics across different ecosystems.

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