THE END OF A CHAPTER
The Internal Revenue Service didn't file a petition with the Supreme Court to appeal a series of rulings invalidating its effort to require mandatory testing and continuing education of tax preparers. The service missed a deadline - presumably intentionally -- for filing a petition seeking a review from the Supreme Court. IRS Commissioner John Koskinen had earlier indicated to Accounting Today that the chances of getting the Supreme Court to review the appeals court ruling were low. In a congressional hearing a week before the petition deadline, however, Koskinen pointed to the Obama administration's budget proposal asking for legislative authority to regulate tax preparers.
In that same hearing before the House Ways and Means Committee, Commissioner Koskinen testified about the 2014 tax filing season, including problems with administering the Earned Income Tax Credit, noting the complex nature of the rules governing eligibility for the EITC. Only a week later, the Treasury Inspector General for Tax Administration released a report estimating that the IRS allowed between $13.3 billion and $15.6 billion in improper EITC claims for the last fiscal year, or about 22 to 26 percent of all EITC payments.
And now that you're (hopefully) well on your way to recovering from tax season, the IRS wants you to know that it anticipates that nearly 5 million taxpayers will amend their returns by filing Form 1040X this year.
The Public Company Accounting Oversight Board issued a supplemental request for comments on its proposal to re-organize the existing PCAOB auditing standards, while also providing an online demonstration of the proposed re-organization, presenting the existing auditing standards as they would look if re-organized according to the proposed framework. Comments are due by July 8.
The Center for Audit Quality released a paper setting out an approach to developing audit quality indicators, which it will be pilot-testing with several auditing firms and audit committees. The CAQ Approach to Audit Quality Indicators represents a two-year effort with firms to develop perspectives on which audit quality indicators could be the most relevant and how and to whom they should be communicated. The Public Company Accounting Oversight Board has been developing its own set of audit quality indicators, and the CAQ's pilot test could provide some valuable feedback that may influence which indicators the PCAOB ends up adopting. The CAQ Approach to Audit Quality Indicators is based on a two-fold focus: communications of AQIs that are directed at audit committees, and communication of AQIs that are focused largely on engagement-specific indicators.
The Securities and Exchange Commission postponed the effective date for compliance with some of the conflict minerals rules that the agency had drawn up, after an appeals court ruled that they violated the First Amendment.
MORE TAX NEWS
The IRS released the 2014 update to its Allowable Living Expense Standards that apply to taxpayers who need to delay full payment of delinquent taxes, as well as the 2015 inflation-adjusted deduction limitations for annual contributions to a health savings account. In Revenue Procedure 2014-30, the IRS said that for calendar year 2015, the annual limitation on deductions for an individual with self-only coverage under a high-deductible health plan will be $3,350. The annual limitation on deductions for an individual with family coverage under a high-deductible health plan will be $6,650 for 2015.
The service also said that it would regard 2014 and 2015 as a transition period for purposes of IRS enforcement and administration of the Foreign Account Tax Compliance Act, or FATCA, for banks that have made a good-faith effort to comply.
Finally, it also announced that it is looking at a plan to re-align compliance operations inside its two largest business units, Wage and Investment and Small-Business Self Employed. The agency's examination and collection activities for individuals and small businesses currently overlap between the W&I and SB/SE units. The concept that IRS officials are now reviewing would re-align the agency's compliance-related operations to avoid organizational duplications, find operational efficiencies and more quickly identify emerging compliance risks.
IN OTHER NEWS
SEC Chief Accountant Paul Beswick announced that he would be leaving the commission for the private sector.
The quantity of financial restatements from public companies has leveled off in the past four years and the severity of those restatements has remained low, according to a new report from the research firm Audit Analytics, but restatements have increased from accelerated filers for the third straight year.
Meanwhile, the number of accounting class-action settlements increased for the second straight year in 2013, but remained relatively low compared to the previous decade, according to a new study from Cornerstone Research, which found that in 2013, a total of 44 accounting class actions were settled.
A majority of accounting and finance executives in the U.S. and Canada anticipate that their companies' compliance burden will increase in the years ahead, though less than half expect the cost of compliance to grow, according to a new study, Benchmarking the Accounting & Finance Function: 2014, by the staffing firm Robert Half and the Financial Executives Research Foundation, the research affiliate of Financial Executives International, which found that 74 percent of U.S. and 67 percent of Canadian execs said they expect their companies' compliance burden to rise in the coming years, while 48 percent and 41 percent of U.S. and Canadian executives, respectively, also anticipate the cost of compliance will increase. Nearly all the respondents project the cost of compliance to either rise or remain steady.
Tax prep giant H&R Block acquired New River Innovation, developer of tax-issue resolution software Beyond415 (and a regular member of Accounting Today's annual Top New Products list). Greensboro, N.C.-based New River will become a part of the H&R Block organization and will no longer offer Beyond415 commercially, according to a statement released by H&R Block.
Former New York Mayor Michael Bloomberg and former Securities and Exchange Commission Chairwoman Mary Schapiro joined the board of the Sustainability Accounting Standards Board, as chair and vice-chair, respectively, of the fledgling organization, lending extra clout and credibility to the SASB, which has been rolling out a series of sustainability accounting standards for various industry sectors.
