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Sanctioning Terrorist Activities by Iran, Accelerating Disaster Assistance and Expanding Healthcare Opportunities for Native Americans

3 min read

HR 589, HR 3152, S 1528, S 70, S 460, S 1271MAHSA Act (HR 589) – The Mahsa Amini Human Rights and Security Accountability (MAHSA) Act is a bipartisan bill that was introduced on Jan. 27 by Rep. Jim Banks (R-IN). The purpose of this bill is to impose sanctions on the leaders of Iran for supporting human rights abuses and terrorism. The sanctions block both property and visas owned by certain foreign individuals and entities affiliated with Iran. The bill passed in the House on Sept. 12 and currently resides in the Senate.

Fight CRIME Act (HR 3152) – This bipartisan bill was introduced by Rep. Michael McCaul (R-TX) on May 9. It imposes visa- and property-blocking sanctions specific to Iran’s missile-related activities, including acquiring, developing, transporting, or deploying missiles or related items, such as drone technologies. These sanctions also may be imposed on adult family members of people directly involved, as well as foreign individuals and entities that engage in transactions and knowingly provide support for the Missile Technology Control Regime (MTCR). This legislation was passed in the House on Sept.12 and is under consideration in the Senate.

Disaster Assistance Simplification Act (S 1528) – This bipartisan bill aims to facilitate streamlined information sharing among federal disaster assistance agencies, accelerate life-saving assistance to disaster survivors, and expedite the ability for communities to recover from disasters, as well as other purposes. The legislation was introduced by Sen. Gary Peters (D-MI) on May 10 and was passed in the Senate on July 27. It is presently under review in the House.

Tribal Trust Land Homeownership Act of 2023 (S 70) – Introduced by Sen. John Thune (R-SD) on Jan. 25, this bill mandates that the Bureau of Indian Affairs expedite processing and completion of residential and business mortgage applications within certain deadlines (e.g., provide approval or disapproval within 20 or 30 days, depending on the type of application). The bipartisan bill passed in the Senate on July 18 and is currently under consideration in the House.

Urban Indian Health Confer Act (S 460) – This Act, introduced by Sen. Tina Smith (D-MN) on Feb. 15, passed in the Senate on July 18 and is currently in the House. Its purpose is to expand the requirements of the Indian Health Service (IHS) on matters relating to both American Indians and Alaskan Natives. At present, the IHS is required to confer only with urban Indian organizations. However, this new bill would mandate that the U.S. Department of Health and Human Services (HHS) ensure that the IHS and other agencies consult on matters related to the Indian Health Care Improvement Act, as well as other healthcare provisions for Native Americans. The Act passed in the Senate on July 26 and has been forwarded to the House.

FEND Off Fentanyl Act (S 1271) – The objective of this bill is to impose sanctions on individuals, cartels and transnational criminal organizations involved in trafficking illicit fentanyl and related products. The legislation was introduced by Sen. Tim Scott (R-SC) on April 25 and was assigned to the committee for review on June 21. This bipartisan bill is co-sponsored by 32 Republicans, 32 Democrats and two Independents. It has a high probability of being passed by both houses and enacted by the president.

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Evaluating Net Operating Loss Considerations

3 min read

Net Operating Loss, what is Net Operating LossWhen it comes to determining if a business is eligible to claim a net operating loss (NOL), it depends on the financial situation. If a business’ taxable income is less than its allowable deductions in a set tax period, usually a year, then the business can utilize the NOL deduction on future tax obligations. Since some businesses’ profits and losses result from uneven cycles, the Internal Revenue Service (IRS) Code permits businesses to find a balance with their tax obligations.

How a Net Operating Loss Works

Here is an example showing a business’ situation with annual profit/loss summaries:

Year one: High profits and big tax payments due

Year two: Net operating loss incurred

Year three: High profits and big tax payments due

The way a NOL deduction works in the example above is that the losses from year two can be used to offset taxes due in year three.

Net Operating Loss (NOL) = Taxable Income – Allowable Tax Deductions

Referring to the income statement, if the company’s bottom line is a net loss, then the company might be eligible to take advantage of the NOL deduction.

It’s important to keep in mind there have been modifications to what and how businesses may use this. Until recently, the IRS let businesses utilize the carryback method to offset losses to prior years’ tax bills (up to 24 months of tax liabilities), resulting in an immediate refund. However, with the passage of the Tax Cuts and Jobs Act, NOLs were modified. Effective Jan. 1, 2018, or later, the two-year carryback provision was removed (except for select farming losses), but allowed for an indefinite carryforward period. The TCJA also limits carryforwards to 80 percent of each subsequent year’s net income. Additionally, if a business records a net operating loss in more than one tax year, they must be exhausted in the order that the losses occurred. 

The Coronavirus Aid, Relief and Economic Security (CARES) Act permitted NOLs occurring in tax years 2018, 2019, and 2020 to be carried back five years and carried forward indefinitely. However, the exemptions have now expired. Losses that occurred in pre-2018 tax years are still subject to former tax rules, with any remaining losses expiring after 20 years. Beginning with the 2021 tax year, when the Tax Cuts and Jobs Act (TCJA) passed in 2017, it permitted carryforwards of NOLS indefinitely. However, only 80 percent of taxable income can be “carried forward” during a single tax period.

2021 and Forward NOL Example

Year one: NOL $10 million

Year two: Taxable income of $3 million

Year three: Taxable income of $5 million

For year two, with the taxable income’s carryover limit (80 percent) of $3 million is $2.4 million. With the carryover limit subtracted ($3 million – $2.4 million = $600,000), the company’s taxable income will be $600,000 for year two. The remaining NOL of $7.6 million will be considered a “deferred tax asset.” Looking at year three, 80 percent of the year’s $5 million in taxable income equals $4,000,000 in a carryover limit. Subtracting $4 million from $5 million in year three’s taxable income, the business will have $1 million in taxable income, and $3.6 million will be the remaining NOL balance at the end of year three. 

With the tax code continuing to evolve, businesses that stay up-to-date with changes in the IRS Code will make the most of their ability to maximize deductions and reduce liabilities.

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How to Write an Awesome Accounting Bio

4 min read

How to Write an Accountant Bio, How to write CPA Bio, How to write a Tax Preparer Bio, How to write a Bookkeeper bioEven though numbers are probably the biggest thing in an accountant’s wheelhouse, getting people in the door with the right words in your bio can make all the difference in the world. Here are a few tips to make sure that how you present yourself to the public via your wording is powerful, succinct, and engaging.

Make it Short and Engaging

Yes, attention spans in our world are woefully short, much like that of gnat. You have seconds to grab someone’s attention. Write your bio as if you were looking for an accountant. How would you word it? What would catch your eye? Of course, you’d start with your name and title, but what after that? Spend time thinking about this.

Don’t Use First Person

While social media is all about saying “I this” and “I that,” when it comes to bios, it’s best not to do that, use the third person as if you were talking about someone else. For instance, “John Davis is a CPA at Ernst & Young.” After that, you can launch into telling the world just how awesome you are.

Use Active Voice

And avoid passive voice. An example of this would be something like, “John’s team was involved in the overhaul of the payroll system.” For active voice, you’d write it like this:  “John’s team overhauled the payroll system.” See the difference? You’ve cut out extra words and adjusted your verb to be active. A quick way to check your writing for passive voice is to do a search in your document for an “of.” If you spot these babies, fix them right away.

Update Your Social Media Profiles

While most people use LinkedIn, many others who are looking for a job include their bios on their social media pages. In fact, you might update your bio on your LinkedIn page and then share it on Facebook, Instagram, or other platforms you use. This way, when employers are casually scrolling, you’ll appear in their feed. And if they’re looking for someone, all the better.

End Strong

The abbreviation in the marketing world is CTA, or Call to Action. You see it on nearly every digital ad as a button. But if you reimagine it in terms of the last sentence of your bio, it can leave a lasting impression and, hopefully, trigger a response. You might end your bio with a short, friendly statement, your email, and your phone number: “John is actively seeking employment, can be reached at [FILL IN INFO], and is just a ping or phone call away.” No matter what you choose to end with, it should reflect you and your personality.

If you need a little help to get started, here are two different samples:

Sally Smith is a CPA and a Senior Accountant at ABC Company, a full-service tax and bookkeeping firm in Home Town, USA.

John Jones joined ABC Company in 2000. In his current role, he is a seasoned tax preparer with a focus on international taxes. This involves staying up-to-date with current and future tax regulations for foreigners living and working in the United States and abroad, as well as state tax regulations in California and Florida.

Writing an accountant bio that will stand out from the crowd will take a bit of time, but it is well worth it. You want to present yourself in the best possible light to your audience. When you do this, you’ll get more traction and, in turn, more business.

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IRS Announces End of Unannounced Taxpayer Visits (Mostly)

3 min read

IRS Announces End of Unannounced Taxpayer VisitsYou wake up in the middle of the night. Heart racing, drenched in sweat, and breathing heavily. Thankfully, it was just a nightmare when the IRS showed up at your doorstep unannounced. Recently, however, this was the reality for some taxpayers – and not just a bad dream. The IRS just publicized a significant shift in policy, effectively ending the vast majority of surprise taxpayer visits. The change comes in an effort to create safer conditions for IRS officers as well as ease public concerns.

Who’s Knocking at My Door?

In order to understand the change in policy, you’ll need to understand the three categories of IRS employees that typically interact with taxpayers: Revenue Officers, Revenue Agents, and Special Agents.

IRS Revenue Agents are tax return auditors. They don’t typically show up unannounced.

IRS Revenue Officers, of which there are approximately 2,300, have duties that include paying visits to taxpayers to collect back taxes and tax returns not filed. They are not auditors but instead focus on collection efforts, including issuing liens and levies. Revenue Officers are the main category of IRS employees impacted by the policy change.

Special Agents deal with criminal matters and are part of one of the largest law enforcement agencies in the United States. The change in policy does not impact Special Agents.

Safety

Why the shift to (mostly) eliminating surprise visits from IRS Revenue Officers? Safety is cited as the main concern. Unannounced visits to taxpayers, whether at home or their business, can be risky. Historically, IRS Revenue Officers faced contentious and sometimes dangerous conditions during their unannounced visits.

Taxpayer Confusion

There is also a growing number of scam artists pretending to be IRS agents or officers. As a result, taxpayers are increasingly wary of unannounced visits, and this causes confusion for both the taxpayer and law enforcement.

The difficulty in distinguishing between IRS representatives and fakes has caused concern for taxpayers already on guard for scam artists. The IRS believes that maintaining trust among the public will go a long way to maintaining the legitimacy of the organization.

Appointment Letters In Lieu of Visits

In place of these previously unannounced visits, the IRS will contact taxpayers through a 725-B letter, more colloquially known as an appointment letter.

An appointment letter will facilitate scheduling in-person meetings, with the opportunity for the taxpayer to prepare any information and documentation beforehand, allowing for quicker resolution of cases. These meetings occur at a pre-determined time, date, and place.

Limited Visits Will Still Occur

The policy change does not completely eliminate unannounced visits by the IRS. In “extremely limited situations,” such as serving summonses and subpoenas and the seizure of assets, unannounced visits will still occur. To give some perspective, these types of visits will account for only a few hundred per year compared to the tens of thousands of unannounced visits under the old policy.

Conclusion

Unannounced IRS visits are (almost) a thing of the past. They will be carried out only in rare, necessary cases, with most Revenue Officer visits being pre-scheduled. This should ease taxpayer anxiety and make case resolution more efficient.

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How to Identify and Avoid Cash Flow Pitfalls

4 min read

Cash Flow Pitfalls, Cash Flow problemsLooking at expenses for one’s business is essential to reduce cash flow issues. For example, it would show if there’s too much money leaving the business or what type of scenario the business might face if there’s an unexpected and large expense that guts the business’ cash position. Tracking expenses on a monthly basis is one way to determine a company’s financial health.  

Estimating sales by starting with last year’s month-by-month figures is one way to start. Looking at credit and cash sales from a business’ monthly income statements provides historical reference. Examining both fixed and variable past expenses, specifically, is a good starting point. However, it’s important when projecting future sales and reasonable increases to remember that the business could be impacted negatively by a new competitor or positively if one goes out of business.

Determining when payment will be received is a good way to project cash flow. If it’s cash, then it’s instant and no further calculation is necessary. However, if payment is conducted by invoices, credit lines, etc., businesses are encouraged to perform the Days Sales Outstanding (DSO) calculation. This calculates, on average, how long customers take to pay outstanding invoices.

DSO = (Monthly accounts receivables/Total sales) x Days in the month

This is a good way to measure how long customers actually take to pay invoices versus what terms are specified in contracts or invoices.

Another consideration is to look at fixed and variable expenses. While fixed expenses are just that, fixed, it’s important to monitor variable expenses because they can fluctuate. One example is inflation, which can increase the cost of input materials, salaries, overhead, etc. Depending on the volume of production or sales, electricity, commission, or similar costs can also vary.

Once this information is gathered, the current month’s projected cash flow can be calculated.

The formula is as follows: (Last month’s cash balance + Current month’s projected receipts) – Projected expenses.

Preventing Bad Debt from Happening Before Collections is Necessary

According to SCORE, there are many things a business can do to reduce the likelihood of customer debt default and increase cash flow. Businesses can check the creditworthiness of both individual and commercial clients before offering credit to determine the likelihood of defaulting. 

Similarly, if Net 30 is the standard timeframe to pay an invoice, offering a 5 percent discount if it’s paid within seven days is one way to encourage prompt payment. Businesses that get a deposit when signing the contract or before beginning work will generate a more consistent cash flow.

Operating Cash Flow Ratio Example

This looks at how easily a company can satisfy current liabilities from its cash flows that are produced from the business operations. If there’s negative cash from operations, a business might be relying too heavily on financing or selling assets to run its operations. If earnings are steady, but cash flow from operations is falling, this is a negative indication of a company’s health. It’s calculated as follows:

(Operating Cash Flow/Current Liabilities) = ($15 billion/$45 billion) = 0.33

Businesses with an operating cash flow ratio greater than 1 have produced more cash in an operating period than is necessary to satisfy current liabilities. Businesses that have a reading less than 1 did not produce enough cash to satisfy current liabilities. However, further investigation is required to ensure that it’s not taking some of its excess cash to reinvest in projects with the potential to create future rewards.

While there’s no way to predict future cash flow trends, making projections can help businesses compare actual results to projects and adjust their plans more efficiently.

Sources

https://www.score.org/resource/article/10-ways-improve-collections-and-cash-flow