The knowledge you need

The Taxpayer Advocate Service (TAS) released its annual report in January 2023. It provides a detailed analysis of the significant progress the agency has made in reducing the backlog of returns and the top problems as well. This includes challenges with processing delays, agency hiring and training, transparency, and a troubled appeals process. TAS is a nonpartisan, independent organization within the IRS that advocates for and supports taxpayers. Its 2023 report contains summaries of the most important issues in the fiscal year 2022 and recommendations for changes to improve the taxpayer experience.

What happens when you take established legislation, build on it, reconcile 3 bills into one, and then add more than 100 provisions? You get the SECURE Act 2.0, a bill that passed by a vote of 414-5 that was signed into law on December 29, 2022, as part of the Consolidated Appropriations Act of 2023. The overall goal of SECURE 2.0 is to make enrolling in retirement plans and saving for retirement more accessible than ever. While most of the changes impact plan participants, there are several updates and changes that will impact plan sponsors this year alone.

The golden years are a time when the days of the daily grind of the working world are left behind and a new chapter begins. It often means spending more time pursuing hobbies, time with family, or traveling. As lovely as it sounds, this reality may simply be out of reach for many. Most workers do not have enough saved to be able to support themselves, even when coupled with anticipated Social Security payments. According to the U.S. Bureau of Labor and Statistics, only 55% of workers participate in an employer-sponsored retirement plan. This alarming statistic prompted Congress to take action resulting in the passage of the SECURE Act in 2019. The legislation made it easier to save, expanded plan eligibility to part-time employees, and more.

There are several new clean energy tax incentives available to construction companies in 2023 thanks to the Inflation Reduction Act. To qualify for the highest savings possible, taxpayers need to meet new prevailing wage and apprenticeship requirements. Unfortunately, the necessary guidance to allow compliance had not yet been issued. The good news is the IRS recently issued  Notice 2022-61, which provides important guidance for builders, contractors, and developers, to understand how to meet the new rules.

Most Atlanta construction contractors are going into the new year with a positive outlook. This is because of the convergence of positive indicators including sales, profits, staffing, and available jobs. In fact, the Construction Backlog Indicator, which highlights the amount of work companies are contracted to complete in the future is quite positive. It is now at the highest level since 2019. Despite this, many are concerned about the current economic situation and what steps to take should a recession hit in the coming months. While it's unclear what will happen, there are several steps that companies can take now to weather a potential storm.

The recent interest rate increases initiated by the Federal Reserve are designed to counteract increasing prices. While dealing with inflation is certainly important, many contractors are already challenged by the ill effects that it brings. Most notably, there has been an increase in the cost of building materials, equipment rentals, skilled labor, and supplies. The trend of increasing costs has made it difficult for many to thrive. While there are different ways to combat the effects of inflation, one of the most effective is through cash flow planning. Maintaining a consistent cash flow is essential to weathering the storm of economic issues.

The Employee Retention Tax Credit (ERTC) is one of the remaining federal tax incentives left over from the pandemic era. Although the program is no longer in effect, taxpayers can continue to file retroactive claims. This is certainly good news for eligible businesses that previously did not claim the savings. At the same time, it has also opened the door to unscrupulous ERTC mills and others falsely promising huge tax savings to unsuspecting business owners. The result has been a sharp increase in the number of fraudulent ERTC claims. In fact, the IRS has already identified over 11,000 fraudulent returns

Managing an employer-sponsored retirement plan can be quite challenging. There are several regulatory, compliance, and reporting requirements imposed by the IRS and the Department of Labor. Matters can become more complicated when dealing with a large plan. New requirements such as an annual plan audit, which peers into virtually every aspect of operations, need to be conducted.  Attention is placed on the plan's functions and whether compliance requirements are met.  Given the complexities, it is not uncommon for plans to commit unintentional errors in plan management.

Over the past few years, a new investment framework focused on the environmental, social, and governance (ESG) framework has been introduced to help screen investment opportunities. The focus is on determining how a company safeguards the environment, manages relationships with employees, and suppliers, and considers internal controls, audits, shareholder rights, and more. The approach has become so popular there are a number of ESG rating agencies including MSCI, ISS ESG, and FTE Russell. They provide important information on the ESG quality of an investment. In other words, ESG has become an increasingly important framework to investors.

Soon, the IRS will allow 403(b) retirement plans to use the same approval process as other qualified plans. Depending on a plan sponsor’s employer identification number, this process can start as soon as June 1, 2023. Though there are some exceptions, most 403(b) plans will qualify in the new guidance outlined in Revenue Procedure 2022-40. A determination letter confirms a plan is operating by relevant rules and regulations.  This is welcome news for many Atlanta not-for-profit organizations which previously were not permitted to make a request.