The knowledge you need

When the Inflation Reduction Act was passed last year, it called for significant investments in clean energy. It contained dozens of clean energy provisions which included 24 new tax incentives designed to accelerate clean energy investments. While many incentives were designed to benefit companies there were three new tax incentives introduced and updated that benefit individuals. Specifically, the Used Clean Vehicle and New Clean Vehicle tax deductions provide an incentive for purchasing qualified clean energy vehicles. Through the end of 2023, taxpayers interested in claiming the credit need to do so by filing Form 8936 along with the federal tax return. At the start of the new year these rules will change.

The high amount of fraud plaguing the Employee Retention Tax Credit (ERC) program reached a tipping point forcing the IRS to take action. Last month, the agency announced a moratorium on new claims processing through the end of the year. The time is needed to review existing claims more carefully and to implement programs to assist those who may have improperly filed claims. On October 19th, the IRS release Notice IR- 2023-193 which provides guidance for those who wish to withdraw a claim. Depending on the taxpayer’s situations there are different steps which must be followed. Only those that want to completely withdrawal a claim can participate.

The Inflation Reduction Act, which was signed into law on August 16, 2022, includes several provisions designed to help fight the high level of inflation. The purpose was to help meet national climate goals, strengthen energy security, invest in the creation of good paying jobs, and to reduce the costs of energy and healthcare for families. It is filled with dozens of provisions and includes 24 new tax incentives designed to accelerate the deployment of clean energy vehicles, buildings, and manufacturing. This includes both the Used Clean Vehicle and New Clean Vehicle Tax Credits.

For years construction companies and contractors have leveraged the Section 45L federal tax credit for the inclusion of energy-efficient systems in new residential construction. Originally passed in 2005, it permitted homebuilders to claim a federal tax credit for energy efficient home construction. Over the years the credit has been updated and modified to extend its value. Most recently, the Inflation Reduction Act (IRA) extended and enhanced the credit to allow homebuilders who construct, reconstruct, or rehabilitate energy efficient homes to receive a credit up to $5,000.  Unfortunately, many home builders have not claimed the credit because of a lack of detailed guidance from the IRS.  The good news is the agency recently released Notice 2023-65 which provides the long-awaited details.

Over the last year the IRS has issued several warnings about the number of ineligible Employee Retention Tax Credit (ERTC) claims being submitted. A central issue has been the large amount of misinformation about the program being spread by promoters and marketing companies. Business owners are led to believe that every business is entitled to receive the credit without any discussion about eligibility criteria or what happens if the credit is improperly awarded. What makes the situation worse are the aggressive radio, email and online marketing tactics used. Unfortunately, these bad actors pray on those who have little information about the credit resulting in ineligible claims.  

The IRS announced last week (in IR-2023-169) a moratorium on processing new ERTC claims through the end of 2023. The reason for the change is the increase in the number of ineligible claims that are being filed. It appears many of these are coming from businesses that have been pressured and scammed by aggressive promoters and marketing firms. The agency will continue processing claims received prior to September 14th but cautions it will now take longer due to increased fraud concerns.

On September 8, 2023, the IRS issued  a news release (IR-2023-166) detailing enforcement priorities over the coming year. Regulators will be shifting attention to high-income earners, partnerships, large corporations, and promoters taking advantage of tax laws. Specifically, the agency will target those groups that have experienced a sharp reduction in audit rates over the past decade. In addition, the IRS will also be relying on Artificial Intelligence (AI) to help detect tax cheating, compliance issues, and to improve case selection.

In May, Tennessee unanimously passed the Tennessee Information Protection Act (TIPA), outlining new data privacy protections businesses operating in the state must follow. It is similar to regulations already in effect in Utah, Virginia, Iowa, and Colorado. The legislation requires certain protections of personal information including genetic or biometric, demographic, immigration status, sexual orientation, information about minors (under 13), and precise geolocation information. Due to the comprehensive nature of the changes impacted businesses will have two years to achieve compliance.

Over the past few years, Congress has passed various legislation designed to make it easier to participate in and save money in an employer sponsored retirement plan. The growing retirement savings gap has long been an issue the government has been working to address. Efforts to change retirement savings started with the  SECURE Act of 2019 and mostly recently included additional reforms that culminated in the SECURE Act 2.0. The latter included many changes designed to encourage employers to start workplace plans and to make it easier for workers to participate. Many of the updates are significant and are scheduled to become effective over a 5-year period.

The alarming situation has prompted Congress into action calling for significant changes to make it easier for workers to qualify, participate in, and benefit from employer sponsored retirement plans. Most recently the SECURE Act 2.0 was signed into law which outlines changes to accelerate saving opportunities. Despite it’s sweeping nature, many in Congress are looking for more ways to streamline the process. One example is the Auto Reenroll Act of 2023 which was introduced in late July and allows employers to automatically reenroll non plan participants.