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Continue to Focus on Accounting and Disclosures Related to the Pandemic

Published on October 20, 2020

Entities need to continue to consider the effects of the COVID-19 pandemic and its economic fallout in their accounting and disclosures for the latest period, and their disclosures should evolve as facts and circumstances change. 

As a reminder, that includes considering whether the pandemic-induced recession has triggered asset impairments; whether any accounting estimates, such as the amount of variable consideration an entity expects to be entitled to under contracts with customers, need to be revisited; and what the effect might be on hedging relationships, compensation arrangements and income taxes. 

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The Rise of Cybercrime in the Accounting Profession Continues

Published on September 24, 2020

The July 15 tax filing deadline is finally behind you. Now is the perfect time to address the growing number of cyberattacks still taking place in the accounting industry. 

Many accounting practices are reporting that IT vendors and employers rushed to provide access for remote employees without fully understanding how to properly implement and secure it. This has resulted in an increased number of cyberattacks on accounting practices of all sizes. With the increase in the remote workforce and the ongoing COVID pandemic, there has been a 300 percent increase in cyberattacks. 

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IRS Says Companies Are Responsible for Deferred Payroll Taxes

Published on September 24, 2020

The Internal Revenue Service said companies will be responsible for collecting and paying back any deferred payroll taxes under a directive by President Donald Trump aimed at helping workers while the administration and Democrats are stalemated on a stimulus deal. 

The agency issued guidance that implements Trump’s order to delay the due date for payroll taxes for millions of workers from Sept. 1 through year-end. Come next year, the taxes will need to be paid by April 30, however — unless Congress votes to forgive the liabilities, the release showed. 

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Guidance Issued on Payroll Tax Deferral

Published on September 24, 2020

The IRS issued much-anticipated guidance on the payroll tax deferral that was ordered by President Donald Trump in a presidential memorandum on Aug. 8 (Notice 2020-65). The notice allows employers to defer withholding on affected employees’ compensation during the last four months of 2020 and then withhold those deferred amounts during the first four months of 2021. 

Under the guidance, employers can defer the withholding, deposit, and payment of certain payroll taxes on wages paid from Sept. 1 through Dec. 31, 2020. The deferral applies to the employee portion of the old-age, survivors, and disability insurance (OASDI) tax under Sec. 3101(a) and Railroad Retirement Act Tier 1 tax under Sec. 3201. The due date for withholding and payment of these taxes is postponed until the period beginning Jan. 1, 2021, and ending April 30, 2021. 

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Will PPP Fraud Turn into the Next Wave of 'Liar's Loans'?

Published on September 24, 2020

In April, Andrew Marnell of California applied for millions of dollars of loans in federal assistance through the Paycheck Protection Program. Based on his applications, Marnell received approximately $9 million in federally awarded funds from banks authorized to make the loans. It was only after funding the loans that the lenders discovered the funds were going directly to Marnell rather than the small businesses listed in the applications, causing them to notify federal investigators. 

The Department of Justice soon brought a criminal complaint against Marnell, alleging that he received approximately $9 million in PPP loans by submitting applications for multiple, nonexistent businesses that employed hundreds of fabricated workers and had millions of dollars in fanciful payroll expenses. He’s alleged to have then used the money to make stock trades and gamble hundreds of thousands of dollars in Las Vegas. On July 16, Marnell was arrested on federal charges of bank fraud. 

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IRS Issues More Bonus Depreciation Rules

Published on September 24, 2020

The IRS issued final regulations (T.D. 9916) providing guidance on additional first-year (bonus) depreciation under Sec. 168(k), which was amended by the law known as the Tax Cuts and Jobs Act, P.L. 115-97. T.D. 9916 provides taxpayers with guidance on issues involving the application of Sec. 168(k) that were not addressed in 2019 final regulations (T.D. 9874). This includes clarifying guidance on the requirements that must be met for property to qualify for the deduction, including used property. The regulations also address recent legislative changes to the depreciation rules for qualified improvement property. 

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IRS Finalizes 100% Bonus Depreciation Rules

Published on September 24, 2020

The Internal Revenue Service and the Treasury Department issued the last set of final regulations to implement the 100 percent additional first-year depreciation deduction from the Tax Cuts and Jobs Act, enabling companies to write off the cost of most depreciable business assets in the year they are put in service. 

The 100 percent first-year bonus depreciation deduction was part of the 2017 tax overhaul. It typically applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture usually qualify for the tax break. 

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Net Operating Losses: CARES Act Changes

Published on September 24, 2020

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, was enacted March 27, 2020, to provide wide-ranging relief to businesses and individuals adversely affected by the coronavirus pandemic. Among its many business tax relief provisions, the CARES Act amended the net operating loss (NOL) rules under Sec. 172 that were previously amended by the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. 

The TCJA eliminated NOL carrybacks and permitted NOLs to be carried forward indefinitely. The CARES Act changes those rules temporarily by permitting NOLs incurred in 2018, 2019, or 2020 to be carried back for five years to the earliest year first and suspending the 80% taxable income limitation through 2020. 

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IRS Issues 2020??

Published on September 24, 2020

Business travelers who incur expenses while traveling away from home have new per-diem rates to use in substantiating certain of those expenses (Notice 2020-71). The new rates are in effect from Oct. 1, 2020, to Sept. 30, 2021. On Friday, the IRS provided the 2020–2021 special per-diem rates, including the transportation industry meal and incidental expenses rates, the rate for the incidental-expenses-only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method. 

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Top 10 Ways Companies Cook the Books

Published on August 20, 2020

With the recent economic slowdown, companies are under increased pressure to show stability, or even growth, and paint a rosy picture for investors. That pressure will undoubtedly cause some companies to engage in accounting fraud to distort their financial results, thereby misleading investors. As with most accounting scandals, companies are usually unable to sustain the deception, and the house of cards eventually collapses.

The following are 10 of the primary accounting schemes that we regularly see in our practice representing whistleblowers at the Securities and Exchange Commission. Under the SEC whistleblower program, individuals are eligible to receive monetary awards for bringing such frauds to light. In certain circumstances, compliance personnel, including auditors, accountants, officers and directors, may be eligible for awards under the program. Since 2012, the SEC has awarded more than $500 million to whistleblowers, which includes three awards to compliance officers. 

1. Improper timing of revenue recognition

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