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January 1, 2024

IRS Plans to Shake Up Leadership

The top leadership in the IRS is set to change. IRS Commissioner Daniel Werfel believes the changes are needed for the agency to meet its new goals. He aims to create greater flexibility and efficiency over the agency by streamlining internal processes. The changes also are needed, in his view, to adapt to the evolving landscape around tax administration – which has undergone changes due to new tax laws and technology.

What Are the Changes?

Changes to the organizational structure include reducing the Deputy Commissioner post to a single position (there are currently two); as well as creating four new positions with an IRS chief of taxpayer services, IT, compliance, and operations.

Long Time No Changes

While these changes are set to take place in the beginning of 2024, they are the first changes to take place in a long time for agency leadership. Currently, the highest rungs of the IRS organizational structure dates to the year 2000, over 20 years ago.

The last time changes were made in 2000, the IRS reorganized operations to support taxpayer segments that were the result of the IRS Restructuring and Reorganization Act of 1998.

Single Deputy IRS Commissioner Model

The change over from two at the top to a single deputy IRS commissioner position is modeled after the way the Treasury Department is structured. Doug O’Donnell, current deputy commissioner for Services and Enforcement, will step up to the post.

The Four New Positions

Other key changes in the leadership structure are the creation of four new chief positions, overseeing the areas of taxpayer service, compliance, IT, and operations.

Ken Corbin (currently Wage and Investment Commissioner) is being promoted to Chief, Taxpayer Service. Corbin served in various roles within the IRS since starting his career in 1986 at the Atlanta Service Center. His division will handle taxpayer-centered services, including the toll-free call and taxpayer assistance centers, overseeing tax return processing centers and correspondence with taxpayers.

The Chief, Taxpayer Compliance Officer role will be filled by Heather Maloy. Maloy’s career encompasses both roles within the IRS as well as private practice. Previously, she served as the LB&I Commissioner as well as other roles, including Associate Chief Counsel to a number of IRS divisions. The Chief, Taxpayer Compliance Officer role will oversee compliance work, including operations in the Small Business, Self Employed, Tax Exempt, and Government Entities divisions. She will also be responsible for the Professional Responsibility, Return Preparer, and Whistleblower offices.

The position of Chief Information Officer will be filled by Rajiv Uppal. Uppal’s current role is as the Director of the Office of IT and Chief Information Officer for Medicare and Medicaid Services centers. The Chief IT Officer role will oversee the entire IRS IT division.

Finally, the fourth new position, that of Chief Operating Officer, will be held by Melanie Krause. Krause began working at the IRS in 2021 and currently serves as the Chief Data and analytics Officer. Prior to this, she was the Acting Deputy Commissioner for Services and Enforcement.

Conclusion

Logistically, the changes should occur on the proposed timeline as reorganization changes that do not require a budgetary appropriation amendment. In layman’s terms, the IRS isn’t looking to Congress for any more money, so Congressional approval isn’t needed. As such, the changes are all but certain to take place in early 2024. The result aims to help the organization adapt to recent tax law changes and evolving technology while simultaneously streamlining the organization and making it both more efficient and effective.

January 1, 2024

Documenting Fiduciary Accounting Practices

Fiduciary accounting, which is also referred to as court accounting, is a way to document and report financial activity during a discrete period of time for legal entities, such as a conservatorship, estate, trust or guardianship.

It’s meant to give adequate notice to all relevant parties when it comes to every consequential financial activity impacting the administration that occurred over the accounting time frame. It shows every disbursement and receipt that is managed by the legal entity’s fiduciary. It accounts for transactions beginning with the initial funding or principal and the resulting future transactions, including income.

When it comes to the format of fiduciary accounting, along with the United States having its own unique modifications, the Uniform Principal and Income Act requires checking the governing instruments, in addition to state laws, to ensure fiduciary accounting compliance is met. However, looking at the National Standard Format, the following components in a filing are accepted by most courts:

Documentation of incoming and outgoing monetary sums of the legal entity’s starting principal and income produced
Documentation of the entity’s liabilities and assets
Documentation of any payment the fiduciary received
Legally authorized individuals hired by the fiduciary, what pay they received, and their association with the fiduciary

The primary consideration is that being part of being a fiduciary is having a legal duty to the beneficiary of the legal entity, including “the duty to account” to the beneficiary. This duty to account is oftentimes required by the governing document, the state statute, a court order, linked to court proceedings or a beneficiary requesting an accounting. If this duty is breached, the fiduciary may be liable.

The accounting should ensure a reporting of every asset in the legal entity. During the first year, the beginning balance will list the assets that fund the account. For successive accountings, the starting balance and the ending asset values on the preceding accounting should be the same. Along with the assets in the custody of the legal entity being documented, any asset that has been withdrawn, paid out, or moved must also be documented. Income received from the entity’s investments is to be measured against the principal and income investment schedules to ensure that all income, dividends, and interest have been received and reported correctly.

Reasons Why an Accounting is Done

Some of the more straightforward reasons a fiduciary accounting is done is to ensure the fiduciary is compliant. There’s also greater efficiency when doing this annually versus more infrequent intervals since mistakes can be identified and corrected sooner. The same accounting results can also be used for the entity’s tax filings.

Other reasons concern the fiduciary and beneficiaries. The beneficiary can review and challenge the accounting if there’s impropriety suspected. When the fiduciary has completed their responsibilities for the beneficiaries and entity, liability for the fiduciary may cease to exist, even if the beneficiaries decline to execute a receipt, release, and refunding agreement (or similar document). If an approved accounting is necessary to be submitted with a court, the above four documents may be considered an acceptable substitution in place of an accounting.

Regardless of the type of legal entity that requires this type of fiduciary accounting, a fiduciary that is diligent and works with an accounting and legal professional can reduce the chances of exposing themself and their supervising entities from unnecessary exposure.

January 1, 2024

How a No-Spend January Can Kickstart Your New Year

Here we go again. The new year is approaching, and those resolutions are staring us in the face – and the most common? Saving money. In fact, according to YouGov, this is the most important resolution for American adults. Now, certainly, you can’t not spend money in January (you have to eat), but the idea is to rid yourself of any unnecessary cash outflow so you can kickstart the year with some solid financial habits.

Limit Trips to the Store

Of course, you’ll need food, toiletries, and general household staples, but here’s your chance to step back and make lists, as opposed to running out to Target or Starbucks for a quick adrenaline rush. Plan your trips out. Buy store brands. Check prices. Use those coupons. Set your sights on the long view of the month, if not the year. This is one way to work toward getting fiscally fit.

Eat Everything in Your Pantry

You probably have cans of soup and pasta sitting on your shelves. Maybe even some canned veggies. Google some simple recipes with the items you have, add some spices, and voila, you’ve got a tasty, no-spend meal. Nothing like this can lead to long-term savings.

Forgo Eating Out

Once more, this tip is related to the first two. Truth is, you’ll want to go out to eat a few times – so go – but within reason. The trick is to find affordable spots with delicious grub. Another money-saving idea: split your entrees. You’ll not only save dollars but also calories.

Reevaluate Your Subscriptions

This is something that might creep up on you during the year. While you’ve been scrolling these past months, you might have seen an irresistible product, and you just had to have it – whether it was special vitamins, a hip magazine, or yet another streaming station with all those binge-worthy shows you can’t stop watching. But you might ask yourself: are these expenditures really improving my life? Once you see how much money you’ll be saving, you’ll most likely feel better (new and improved!) already.

Invest the Money You’re Saving

Now that you’ve cut back, you should have a surplus of cash accumulated over the year. So, what to do? One of the best things to do is tuck it away in a high-yield savings account. Just like with regular (traditional) savings accounts, you can withdraw when you want to. But with a high yield, you’ll most likely have a limit to how often you can take money out, which is usually six times per month without a fee. The main difference between a traditional and high-yield savings account is the interest rate. The current national average interest rate for a traditional savings account is 0.64 percent APY. Comparatively, top high-yield savings accounts pay between 4.25 percent and 5.27 percent. You in? Thought so.

Moral of the story? No-spend January is all about starting some new habits for 2024 – and watching them pay off. This way, during the new year, you’re not just working for your money, but allowing your money to work for you.

Sources

https://www.cbsnews.com/news/how-no-spend-january-can-kickstart-solid-financial-habits-for-2024/