IRS news, Roth conversion considerations, stopping elder financial abuse

This episode of the podcast summarizes recent news coverage in the Journal of Accountancy, along with an article on what to consider before converting a traditional IRA to a Roth IRA. The episode highlights articles in the November issue of the magazine flipbook. Content mentioned in the episode includes:

• Coverage of the AICPA & CIMA National Tax Conference: The sentiment of former IRS commissioners, along with one concern of National Taxpayer Advocate Erin Collins.
• Details on the growing tax gap, according to IRS data.
• NOCLAR: What CPAs in public practice and in business should know.
• What to think about before converting a traditional IRA to a Roth IRA.
• How CPAs can protect clients from elder financial abuse.
• The Last Word feature by Andrew Hunzicker, CPA.
• Technology Q&A articles about Excel’s Advanced Filter feature and comparing versions of a Word document.

What you’ll learn from this episode:

• What former IRS commissioners said about the future of the IRS.
• National Tax Advocate Erin Collins’s comments about audits of those making less than $400,000 annually.
• A summary of feature articles in the November issue of the Journal of Accountancy.

Play the episode below or read the edited transcript:

— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Transcript:                                                            

Neil Amato: Welcome to the Journal of Accountancy podcast and welcome to November. This is Neil Amato with the JofA, and I’m glad you’re back for another episode of the show. Today’s episode is going to cover multiple topics:

IRS news, what to consider in converting a traditional IRA to a Roth IRA, and the lessons that can be learned from one CPA fighting elder financial abuse. That’s all coming up after this word from our sponsor.

Martha Waggoner of the Journal of Accountancy has coverage of the AICPA & CIMA National Tax Conference. Her article on a panel discussion details the words of two former IRS commissioners. Their sentiment includes a note of optimism for the future, based on new funding and pending improvements in technology.

You can read that article and all the others mentioned on the JofA site, and we will link to the coverage in the show notes for this episode.

Also from the tax conference, one of the constant reassurances about the $80 billion allocated to the IRS from the Inflation Reduction Act has been that the IRS will not use the money to focus on small businesses or households earning less than $400,000 a year.

During a Q&A at the conference, National Taxpayer Advocate Erin Collins expressed doubt about that promise — made by the president, the Treasury secretary, congressional supporters of the bill, and IRS officials — because taxpayers could use it to assume they will not have to pay their fair share of taxes.

Again, we will link to the article in the show notes.

Also in IRS news, the annual tax gap averaged $496 billion for tax years 2014 through 2016, and that figure is likely to grow, the IRS said late last week in its latest set of tax gap estimates.

The gross tax gap is the difference between the estimated tax liability for the period and the amount that taxpayers pay on time.

Based on projections for 2017 through 2019, the estimated average gross tax gap is projected to be $540 billion per year, the IRS said.

The 2014 through 2016 estimated annual tax gap is an increase of more than $58 billion from the estimate for tax years 2011 through 2013.

Outgoing IRS Commissioner Chuck Rettig said about the tax gap: “These findings underscore the importance of ensuring fairness in our nation’s tax system. The increase in the tax gap estimates reflects that the IRS needs to do more, both in improving taxpayer service as well as working to improve tax compliance.”

Also online is set of articles together on what CPAs in public practice and also business need to know about NOCLAR. What is NOCLAR? That would be noncompliance with laws and regulations. It is an ethics focus, and two CPAs are writing about that topic, one on the public practice angle, the other the business angle. Those articles will be on journalofaccountancy.com/news/ and will be linked in the show notes.

Two CPAs are writing an article on the personal financial planning topic with the headline “When Is a Roth Conversion Beneficial?” The article focuses on considerations that investors should assess when determining whether to convert a traditional IRA to a Roth IRA. These considerations include not only expected future income tax rates but also the account owner’s particular tax situation in the year in question; anticipated required minimum distributions, or RMDs; charitable contribution intentions; and estate tax aspects. Be sure to check that out. Again, it’s on journalofaccountancy.com/news/. It was posted in late October, and we’ll also link to it in the show notes for this episode.

The November issue of the Journal of Accountancy is live in flipbook form and also in individual article links, which can be found under the “Magazine” tab on the JofA homepage.

One article of note was co-authored by CPA Jefferson T. Davis of Utah, and it’s about elder financial abuse. The article details how CPAs providing services to elderly individuals play a role in protecting their clients from financial exploitation.

Such exploitation challenges CPAs who provide financial planning, prepare tax returns, or provide accounting and reporting services to recognize potential exploitation and to help their elderly clients identify or prevent abuse. The article features a real story, with names changed, of elder financial abuse and a CPA who took steps to stop it. It detailed the questions the CPA asked along with strategies involved to root out the financial abuse.

Also in the magazine is the Last Word feature on Oregon CPA Andrew Hunzicker, and the Technology Q&A column with advice from CPA Kelly Williams, a previous guest on this podcast. In the November issue, Williams is writing about how to use Excel’s Advanced Filter feature. Also in the Tech Q&A section, author Wesley Hartman explains with screenshots how to compare and combine Word documents when revisions have been made without track changes being activated.

A reminder to follow the Journal of Accountancy podcast wherever you listen. We’d love for you to leave us a rating and a review. Thank you for listening, and we will talk next week.