FASB Proposes Change For Contributions Accounting

The Financial Accounting Standards Board on August 3 issued a proposed Accounting Standard Update (ASU) intended to clarify and improve the scope and the accounting guidance for contributions received and made, primarily by not-for-profits. FASB requested comments on the proposed ASU by November 1, 2017.

According to FASB, the proposed ASU is intended to help organizations decide if transactions should be accounted for as a contribution or an exchange. Organizations would accomplish this by using clarifying guidance to evaluate whether a resource provider is receiving value in return for the resources transferred.  The proposed ASU also helps organizations evaluate such arrangements by using an improved framework to determine whether a contribution is conditional or unconditional, and better distinguish a donor-imposed condition from a donor-imposed restriction.

"Stakeholders indicated that there is difficulty and diversity in practice among not-for-profits with characterizing grants as exchanges or contributions, and in distinguishing between conditional and unconditional contributions" said FASB Chairman Russell G. Golden. "The proposed ASU provides not-for-profits with a more robust framework to evaluate and determine if a transaction should be accounted for as a contribution or an exchange."

Accounting for contributions is an issue primarily for not-for-profit organizations because contributions are a significant source of revenue. However, FASB stressed that the amendments in this proposed ASU would apply to all organizations that receive or make contributions of cash and other assets, including business enterprises.

The proposed standard follows the same effective dates as FASB's recent Revenue Recognition standard:

• A public company or a not-for-profit organization that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market would apply the new standard to annual reporting periods beginning after December 15, 2017, including interim periods within that annual period.
• Other organizations would apply the standard to annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

Early adoption of the amendments in this proposed ASU would be permitted irrespective of the early adoption of the amendments in the Revenue Recognition standard.

A copy of the proposed ASU is available here.

 

Republicans Aim For Fast Tax Deal This Fall

Even though many senators bemoaned the partisan nature of the health-care debate, Republicans plan to use the same reconciliation procedure to rewrite the tax code.  The plan was confirmed by Senate leader Mitch McConnell, who acknowledged this would also require all but two Republicans to vote for the plan or risk defeat.

White House Legislative Affairs Director, Marc Short said at a press conference that he expects the House to pass tax legislation in October and the Senate to do so in November. Short also said he expects the House and Senate to pass budget resolutions by October, which are likely to include instructions to use the reconciliation procedure.

The timing of a tax reform bill raises concerns about the time necessary for the IRS to prepare for filing season.  When asked if the legislation could pass by November, Sen. Charles E. Grassley (R-Iowa), the second-ranking Republican on the Finance Committee, responded, "It'd better be.  It's almost got to be signed by the president by that time because IRS has to have that much time so you can file taxes in January."  But Rep. Peter Roskam (R-Ill.), chairman of the House Ways and Means Tax Policy Subcommittee, said on the same day that tax reform could still happen even if it stretches into 2018.

Nevertheless, Rep. Kevin Brady, Chair of the Ways and Means Committee, discussed tax reform with NSA Executive Vice President John Ams on August 3 and stated that a tax reform proposal is under discussion and would likely be unveiled in September, with hearings and a House vote soon to follow.  Brady said any decision on tax rates, or the elimination of deductions or other details is still unclear because of the need to satisfy reconciliation rules, which require any tax proposal to be revenue neutral during the ten year budget window following enactment. 

 

Passwords Of Tax Professionals New Scam Target

 

The IRS Security Summit warns tax professionals to be alert to a new phishing email scam in which criminals impersonate tax software providers and attempt to steal usernames and passwords.

According to the IRS, this latest scam email variation comes with a subject line of "Software Support Update" and highlights an "Important Software System Upgrade." It thanks recipients for continuing to trust the software provider to serve their tax preparation needs and mimics the software providers' email templates.

The e-mail informs the recipients that due to a recent software upgrade, the preparer must revalidate their login credentials. It provides a link to a fictitious website that mirrors the software provider's actual login page.

Instead of upgrading software, however, the tax professionals are providing their information to cybercriminals who use the stolen credentials to access the preparers' accounts and to steal client information.

The Security Summit reminds tax professionals that software providers do not embed links into emails asking them to validate passwords. Also, tax professionals and taxpayers should never open a link or an attachment from a suspicious email. Tax professionals who receive emails purportedly from their tax software providers seeking login credentials should send those scam emails to their tax software provider. 

This new scam is yet another reason why tax professionals need to take strong security measures to protect their clients and protect their business.

 

IRS Planned E-Services Outage

There will be a planned outage of all e-Services tools from 6 p.m. Thursday, August 17 through 6 a.m. Monday, August 21. During this period, users will be unable to access the Transcript Delivery System (TDS) and Secure Object Repository (SOR), Registration and TIN Matching. All applications will also be offline until August 22.

Affordable Care Act Information Return (AIR) filers may resume submission of applications for Transmitter Control Codes starting on August 22. The application process for AIR users has been offline since July because of the e-Services platform transition.

Also on August 21, a redesigned landing page for e-Services will launch with a new look and feel.

The scheduled outage will complete the transition of e-Services to a new platform that will improve the look and feel of applications and complete a multi-year technological upgrade. The IRS will also perform testing during that four-day period.

 

 

Some ITINs Expire By End of 2017 – Renew Now

 

The IRS has begun mailing notices to more than 1 million taxpayers with expiring Individual Taxpayer ?Identification Numbers (ITINs) to inform them their ITIN is expiring, and urging them to renew as quickly as possible to avoid tax refund and processing delays.

 

ITINs with middle digits 70, 71, 72 or 80 are set to expire at the end of 2017. The notice being mailed explains the steps taxpayers need to take to renew their ITIN if it will be included on a U.S. tax return filed in 2018.

 

The IRS said notices will be issued over a five-week period beggining early August. Taxpayers who receive the notice but have already acted to renew their ITIN do not need to take further steps unless another family member is affected.

 

Under the Protecting Americans from Tax Hikes (PATH) Act, ITINs that have not been used on a federal tax return at least once in the last three consecutive years will expire Dec. 31, 2017, and as mentioned above, ITINs with middle digits 70, 71, 72 or 80 will also expire at the end of the year.