Accounting

IRS Independent Office of Appeals created by new rules

Published

1 year ago

February 3, 2025

Financial advisors and tax professionals whose clients dispute an IRS calculation of their liability could get an outside ruling through the newly renamed Independent Office of Appeals.

In the last week of President Joe Biden’s administration, the IRS issued the final rules under a 2019 law adopted during President Donald Trump’s first term that added “independent” to the name of the administrative review body and codified that the process is available to most taxpayers. Because the law “originated in his first term,” it’s not clear whether President Trump’s team intends to change anything about this aspect of taxpayer services at the IRS amid their larger plans for budget cuts at the agency, said Brett Cotler, a partner in the Taxation Group of law firm Seward & Kissel.

“Sometimes you are dealing with a tax examiner that sees a case one way, and no matter how hard you try, you can’t convince them that they’re wrong and you’re right,” he said. “The ability to move the case up a level can just provide options and benefits to your clients when dealing with controversial matters.”

With only 14 public comments on the proposed version of the regulation from September 2022, the rule will likely fall below many other bigger-ticket items on newly confirmed Treasury Secretary Scott Bessent’s agenda, such as the extension of the Tax Cuts and Jobs Act and efforts by the new administration to roll back the previous one’s enforcement efforts.

The new appeals process, and exceptions to the rule

The Taxpayer First Act put the appeals process under the responsibilities of a “chief of appeals” whose office exists “to resolve federal tax controversies without litigation on a basis that is fair and impartial, promote consistent application of federal tax laws, and enhance public confidence in the IRS,” the law’s text said. The law required that any taxpayer whose request for an administrative appeal is denied get a detailed written explanation, and it dictated that any individuals with gross income of $400,000 or less be able to obtain every nonprivileged part of their case files, according to a guide to the law from “The Tax Adviser” journal. Those with wealth above that level could receive case files through a Freedom of Information Act request.

“The Office of Appeals is the settlement arm of the IRS, with a mission to review administrative determinations from the IRS’s collection and examination activities and, when possible, to resolve them without litigation,” Timothy McCormally, a former chair of the IRS Advisory Council, wrote in the guide to the legislation. “Before the TFA’s enactment, there was no statutory right to contest administrative decisions in Appeals, even though a review of administrative actions before payment of any tax underlying a controversy was generally available. (There are exceptions to the taxpayer’s access to Appeals — for example, when inadequate time remains on the limitation period for assessment or collection, the taxpayer’s arguments are frivolous, or a case has reached the point at which litigation is initiated.)”

Other exceptions include whistleblower awards, agency determinations from outside the IRS, cases with criminal prosecutions involved in the underlying taxes, disputes that are already docketed for the U.S. Tax Court or filings questioning the constitutionality of provisions of the Tax Code or other laws.

In general, clients who believe an IRS agent, auditor or a “foreign bank and financial accounts” (FBAR) examiner added up their tax bill erroneously can go to Appeals for “a fresh look at the merits of the case, and it will determine whether it thinks the IRS got it right or wrong,” Cotler said.

“Even though there are 24 broad exceptions, they’re actually kind of narrow,” he added. “The vast majority of income-tax controversies, as well as FBAR examinations, which the IRS will do, those all have basically the option to go to appeals.”

Accounting

FASB Standardizes Carbon Offsets Accounting Rules

Published

1 day ago

July 27, 2026

Business Finance News

FASB Standardizes Carbon Offsets Accounting Rules

In a decisive move toward standardized environmental financial reporting, accounting standards boards issued updated implementation guidance during the week ending July 25, 2026, regarding the formal recognition and valuation of corporate carbon offsets and environmental credits. The revised frameworks establish precise rules for how enterprises must measure, record, and disclose carbon credits on balance sheets, eliminating years of inconsistent reporting practices across public capital markets.

Under the finalized accounting standard, purchased carbon offsets can no longer be categorized under vague administrative expenses or unstandardized intangible asset accounts. Instead, organizations must classify environmental credits based on underlying operational intent—distinguishing between credits held for immediate compliance compliance obligations, long-term offset obligations, or active market trading. Furthermore, companies are required to evaluate carbon holdings for fair value impairment at the end of each reporting period, ensuring that depreciated or low-quality environmental credits do not distort corporate asset values.

The standardized rules carry significant implications for corporate audit committees and chief accounting officers. External audit firms are implementing rigorous verification protocols to validate the physical legitimacy, legal ownership, and scientific permanence of carbon credits claimed on balance sheets. Inaccurate or overstated carbon accounting claims now carry substantial financial litigation risk, alongside potential regulatory enforcement for misleading ESG disclosures.

To remain fully compliant, corporate accounting departments must establish centralized carbon tracking systems integrated into primary standard ERP ledgers. Accounting teams that proactively adopt standardized environmental reporting protocols will build investor credibility, streamline annual audit processes, and insulate their organizations against evolving regulatory scrutiny.

Accounting

Automated Tax Compliance Tools Reduce Risk

Published

1 day ago

July 27, 2026

Business Finance News

Automated Tax Compliance Tools Reduce Risk

Corporate tax departments reached a critical juncture in automated operational management. With nations worldwide rapidly enacting digital service taxes, localized value-added tax (VAT) mandates, and real-time electronic invoicing requirements, manual tax calculations have become obsolete. Modern corporate tax divisions are aggressively deploying AI-driven tax engine software to automate complex cross-border indirect tax calculations in real time.

The imperative for automated tax compliance stems from the sheer complexity of current trade policies and multi-jurisdictional commerce. E-commerce platforms, software vendors, and global manufacturers face constantly changing regional tax rates, statutory exemption rules, and cross-border tariff structures. Automated tax engines embed directly into enterprise enterprise resource planning (ERP) architectures, automatically applying correct tax codes at the point of sale, calculating real-time withholding amounts, and generating compliant e-invoices.

Automated audit trail generation represents another key advantage of modern tax tech integration. Advanced compliance platforms log every transactional tax determination on immutable digital ledgers, providing tax authorities with transparent, self-verifying audit trails. This capability drastically reduces the operational duration and administrative cost of corporate tax audits, protecting enterprises against severe penalties resulting from calculation errors or missed reporting deadlines.

For chief financial officers and tax directors, investing in automated tax compliance is a vital operational risk mitigation strategy. Automating routine tax calculations frees high-level accounting professionals to focus on strategic tax planning, transfer pricing optimization, and risk management in an increasingly complex global economic environment.

Accounting

Continuous Auditing Transforms Corporate ERPs

Published

7 days ago

July 21, 2026

Business Finance News

continuous auditing transforms corporate erps

As corporate accounting departments cross the threshold into late July 2026, the adoption of continuous, automated auditing systems has reached a definitive turning point. Driven by advances in artificial intelligence and deep integration with modern Enterprise Resource Planning (ERP) platforms, leading finance organizations are moving away from traditional, periodic post-hoc audits in favor of real-time, 100% transactional verification. This technological transition is redefining internal control environments, reducing compliance costs, and eliminating the structural delays inherent in legacy quarterly closing processes.

Unlike traditional auditing frameworks that rely on statistical sampling—a process that inevitably leaves operational blind spots—continuous auditing software monitors operational data feeds continuously. Every purchase order, electronic invoice, payroll disbursement, and cross-border wire transfer is automatically cross-referenced against established corporate governance parameters, regulatory tax schedules, and anti-fraud algorithms in real time. Anomalies or unauthorized ledger entries are flagged instantly, allowing internal audit teams to investigate and remediate compliance gaps immediately rather than months after the close of a financial period.

The implications for executive financial management are far-reaching. By embedding continuous verification directly into daily transaction workflows, chief financial officers gain uninterrupted visibility into the organization’s true financial standing. Real-time balance sheet auditing eliminates the severe operational bottlenecks associated with month-end and quarter-end financial reconciliations, freeing accounting professionals to focus on strategic financial modeling, tax planning, and capital allocation rather than manual data entry and spreadsheet consolidation.

However, implementing continuous auditing requires accounting leadership to invest heavily in data governance and technical upskilling. Internal audit teams must evolve from manual ledger reviewers into system architects capable of auditing complex algorithms and validating automated data pipelines. Accounting firms and corporate controllers that master continuous auditing will establish a resilient compliance framework capable of meeting stringent international regulatory standards with total transparency.