Accounting

IRS starts tax season with hiring freeze and rescinded job offers

Published

1 day ago

January 27, 2025

The Internal Revenue Service kicked off tax season Monday facing a hiring freeze imposed by President Donald Trump in an executive order on Inauguration Day and lingering uncertainty over how to make up for over $20 billion in budget cuts.

The IRS has been rescinding job offers and posted on its website that offers with a start date on or before Feb. 8, 2025, will be allowed to continue/proceed with the hiring and onboarding process. But offers with a start date after Feb. 8, 2025, or an unconfirmed start date will be revoked.

Last week, Trump formally nominated Billy Long, a former Republican congressman from Missouri, as IRS commissioner, after announcing his intention last month to nominate Long, even though then-commissioner Danny Werfel’s term wasn’t set to end until Nov. 12, 2027. Werfel announced he would be resigning on Jan. 20, Inauguration Day. Deputy commissioner Douglas O’Donnell is acting commissioner in the meantime. He was previously acting commissioner from November 2022 to March 2023 during the transition between former IRS Commissioner Chuck Rettig and Werfel. But the IRS newsroom page was uncharacteristically quiet this past week since the inauguration, especially considering it was the week before the official launch of tax season on Jan. 27, and the IRS had already begun accepting business tax returns and Free File individual returns.

Tax season ran relatively smoothly last year thanks to the increased funding from the Inflation Reduction Act of 2022, and despite the budget cuts, hopes are high that it will happen again this year.

“Busy season is always terrible, but I think it’s going to be sort of business as usual because there are no major expiring provisions to deal with,” said Bill Smith, managing director of the CBIZ Advisors’ National Tax Office.

But there could be problems with the hiring freeze, especially with the IRS already having trouble recruiting enough employees. “A third of the workforce is eligible for retirement, and if you hire new people, they don’t come in as senior auditors, they come in out of college or relatively inexperienced for the most part,” said Smith. “It takes two years to train them and get them marginally effective. If you kill all that, there will be a tremendous amount of natural attrition at the service, and the attrition is going to be at the most experienced level, which will have a huge impact.”

It’s unclear when Long will get a confirmation hearing, but questions have already arisen over his promotion of the fraud-plagued Employee Retention Credit. Sen. Elizabeth Warren, D-Massachusetts, a member of the Senate Finance Committee, who will likely be at the hearing, has already sent Long a letter with a long list of questions about that and his other qualifications.

“He has no tax background,” said Smith. “The Democrats on the Senate Finance were asking about all of his interactions with the Employee Retention Tax Credit company he was working for. He’s on record as saying, everybody’s eligible. He’s on record as saying even if your accountant told you you’re not eligible, come see us. You’ve got the IRS over the last several years prosecuting companies for illicit claims for the Employer Retention Tax Credit. And these two companies that he was affiliated with seem to have been doing exactly that. That’s in addition to the fact that he has no tax experience as an attorney, accountant or Enrolled Agent. He’s a certified auctioneer. That seems to be his lone certification.”

Long has said he’s a certified tax and business advisor, but according to ProPublica, the CTBA that Long uses on his X profile comes from a Florida company called Excel Empire that has only been around for two years and gives the certifications to people who have only attended a two-day seminar.

Some believe that the IRS needs to do more to speed up the processing of ERC claims. National Taxpayer Advocate Erin Collins highlighted the problem with delayed ERC claims earlier this month in her annual report to Congress. As of Oct. 26, 2024, the IRS faced a backlog of about 1.2 million ERC claims, with many claims pending for over a year.

“I’ve been hearing the exact same issues from taxpayers, CPAs lawyers, ERC firms, as well as government officials’ frustration about the overall management of the program,” said Jesse Morton, a managing director at Berkeley Research Group. Somebody who actually has experience with the program and is knowledgeable about the good, the bad and the ugly of the program has a perhaps better and more realistic perspective, I think, is going to be positive for the IRS, and certainly positive for the 1.2 million taxpayers that are currently waiting on their pandemic relief, and have been waiting on it for, in some cases, years.”

Long perhaps may make a priority of speeding up ERC claim processing at the IRS. The Taxpayer Advocate noted that as the report was going to press, Werfel announced in mid-December he expects that approximately 500,000 additional claims will be processed in 2025, but the details and timing of the refunds are still to be determined. However, with the extra $20 billion in budget cuts and the hiring freeze, it’s unclear when or if the IRS will return to other priorities from Werfel such as ramping up audits of large partnerships, big corporations and the wealthy. Trump has threatened to reassign thousands of IRS agents to patrol the Southern border.

‘They hired — were trying to hire 88,000 new workers to go with you, and we’re in the process of developing a plan to either terminate all of them or maybe we move them to the border,” Trump said during a rally in Las Vegas, according to the Daily Mail. “I think we’re going to move them to the border where they are allowed to carry guns. You know, they’re so strong on guns. But these people are allowed to carry guns. So we will probably move them to the border.”

These echoed comments he made last Monday when he was signing his executive order freezing hiring across the federal government, but singling out the IRS for an even longer hiring freeze.

“Upon issuance of the OMB plan, this memorandum shall expire for all executive departments and agencies, with the exception of the Internal Revenue Service (IRS),” says the executive order. “This memorandum shall remain in effect for the IRS until the Secretary of the Treasury, in consultation with the Director of OMB and the Administrator of USDS, determines that it is in the national interest to lift the freeze.”

As he signed the order, Trump remarked, “We’re going to take those 88,000 — let’s see if they’d like to work on the border because that’s where we want them really.”

He seemed to be alluding to the 87,000 armed IRS agents who were supposedly going to be hired by the Biden administration, although that claim has been disputed by the IRS and its employee union.

Nevertheless, the extra $20 billion in cuts to IRS funding from the Inflation Reduction Act, on the heels of an earlier $20 billion in cuts, due to legislative language that was repeated in two continuing resolutions passed by Congress last year to keep the government open, are supposed to be coming out of the funding for the IRS’s enforcement budget. That will certainly translate into less emphasis on audits under Long.

“It’s a little frightening to think about what might happen in the IRS if he gets confirmed,” said Smith. “You almost want to tell your clients, you’ve got a four-year holiday because the IRS isn’t going to go after anybody during this period of time. You can’t do that, of course, because it would be unethical. But all of the initiatives they were talking about, like spending a lot more money on auditing big partnerships, that would be an important and very money-making operation for the IRS and the United States. But I would guess they’re going to scale back audits, which are already at kind of historic lows, so I think it will have a very big impact if he’s confirmed.”

Accounting

M&A roundup: Avantax and Marsico Financial expand

Published

1 hour ago

January 28, 2025

Business Finance News

Avantax, a tax-focused financial planning and wealth management firm that’s part of Cetera Holdings, has acquired the assets of Sweeney Kovar LLP, a wealth management and accounting firm that’s already affiliated with Avantax.

Sweeney Kovar was founded in 1984 by Kevin Sweeney and Joseph Kovar. Their firm’s wealth management business had approximately $180 million in assets under management as of Sept. 30, 2024, while the tax and accounting business processed 2,000 tax returns annually. Kovar and the firm’s staff of 12 became Avantax employees as part of the deal, and are continuing to operate from their current offices in Danville, California, east of San Francisco. Sweeney continues to work with the wealth management business, supported by his wealth management assistant who joined Avantax as an employee.

“We’re proud of the business we built, but we wanted succession to be about more than just our future retirement,” Sweeney said in a statement. “Our main goal was consistency for our clients, many of whom have been with us for 35 years, and our staff so selling to Avantax was the right choice. Choosing anyone but Avantax could mean a drop-off in service for our clients, and changes for our team that probably wouldn’t be a good fit. With Avantax, it’s the same level of client service and the same culture for our staff — it’s a real blessing.”

The Sweeney Kovar founders approached their succession plan with comprehensive tax-focused financial planning services in mind.

“Adding wealth management to our practice many years ago made us better CPAs because we go beyond the tax returns, we know more about the client’s family and what’s important to them so we can plan for their future and help them get in the right place to achieve their goals and objectives,” Kovar stated. “We looked at other firms, but sticking with Avantax was better all the way around.”

“Joe and Kevin sought out our Corporate Development team at our National Conference to discuss creating a succession option that checked all their boxes while keeping their truly outstanding business within the Avantax Community,” Watts said. “I know Joe and Kevin would agree that it’s best when advisors start thinking about succession planning many years before they want to retire so the process can happen thoughtfully, with every detail covered, enabling us to collectively create the best possible outcome for the advisors, their teams and their clients.”

Last year, Avantax acquired GA Investment Management, a wealth management firm based in Seven Fields, Pennsylvania, with satellite offices in Pittsburgh, and Houston-based Integrated Tax & Wealth Strategies, one of Avantax’s largest affiliates, with $760 million in total client assets. The financial planning firm Cetera acquired Avantax for approximately $1.2 billion in 2023. Avantax was formerly known as Blucora, which rebranded as Avantax after Blucora sold off its TaxAct tax preparation software to a private equity firm in 2022 to focus instead on its Avantax financial planning and wealth management business. Blucora created Avantax Wealth Management in 2019 after acquiring HD Vest and 1st Global, two financial planning firms that partnered with CPA firms around the country to offer wealth management services, and combining them under the Avantax name.

Accounting

Ignition appoints new CEO, CFO; Pearson now executive chair

Published

2 hours ago

January 28, 2025

Business Finance News

Practice management software provider Ignition announced that Ignition’s global president, Greg Strickland, is the new CEO as the current head, co-founder Guy Pearson, transitions into an executive chairman role to focus more on strategy.

Strickland has been president since March of last year. Prior to that, he led product management software provider ProductBoard and was also a leader in content management platform Box. Given this experience in the business software world, as well as his recent performance as Ignition’s president, Pearson expressed strong confidence in his successor.

“Greg has been with Ignition since 2024 based out of San Francisco and brings all the things I don’t have to the table,” said Pearson in the announcement, “He’s worked at a software company before (actually been COO at a number of them); he understands the U.S. tax market—our historical core market (family member is a U.S. CPA) and general SMBs; he knows why paper cheques/checks still exist in the U.S. If that’s not enough, he lives our values and we think in a very similar way on business model vs. value exchange and trying to serve our customers and build what they need to be successful and serve their clients.”

Ignition also welcomed Amy Foo as its new chief financial officer. As CFO, Foo will be responsible for managing the company’s financial health and operations. She will drive financial planning, manage capital to maximize ROI, and ensure operational efficiency to support Ignition’s ambitious growth. She most recently served as senior vice president of finance and revenue operations for employee engagement and performance platform Culture Amp, and prior to that she spent eight years as senior vice president of global finance operations and managing director for Australia/New Zealand for customer experience platform Zendesk.

“I’m incredibly excited to be joining Ignition,” said Foo. “This is a company that empowers customers, drives business value, and is focused on strategic growth. All things that align perfectly with my experience and passions. Joining Ignition at this crucial stage allows me to leverage my experience in scaling high-growth businesses to help grow the team and organization. By fostering agility and efficiency, I think we can achieve ambitious goals, deliver value, and sustain ongoing success.”

Pearson said stepping away from the CEO role reflects the advice he has long given to others.

“When you start a business, you aim to solve a problem for a market, build a business model that makes sense (and scales), then remove yourself as the last bottleneck of the processes in the business and become an owner and thought partner for the operators of the business,” he said. “This is what I used to talk about with my clients when I ran my accounting firm (Scendar) and what I’ve preached on webinars, talks and keynotes around the world at conferences and online over the last 10+ years. It’d be a shame not to follow my own advice.”

Accounting

In the blogs: Keeping It Straight

Published

3 hours ago

January 28, 2025

Business Finance News

The limits of DOGE; big pharma and the Tax Cuts and Jobs Act; soda tax misaimed; and other highlights from our favorite tax bloggers.

Keeping It Straight

HBK (https://hbkcpa.com/insights/): In the latest lob of the ball back over the net, the Supreme Court says it will allow the Corporate Transparency Act and beneficial ownership reporting.
Eide Bailly (https://www.eidebailly.com/taxblog): Basically, on Jan. 23, the Supreme Court stayed an injunction on reporting, pending consideration by the 5th Circuit Court of Appeals. “However, there is another nationwide order issued by a different federal district court that remains in place, and the government states ‘reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action’.”
Taxable Talk (http://www.taxabletalk.com/): More on BOI reporting, with wittily placed strikethroughs.
Tax Vox (https://www.taxpolicycenter.org/taxvox): DOGE could end up missing some of the largest government programs — because they’re hidden in the Tax Code and run by the IRS.

Making an impression

We need to talk

Tax Notes (https://www.taxnotes.com/procedurally-taxing): First-time blogger Abdulrahman Azzouni addresses when “Alternate Dispute Resolution Meets FOIA: Resolving Disputes Through Mediation.”
Palm Beach Accounting and Financial Services (https://www.pbafs.com/blog): Credit Where It Isn’t Due Dept.: What to remind them about the most common scams of IRS impersonators.
Tax Pro Center (https://accountants.intuit.com/taxprocenter/): Per the IRS, a rundown on ever-popular gift card scams.
Boyum & Barenscheer (https://www.myboyum.com/blog/): What nonprofit clients need to know — but might not want to tackle — about cost allocation.
Current Federal Tax Developments (https://www.currentfederaltaxdevelopments.com/): There are big events in life and then there are big events in taxes: The IRS has denied tax-exempt status under Sec. 501(c)(3) to an organization that planned to provide assistance, primarily to its members in need, in the event of death, marriage or birthday.
Dean Dorton (https://deandorton.com/insights/): Favorite opening of the week: “If your idea of financial leadership involves staring at spreadsheets until your eyes glaze over, we need to talk.”