Accounting
November’s election is shaping up to be critical to tax planning
The nearing November elections will be determinative for tax outcomes, say observers. That’s not just due to the presidential election, according to Rochelle Hodes, Washington National Tax Office principal at Top 25 Firm Crowe. “It’s not just the presidential election,” she said. “Both houses of Congress are also at stake and might tip either way.”
“The tax proposals are not the kind that are able to be implemented by regulation or executive order,” she explained. “There is significant complication this time around, including the expiring Tax Cuts and Jobs Act provisions. Whoever takes control of the next Congress will have to figure out what to do about those provisions. The cost of extending all of the provisions is $4.6 trillion. Most of them are related to individuals. If they are allowed to expire, that would raise the tax for many individuals, which is an unattractive proposition for any president or for Congress. The decision will have to be made about which will be allowed to expire, whether or not some of the provisions will be changed in order to accommodate whatever budget goals are agreed upon, then the decision and consensus will have to be made concerning offsets to pay for the resolution of expiring provisions.”
Each party has taken a position on the TCJA, noted Hodes. “On the Republican side, the TCJA was the central tax policy accomplishment of the Trump administration,” she said. “They would make permanent the double standard deduction, for example. It’s unclear whether or not they want to extend only the positive and not the negative provisions. For example, the SALT cap of $10,000 has been very unpopular with high-tax states. While a lot of them might be blue states, a lot of the rest and Congress are not. So SALT has garnered a lot of attention. In general, Republicans want to make the expiring provisions permanent.”
Stephen Maturen/Getty Images and/Photographer: Stephen Maturen/Ge
Meanwhile, she continued, “The Democrats and the Harris campaign have put forth the view that they are in favor of extending the expiring provisions to the extent that an individual making less than $400,000 per year and small businesses are not going to have an increase in tax. There has been much written about how that will be accomplished.”
Of the two different approaches to the TCJA, the Democrats may be “easier” in that they have put forth offsets for the TCJA extension in light of the $400,000 limit.
Additional Harris proposals focus on the middle class and small business, according to Hodes. “They have offsets they can get, such as a 25% minimum tax on those with more than $100 million in wealth, raising the corporate tax from 21% to 28%. Their raise in the capital gains tax rate is interesting in that Harris recently took a stand that was less of an increase than originally planned in the Green Book — 28% for those with income of more than $1 million. Interestingly, I had trouble getting more concrete information about whether that would also cover qualified dividends. It was unclear from their statement if they were tied together, and was also unclear about the investment income tax. The Green Book proposal to increase that tax, as well as her comments, did not address that, so our chart [
On the Republican side, there are different views about offsets and when they are needed, she added: “For instance, there is a group of Republicans that view many of the TCJA provisions as good for the economy that would drive increases in the economy and economic growth so that an offset would not be necessary. It doesn’t appear that there is a consensus on which provisions in the TCJA should be permanent. How do you figure out who will win in negotiations and how do you plan for uncertainty — that kind of planning is what a lot of them will have to engage in. Some of that uncertainty will be removed after the election.”
For high-net-worth individuals subject to the estate tax, things will become more complicated, according to Hodes. “If either party wins a majority in both houses as well as the presidency, there will be a better understanding of the direction of how the TCJA issues will be resolved, and the direction that other legislation might take,” she explained. “If we have a divided government, I don’t think the November elections will bring much clarity. There will be proposals that will start to develop momentum, as well as some extenders during the lame duck session, but I don’t believe the TCJA can be resolved then. The year 2025 is going to be a very interesting tax legislative year.”
Hodes advised taxpayers to look at the various proposals and identify those that really make a difference — for example, corporate and individual rates for the highest earners. The expiration of Code Section 199A, the qualified business income deduction for pass-throughs, is set to expire. “A lot of small businesses rely on this,” she said. “Does it make another entity more attractive to conduct business? Entities that have taken the deduction need to model and see how a combination of changes will affect them.”
Meanwhile, the Harris proposal to tax unrealized capital gains, if it gains traction in a Democrat-controlled House and Senate, could become the most difficult proposal in the Tax Code to administer, according to Jeffrey Kelson, co-leader of the national tax practice at Top 25 Firm EisnerAmper.
“Harris expressed broad support for a plan to introduce a minimum income tax of 25%. Anyone with a net wealth of more than $100 million would be subject to a prepayment of tax on unrealized gain. If the asset were held and subsequently went down in value, they would be eligible for a refund,” he noted. “Once this is done, it would be necessary to start all over again to value the assets for the next year. It would be very difficult on both sides, and a lot of people might have to sell assets to pay the tax.”
Aprio, a Top 25 Firm based in Atlanta, has acquired JMS Advisory Group, a firm that specializes in unclaimed property compliance and escheat process development, also based in Atlanta
Financial terms of the deal were not disclosed. Aprio ranked No. 24 on Accounting Today’s just released
JMS was founded in 2006 and helps clients mitigate risk and capitalize on opportunities through managed unclaimed property compliance. The team includes attorneys, CPAs, CFEs and others.
JMS has a wide range of clients, including enterprise companies, financial institutions, credit unions, insurance companies, hospitality and health care organizations.
“As Aprio continues its rapid growth, we are committed to expanding our services to meet the evolving needs of our clients,” said Aprio CEO Richard Kopelman in a statement Tuesday. “The addition of JMS gives us the opportunity to continue strengthening our position as a future-focused advisory firm. JMS’s focus on escheat management and asset recovery not only enhances our current capabilities but also allows us to deliver even more impactful solutions to help businesses navigate complex compliance challenges.”
JMS president and CEO James Santivanez is joining Aprio as a partner and provides guidance to clients on unclaimed property and state and local tax issues.
“We created JMS to make an impact nationally in the unclaimed property consulting industry, and I’m proud of our nearly 20-year history of helping clients mitigate risk and capitalize on opportunities resulting from accurate and properly managed unclaimed property compliance,” Santivanez said in a statement. “Joining with Aprio takes us to the next level, allowing us to build upon our success while providing even greater value to our clients. This is an exciting next step in our journey.”
JMS founder and director Sherridan Santivanez is also joining Aprio as a partner. He specializes in representing clients before state enforcement authorities and managing complex audits and voluntary disclosures for some of the world’s largest companies. She provides strategic guidance on audit preparation and navigates interactions with state and third-party auditors.
Aprio received a
The American Institute of CPAs and the National Association of State Boards of Accountancy are asking for comments on their proposal for an additional pathway to CPA licensure through
The AICPA and NASBA proposed the
The UAA changes would:
- Enable states to adopt a third licensure pathway that requires earning a baccalaureate degree with an accounting concentration, completing two years of professional experience as defined by Board rule, and passing the Uniform CPA Examination;
- Shift to an “individual-based” mobility model, which allows CPAs to practice in other states with just one license; and
- Add safe harbor language to ensure CPAs who meet existing licensure requirements preserve practice privileges.
The proposals come as several states are already moving forward with their own changes, including
The updates reflect feedback gathered during a late 2024 exposure draft period and forward-looking solutions being advanced by state CPA societies and boards of accountancy to increase flexibility for licensure candidates while maintaining the integrity of the CPA license.
The AICPA and NASBA are asking for comments on the proposed changes by May 3, 2025. They can be submitted through this
The UAA offers state legislatures and boards of accountancy a national model they can adopt in full or in part to meet the licensure needs of each jurisdiction.
The proposal would maintain the current two pathways to CPA licensure:
- Earning a post baccalaureate degree with an accounting concentration, completing one year of professional experience as defined by Board rule, and passing the CPA exam; and,
- Earning a baccalaureate degree with an accounting concentration, plus an additional 30 semester credit hours , completing one year of professional experience as defined by Board rule, and passing the CPA exam.
Small business employment held steady last month, according to payroll company Paychex, while wage growth continued below 3%
The
“Our employment data continues to show moderate job growth and wage growth below three percent,” said Paychex president and CEO John Gibson in a statement Tuesday. “The consistent long-term trend we’re seeing is a small business labor market that is resilient and stable with little job movement among workers. At the same time, small business owners are optimistic about future business conditions despite uncertainty about how to adapt to a rapidly evolving legislative and regulatory landscape.”
The Midwest remained the top region in the country for the ninth consecutive month with a jobs index level of 100.54. Seven of the 20 states analyzed gained more than one percentage point in February, led by Texas (up 2.11 percentage points).
Phoenix (101.92) increased its rate of small business job growth for the fourth month in a row in February to rank first among the largest U.S. metros.
Construction (3.29%) regained its top spot among industries in terms of hourly earnings growth in February, followed closely by “other services” (3.27%) and manufacturing (3.21%).
The pace of job growth in manufacturing gained 2.39 percentage points to 99.52 in February, the industry’s biggest one-month increase since April 2021.
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