Accounting firms do not always garner headlines, and when they do, it tends not to be for good reasons. Things changed a little bit in this realm over the last week, though, as Mazars USA LLP ended its association with former president Donald Trump and his business interests while saying that it could no longer vouch for a decade’s worth of business statements.
Whether this accounting firm getting such attention is for good reasons or not, well, that can be (and is being) spun in both ways. I will try not to cast any such judgment in this space. Instead, I just want to look at this from the accounting perspective.
What seems clear is that Mazars received some information that led it to believe what was reflected in their financial statements for the Trump Organization was not a complete, accurate portrait. This speaks to a key cog in the accounting machine that the numbers reflected must be honest if they are to reflect anything of value. There are many key questions here that still need to be answered, though, before declaring how egregious any actions surrounding these statements may be.
The obvious first big one is what did Mazars discover that affected how it views that decade of statements? Some still large questions follow that one, however, as to whether this was information that Mazars knew (or suspected), if they were given outright false information, or if there was information that should have been shared with them that was withheld.
This is because the reports that Mazars did are compilations, which essentially means that they are largely based on information provided to them by the client. They were not audited in any meaningful way by Mazars itself.
What may be key to figuring out what is going on here is that Mazars did not simply retract (and then presumably follow up by correcting) the compiled statements. It also ended its relationship with the Trump Organization. This would seem to imply that there was a breaking of trust. It’s possible that in conversations with a client, an accounting firm could discover that an honest mistake was made, but it can then be fixed and be correct moving forward. That is not what happened here.
So even in this quick summation of what is happening, we have hit upon honesty and trust, both pretty strong concepts. Again, I don’t want to cast any judgment on what may or may not have happened here or cast blame. For it is certainly plausible that this situation may just have become too much for Mazars and it wants to step away. Instead, we will wait to see how this is judged by those whose job it is to do so. I will, though, state how important those concepts are to what we do and that clients, accountants, and any third parties observing the work done between those two, deserve to have things be clear and not lay in gray areas, and we commit ourselves to accomplishing this.
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It is unfortunate that we are a couple weeks into the current tax season and still must talk about how the IRS is handling the last one. The numbers vary a bit depending on where you look, but the truth is that the IRS is still dealing with a significant amount of tax returns (and other issues) from 2020. There are various reasons for this, the most obvious being the nature of the pandemic, so we can understand how it happened. At the same time, however, it is also easy to understand how this is frustrating for those dealing with the situation’s ramifications.
For one, this is hopefully something you have not had to deal with often but getting the IRS on the phone is never a fun task. Take our word for it that doing this over the last year has been an even less fun task than usual.
Another effect that you have a better chance of having seen, though, is the number of notices the IRS has sent out that it did not have to. For example, people are seeing collection notices for taxes from a return that the IRS has received but not yet processed. Thankfully over the past week, the IRS has stopped sending many of these until it catches up on its backlog.
Most of the time, we file our taxes, and assume it is just taken care of. To then get these notices for something you thought was taken care of, and then taking the work (and more of it than usual) to determine that your return was received but just not processed, adds to the frustration.
Of course, this backlog of unprocessed returns means that some people are still waiting to receive refunds, too. And we are about to the point where this wait could be going on for about a year. That is quite a holdup for money due to you.
The IRS has said that it is shifting some employees around in an effort to play catch-up. This is great, but at the same time, so many people can only do so much work, and if it has gone on this long already, it is not going to be magically solved in a week.
So the purpose of my writing here is twofold. First, if you are still waiting on resolution from filing last year, know you are not alone. This is a real problem the agency is dealing with and is taking action to see that progress is made. Second, when it comes to filing this year, it will be beneficial to have everything in order as soon as possible to ease your way into the current year’s pipeline of returns.
And as always, if you have questions about any of these situations, we will be happy to help you address them.
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When it comes time to file taxes, that means it’s also time for something else – Super Bowl snacks! So here is to hoping you are using this weekend as an excuse to eat a treat you probably shouldn’t.
It is also time, however, to make mention of how one should be a little more wary of scams than usual. When people’s minds are a little more tuned in to the idea of taxes than usual, scammers can use that to try to take advantage of us a little more than usual. So here are a few things to keep in mind to try to protect yourself.
Even though not directly related to taxes, I recently have had a couple text messages pass my screen saying there are problems with accounts that I don’t even have. And this comes with a ‘friendly’ link to a webpage where you can fix this. Now with this coming from an institution I have no relationship with, it Is quite a bit easier to ignore and realize it is a phishing scam trying to collect information from me. It will be much easier to click, however, if it comes from an institution you recognize. This still teaches the right lessons on how to deal when scammers reach out, though.
First, if you have any reason to suspect something is not genuine, treat it as if it’s not genuine. Whether this be a text or email with a link or an actual phone call, you can halt the interaction and contact or access the institution by yourself. This way, you will know you are on a real website or talking to an actual employee. And if there is an actual issue, you can actually deal with it.
Next, be aware of what people are actually asking for. As soon as it feels like they are asking for personal information they should not need (like why does someone on the phone need the expiration date and three-digit code from your credit card?), let that trickle of unease burn brighter and remove yourself from the interaction.
This can be difficult as scammers are good at easing you into giving some more innocuous information before asking for the more crucial pieces. There are lots of little tip-offs to be aware of, however, such as: calling from a blocked number; demanding payment through prepaid cards or wire transfers; threatening to bring in law enforcement; or even saying you are to receive money of which you are unaware of.
A lot of these things are not necessarily new tactics, but scammers evolve new ways (like those text messages) to get in touch with you. So in this time when scammer activity is only bound to increase, remain vigilant and listen to those voices that tell you something if wrong. Those things are your friends.
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We are barely into tax season and are already seeing some people experience surprises when they start to see what their tax return is going to look like. As always, we don’t want to say, “I told you so,” but it is not as if any of these surprises had to be surprises.
One of the biggest of those surprises is going to continue to be the advance payments of the Child Tax Credit that people received in 2021. Many just took the money not realizing how it could affect the final number on their tax return. For many, this does not even mean that they are receiving less back as a tax refund, it is just some that some of it was received earlier.
This is also the time of year when everyone is looking at their W2, though, and only now taking stock of what taxes were withheld from their pay last year. Granted, I don’t know if this was ever something that people tracked on a week-to-week basis, but it is even easier to not think about now when so many now get paid digitally and may not even look at a paystub during the year.
Of course, this is also a time when many people are making money outside of their main job, too, which can only further complicate tax matters. To return to the original point, though, none of this has to be a surprise.
Many people may not have filled out a W-4 in years, but the form was revamped a couple years ago to account for many different situations. It is no longer just a few spaces that largely only record if you are married or not and have dependents. Instead, now you can indicate if you have another job, how much money you expect to make outside of W2 jobs, how much you expect to be able to take in deductions, and any additional money you would like withheld from your paycheck.
As with most things tax-related, doing this can feel daunting and difficult. The IRS has a pretty powerful tool in its tax withholding estimator, though, which can help you make sure you are withholding the amount you wish from your paycheck. This tool can be reached via a website (https://www.irs.gov/individuals/tax-withholding-estimator) although it is currently down until sometime early this month. If it is something that will benefit you, though, tuck the information away for a little bit and don’t be afraid to use it. After all, it will keep the surprises at bay.
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