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Crack the code: MNCPA Tax Conference

| December 2022/January 2023 Footnote

Editor's note: Updated November 29, 2022

More than 1,200 professionals from Minnesota and beyond attended the MNCPA Tax Conference Nov. 14–16.
 
Regarded as the nation’s premier event for CPAs, tax advisers, accounting firm tax teams and corporate tax experts, the conference offered more than 50 sessions aimed at helping professionals thrive in the ever-changing and challenging tax environment. Topics covered included pass-through entity tax updates, recent federal individual, business and international tax highlights, and a look at how technology will continue to impact the accounting industry.
 
The first two days of the hybrid event were held in person at the Minneapolis Convention Center with a livestreaming option. The final day was held virtually. Attendees also met with exhibitors, connected with their peers, won prizes and mingled during the evening happy hour.
 
The following is a brief look at some of the sights and takeaways from the Tax Conference.

Now what? Economic scenarios for 2022 and 2023

The economy has been volatile the past few years. One day, experts are predicting a recession and the next, the outlook seems to be optimistic. To help make sense of these mixed messages, Chris Kuehl, co-founder and managing director with Armada Corporate Intelligence, delivered the opening session about the current economy and where it might be heading. 
 
Inflation continues to be a top concern and, according to Kuehl, the jury’s still out on when increasing prices will finally relent. The positive news is that recently released inflation figures from the Bureau of Labor Statistics’ Consumer Price Index came in far less than anticipated but remained high at 7.7%.
 
He also examined how the recent midterm elections could play into the economy, shared that the real GDP outlook remains flat, the oil outlook is uncertain, though manufacturing, consumer spending and corporate investment have remained strong. Kuehl indicated there are hints that the economy is slowing.
 
“The way the data is shaping up, we’re either looking at kind of a downturn that doesn’t hit recession,” he said. “Or we have a short and sharp one that manifests itself during the first couple of quarters of next year and the last quarter of this year.”

Federal individual tax highlights

After years of significant and often frenzied tax law changes, the tides turned this past year, seeing fewer changes and offering some reprieve for accountants. Regardless, the compilation of both previous and new changes continues to leave professionals grappling with IRS guidance, tax court rulings and more. 
 
To provide insight on those recent changes, Paul Neiffer, CPA with CliftonLarsonAllen LLP, presented a high-level overview of federal individual tax developments, including adjustments made by the Inflation Reduction Act of 2022, as well as the implications of the SECURE Act and SECURE Act 2.0. His presentation also addressed developments in several areas, including: 
  • Qualified disaster relief payments.
  • Student loan forgiveness.
  • Passive activity.
  • Estate and gift tax.
  • Premium tax credit.
  • Self-directed IRAs.
  • Statute of limitations.
  • Reasonable cause and first time abate.
  • Cryptocurrency.

Income tax nexus after Wayfair

There’s still a lot to consider with the 2018 Wayfair decision, even years after the ruling, with more state-by-state court decisions and new guidance from the Multistate Tax Commission.
 
While there’s not enough space here to go into great detail about deep economic nexus for income tax purposes, factor presence and whether Public Law 86-272 still has any relevancy, presenter Masha Yevzelman shared with attendees these key tips and takeaways when working with a taxpayer who has nexus but hasn’t been filing returns. What do you do?
 
Tips and takeaways
  • Before audit
    • Evaluate next footprint for all tax types.
    • Calculate potential exposure in all states across all tax types. Be careful with sourcing sales.
    • Consider voluntary disclosures (state-by-state and/or through the MTC).
    • Be cognizant of nonprivileged communications. Only communications between an attorney and the attorney’s client are protected by the attorney-client privilege.
  • During the audit
    • Carefully complete nexus or business activities questionnaires with advice of experienced professional.
    • Evaluate strength of the taxpayer’s nexus position for all tax types (not just the one being audited).
      • Consider statutory arguments, constitutional arguments and PL 86-272.
    • Consider impact on other states.
    • Continue to be careful with nonprivileged communications.

Inflation Reduction Act

There’s a lot to understand when it comes to tax implications from the Inflation Reduction Act. There are a number of modified business credits, new credits (particularly around climate initiatives) and individual credits.
 
Highlights of the modified business credits concern the R&D credit, energy efficient home credit, alternative fuels credit and the advanced energy project credit.
 
And, by the numbers, the law aims to boost the federal government’s tax agency with new IRS appropriations to address these changes and ongoing work, including:
  • $3.2 billion to provide taxpayer services.
  • $45.6 billion for tax enforcements activities.
  • $25.3 billion for necessary expenses to support taxpayer services and enforcement programs.
  • $4.8 billion for business systems modernization.