ACC518 Current Development in Accounting Thought-Tax Hikes Act 2015

The article had been published on the 16^th of January 2017 that has taken into consideration the new rules related to the taxations for the year. After the election of the new President of USA, Donald Trump and his fellow Republicans have ensured the performances of transformation in tax structure that is seen as a demanding situation for the country i.e. New York. On the other hand, if no laws exist in the country than the consultant of tax will necessitate the handling and control of the large variety of alterations in tax structures. The taxes that would have been implemented for the first time in the year will have to be documented in the current year (American Bankers Association & American Bankers Association, 2013).

The discussed article is related to the changes in the tax structures and charges except the important modifications and alterations. The changes in the structure of the tax had been established and set up by the breakdown of the Congress for acting as a package for getting the provisions of the tax that were finished before the end of the financial year 2016.

The varieties of alteration that are to be included are discussed as follows:

For the seniors: Higher deductions for the medical expenses

After the start of the taxation year December 2016, it was seen that those individuals and the tax payers with the age group of 65 years and more for the ground under the deductions of the medical expenditure has been increased to 10% of the AGI from the 7.5% to AGI (Brownlee, 2016).

A number of Taxpayers possibly will need new ITINS

The individuals those involved in the documentation of the tax returns in USA has the requirement of disclosing their TIN i.e. Taxpayer identification number at the time of paying and filing the returns of tax. The taxpayer identification number can be referred to as the Individual’s Social Security Number. In case of the situations where the individuals have not been provided with the Individual’s Social Security Number, as they are ineligible, they need to file the returns of taxes. The IRS has provided the individuals with the taxpayer identification numbers to be used with the requirement of the individual taxes.

The Protecting Americans from the Tax Hikes Act, 2015 provides

Revision of due-date for partnership and returns of the C corporations

After the start of 31^st December 2015, there will be activeness in the common use of the returns of the taxes as per the Surface Transportation and the Veterans Health Care Choice Improvement Act of 2015.

The S corporations and the partnerships will require the filing of the returns of their taxes before the 15^th day of the third month after the end of the taxable year. If the returns are paid in advance, the partnership is to file by the 15^th day of the fourth month. The same must be done subsequent to the finishing of the taxable year. The C corporations need to mandatory file the returns within the 15^th day of the fourth month subsequent to the finishing of the taxable year. On the other hand, the C corporations need to file the returns of tax by the 15^th day of the third month subsequent to the finishing of the taxable year. The companies that have shorter year of tax are looked as that on June 30, the year had ended. They will have to file the returns of tax within the 15^th day of the third month (Freedman, 2017).

Amended repeated expansion rules for businesses: As per the Surface Transpiration and Veterans Healthy care Choice Improvement Act of 2015; the automatic extension of three month during the time for the returns of the corporate in Code Sec.6081 (b) is transformed to six month extension. The rules are effectual for the returns of the tax payers that will be established after the December 2015 that will start after the 31^st December 2015.

Accelerated due dates for W-2s, 1099s,

In cases where the salary that are rewarded to the personnel and human resources and also where the taxes that are to be deducted from the earnings of the employees before 2016 the following must be carried on. Firstly, the employers are required to file the respective taxes in Form W-2 with the Administration of the Social Security by the finishing of 28^Th February of this year. The calendar year for which the tax return had to be documented must be followed by making use of the Form W-3 that has a relation to the Transmittal of Wage and Tax Statements. It occurs for the people whose W-2s; the data of expiry for electronically filed returns had been March 31^st (Hallerberg & Scartascini, 2016).

Furthermore, in cases where the payments that are before 2016, the payers of tax will have to file forms in the series of 1099 with the IRS on the ending day or before February of that year. The returns of the statement of the remuneration of the non-employee have a requirement of being recorded before or on 31^st January of the year. The same has to be done in the year following the year in which the returns have an association with respect to the Path Act 2015.

There has been an observation that the returns are no longer in qualification for the extended filing date that will be done in the returns that are electronically documented. In addition, there is a non-automated enhancement of point in time to file W-2 with the SSA. The filing of the returns owing to the period after 1^st January 2017 can have a stake in asking the extension of around thirty days with the submission of the Form 8809. The Form 8809 relates to the Application for Extension of Time to File Information Returns (Hollensbe et al., 2014).

Safe harbor for the de minimise errors

A variety of major factors settles on the amount of penalty and the same takes account of whether the payer of tax is a small business or not. There will be an imposition of penalty in the general cases like the addition or inclusion of any error or wrong information on a return of information or the statements of the payee (Martorano, 2016). The imposition of the penalty will not take place in cases where the cause was justifiable and no wilful abandonment had taken place.

Enlarged fees of User for pre-filling agreements

The process of the agreements of the pre-filling allows a large business and the payers having an international approach. The foreigners are asked towards the evaluation and the investigation for the determination of the issues that are specifically associated with the filed returns or the returns that are not due for filing. A user fee needs to be paid if the elected ones are to participate in the program of PFA. After and from January 1 2017, as per the Rev Proc 2016-30, 2016-21 IRB, for PFA requests, the fee has increased from $134,000 to $ 218,600. The fees are assessed for every separate and disconnected concern. As a result, the saying is proved that the above changes in relation to the taxation are capable of being constructive towards working out the financial records for the individuals and the businesses (Oberlander, 2017).

Revolution for the substitute tax election by non-life insurance corporations

As per the former Sec 831 (b), the taxation can be done at a normal rate of tax for the insurance companies having no relation with life. The premiums in such companies must be newly written or the direct premiums that were written earlier cannot be increased by more than an amount of $1.2 M in the year of taxation that could be selected for getting taxable at the normal rate of corporate taxes. The same must include only the income on investment and not the investment or the underwriting incomes (Plummer, 2016).

The Protecting Americans from the Tax Hikes Act of 2015 regulates the effects of the inflation after the years that start after 31^st December 2015. In such cases, the $1.2 million maximum value of annual premiums had risen to $2.2 million and thus put under regulations.

A variety of accounting standards have been come under the introduction and recommendation by the FASB and the same has a preference towards attaining the comments and drafts of exposure from the corporate bodies and the industries. The feedbacks from such corporate bodies create an influence on the boards for undertaking changes that will lead to an improvement of the standards to help in better implementation.

There has been a proposal regarding the compensation stock compensation and the standard is related to the “Improvements to Non-employee Share-Based Payment Accounting”. There will be an improvement in the payments that will decrease the complexities and the costs that will increase the financial reports.

There had been four respondents considered out of the whole comments provided in the websites of the accounting board. The comments from the respondents will have an influence on the accounting standards analysis towards the provision of overview of the issues. The objective is to provide awareness and understanding towards the improvement of the overall standards. Lastly, the overall report will lead to a final feedback of the comments that will be agreed or disagreed thus concluding about the idealistic nature of the standard.

Proposal

The considered proposal will undertake the improvement of the standards of accounting that will have an intention of improving the share based payments relating to the non-employees. The standards will be related towards the development of such employees to maintain their sentiments for the effective operation of the business. The relationship between the employees and the overall organization will implement an operational environment of a better nature.

There has been recommendation given by the standard that is related to a variety of ideas provided towards the organizations. The same will lead to the encouragement of the industries in taking part towards the feedback processes and comments for better effectiveness. The modifications and alterations are provided by the FASB and the organizations have the job of answering the questionnaires by going for or against the favour. There are also a lot of questions that are not mandatory for being answered.

The answers of the important questions that will be beneficial towards the organization will be provided and thus the accurate answers that will have a relation to the standards will be attained. The significant and the most important questions providing benefits and advantages will be related to the tax benefits, complexities with relation to the financial statements. It also undertakes the connection between the additional amount of benefits of taxes and the cash flows, the proposal of expanding the businesses, process of tax payments and the permission granted towards the entities in undertaking the election of the policies of accounting. The feedbacks received by the respondents will lead to the determination of the modifications being useful or not (Freedman, 2017).

Debates and Discussions

In the discussions it had been mentioned that there will be four respondents that will help in the understanding the conformity and the non conformity about the modifications that have been recommended in the standards of accounting.

The answers given by the respondents are as under:

Raytheon Company

The company is leading innovator and developer regarding the latest technologies related to the defence materials, tools of security and the software related to the civil markets. Raytheon is an organization based in US and has an outlook towards building strong and effective corporate governance. The organizations answered the three questions that have availability in the draft of exposure. The firm had disagreement with the other respondents and further had a disagreement towards the approach under proposal. The disagreement was related with the recommendations provided with respect to the additional benefits of taxes identified and the deficiencies arising in the statement of income.

They believed that the FASB must have a pursuance of a model that will represent the equity with the inclusion of all deficiencies and benefits related to the excessive taxes. There has been a suggestion of the usage of the Approach of Symmetrical Equity for the effective results that will have a relation with the approach of the recommendation of the Boards. The organization agrees with the suggestions provided by the FASB and further gives suggestion about the cash flows that will be considered as the operating activity.

The organization also has an agreement towards the suggestion laid in the exposure draft. It also claims that there will be a permission of withholding the amount that will be up to the highest tax rates of marginal taxes as per the applicability.

Heiskell and MacGillivray and Associates

The organization has a relation with the accounting and auditing that will be provided with the responses to the queries related to the accounting standards of improved nature. They have an agreement with the removal of the PIC pool that reduces the cost and complexities related to the processes of accounting. The organization also has an agreement towards the expenses linked with the compensation that has an inclusion in the statement of income. Thus, there must be an implementation of the deficits of taxes and the benefits of equal importance.

There has been a further agreement about the minimal requirement of delays that leads to the indemnification of the benefits of the surplus taxes. The third question that has a relation with the tax cash flows and the operating activities was agreed by saying that the same requires to be considered as the operating activities. The Firm has agreed with all the questions laid down under the FASB and thus revealed about their happiness with the modifications that are under a proposal and has relation with the share based accounting payments of the non-employees.

American Bankers Association

The Association is related to the organization in case where the participants from all the banks operating in USA remain present and have a forward looking approach towards the improvement of the banking system and the activities of operations under the banks. The association had appreciated the alterations that had been proposed by the standards under FASB that had relation with the improvements of the Employee Share-Based Payment Accounting. Thus, the same will help in the observing of the questions that had been laid under the draft exposures. The association has answered mostly all the questions and only disagreed towards a single question. The association had laid opposition towards the identification of the tax benefits in excess and the deficiencies related to the statement of income (Plummer, 2016).

Visa Inc

The company has been a global leader of the online technologies and then tries on to create improvement in the payments around the globe. The company also appreciated the opportunity in providing recommendations in the proposed improvements of the FASB standards. The company has also answered to most of the questionnaires provided in the drafts of exposure and it has been observed that the assumptions stated by the Board are agreed on by the company. There will be a disagreement related to the suggestions provided in the additional benefits of tax and the deficiencies that have been recognised in the statement of income. The company also believed that there will be a reduction of the complexities for the certain companies that may lead to an increase in the changes in the expenses that has relation to the income taxes (Ranco et al., 2015).

Significance of the Proposal

The proposal has an importance that reveals there are improvements having relation with the employee share-based payment accounting to the improvement with the compensation over the stock. The proposal has an intention in the improvement of the preparation of the financial reports and the lowering of the pressure of the work. The same also has an intention of making the paid cash that will be helpful in the holding of the taxes.

Conclusion

The overall analysis of the proposals gave a provision under the FASB that has relation with the share based payments of the employees. The accounting system shows that leaving one among the four respondents that is the Weiskell and MacGillivray Association. The others have a feeling that the alterations in the proposal that has respect to the acknowledgment about the benefits of the additional taxes and the deficiencies related to the statement of income. The other proposals come towards the agreement upon by the respondents and the same is neglected. The reason of the neglecting theory is the creation of volatility in the expenses that are presented under the statement of income. Thus, it can be said that there will be an improvement in the segments towards the improvement of the scenario that has relation with the employee stock-based payment accounting.

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