Business Frame Weekly – The IRS achieved an 85% level of service for telephone calls to its toll-free phone lines/ The U.S. economy showed much stronger-than-expected growth in the first quarter

The IRS achieved an 85% level of service for telephone calls to its toll-free phone lines, according to the report, and Kiplinger previously reported that the IRS cut phone waiting times from 27 minutes to four minutes.

The U.S. economy showed much stronger-than-expected growth in the first quarter than previously thought, according to a big upward revision Thursday from the Commerce Department.

The new IRS mailing will go to taxpayers in states who received extended deadlines for the 2022 tax year due to natural disasters.

In this newsletter:

• IRS Has Improved Services, But Still Needs Work, Says Taxpayer Advocate
• AICPA Recommends Changes to IRS Form 706-GS (D-1).
• ‘The global economy is due for a reality check,’ warns the central banks‘ bank
• JPMorgan, Wells Fargo and Morgan Stanley to boost dividends after clearing Fed stress test
• IRS to Mail Taxpayers in Disaster Areas CP14CL Notices
• First-quarter economic growth was actually 2%, up from 1.3% first reported in major GDP revision

July 04, 2023

IRS Has Improved Services, But Still Needs Work, Says Taxpayer Advocate

The IRS achieved an 85% level of service for telephone calls to its toll-free phone lines, according to the report, and Kiplinger previously reported that the IRS cut phone waiting times from 27 minutes to four minutes. The IRS has made significant progress processing its backlog of most tax returns and has cut telephone hold times, according to the Taxpayer Advocate Service (TAS). But other IRS services are still lacking. A review of the 2023 filing season identified the shortfalls. “The taxpayer experience vastly improved during the 2023 filing season. Despite these improvements, the IRS is still behind in processing amended tax returns and taxpayer correspondence,” Taxpayer Advocate Erin M. Collins said when submitting the TAS report.

AICPA Recommends Changes to IRS Form 706-GS (D-1).

The American Institute of CPAs (AICPA), provided the Department of the Treasury and the Internal Revenue Service (IRS) issues and recommendations for improvements to the Form 706-GS(D-1), Notification of Distribution from a Generation-Skipping Trust, and instructions and extensions, as well as guidance and regulations updates if Treasury and the IRS find that there are issues beyond changes to the form and instructions. Form 706-GS(D-1) is used by trustees to report certain distributions from a trust that are subject to the generation-skipping transfer tax (GSTT). A skip person is someone related to the transferor by blood, marriage or adoption, who is one or more generations below the transferor. This form provides the skip person distributee with information needed to figure the tax on the distribution. The IRS then uses the information to verify that the tax has been properly computed.

‘The global economy is due for a reality check,’ warns the central banks‘ bank

The global economy is at a critical juncture that could weigh on prosperity for years to come. For the first time in decades, we face a combination of high inflation and financial fault lines. To stop these problems from becoming entrenched, it’s time for a reality check on what current policy settings can and cannot achieve. Global inflation has crept down from its peaks as supply chains normalized, commodity prices fell and central banks embarked on the strongest and most synchronized monetary policy tightening in years. As we report in the latest BIS Annual Economic Report, history shows that it typically takes a year for inflation to return to its previous level after surges, even during episodes less acute than the one following the pandemic. Against this backdrop, there is an emerging sense of hope in some quarters that the global economy will achieve a soft, or soft-ish, landing. But we must be ready to tackle the significant risks that cloud the outlook. One risk is that high inflation could persist. New price pressures could emerge. In many countries, households’ purchasing power has fallen, as wages have not kept pace with inflation. With tight job markets, workers may seek to redress the balance. Firms have found it easier to raise prices and may pass higher costs on to consumers, creating a vicious cycle. Once this sets in, it is hard to stop.

JPMorgan, Wells Fargo and Morgan Stanley to boost dividends after clearing Fed stress test

Large U.S banks including JPMorgan Chase, Wells Fargo and Morgan Stanley said Friday they plan to raise their quarterly dividends after clearing the Federal Reserve’s annual stress test. JPMorgan plans to boost its payout to $1.05 a share from $1 a share starting in the third quarter, subject to board approval, the New York-based bank said in a statement. “The Federal Reserve’s 2023 stress test results show that banks are resilient – even while withstanding severe shocks – and continue to serve as a pillar of strength to the financial system and broader economy,” JPMorgan CEO Jamie Dimon said in the release. “The Board’s intended dividend increase represents a sustainable and modestly higher level of capital distribution to our shareholders.”

IRS to Mail Taxpayers in Disaster Areas CP14CL Notices

The new IRS mailing will go to taxpayers in states who received extended deadlines for the 2022 tax year due to natural disasters. The IRS, after confusing millions of California taxpayers with tax balance-due notices in May and June, will send follow-up letters to people in states that received extra time to file their federal income tax returns due to severe weather events. The new IRS mailing will go to many California residents and taxpayers in designated disaster areas in other states, including Alabama, Arkansas, Florida, Georgia, Indiana, Mississippi, and Tennessee. As Kiplinger has reported, taxpayers in IRS-designated areas received extended IRS tax deadlines for the 2022 tax year due to tornados, flooding, and other natural disasters. IRS Commissioner Danny Werfel said the IRS is working hard to improve and that the mailing is part of an effort to be more taxpayer-focused. “We know our initial mailing confused taxpayers and tax professionals, and we worked quickly to send a follow-up reminder to help reassure people,” Werfel said in a statement, adding, “This mailing reflects how we’re trying to be more taxpayer-focused given the additional resources that we’ve been given under the Inflation Reduction Act.”

First-quarter economic growth was actually 2%, up from 1.3% first reported in major GDP revision

The U.S. economy showed much stronger-than-expected growth in the first quarter than previously thought, according to a big upward revision Thursday from the Commerce Department. Gross domestic product increased at a 2% annualized pace for the January-through-March period, up from the previous estimate of 1.3% and ahead of the 1.4% Dow Jones consensus forecast. This was the third and final estimate for Q1 GDP. The growth rate was 2.6% in the fourth quarter. The upward revision helps undercut widespread expectations that the U.S. is heading toward a recession. A separate economic report released Thursday showed layoffs running well below expectations, indicating that labor market strength has held up even in the face of the Federal Reserve’s 10 interest rate hikes totaling 5 percentage points. According to a summary from the department’s Bureau of Economic Analysis, the change came in large part because both consumer expenditures and exports were stronger than previously thought.

Random Ramblings

• Getting rich isn't the American Dream anymore, says new survey—here's how people define success instead.
• Financial stress is taking a toll on employees' social lives.
• Businesses could save lots in taxes under house GOP plan.
• The best high-yield savings account rates for July 2023.
• What the Supreme Court's ruling on student loan forgiveness means for employees?
• LGBTQ small business owners struggle to find financing.