Business Frame Weekly - U.S. Inflation Cooling / Accounting & Finance Apprenticeship Program Launches / Financial Benefits of Offering a 401(k)

U.S. inflation cooled down in October by more than forecast. According to a Labor Department report, the consumer price index was up 7.7% year-over-year, and core prices advanced 6.3%, pulling back from a 40-year high.

The AICPA’s Registered Apprenticeship for Finance Business Partners program was released, the first of its kind for the accounting and finance profession, said Paul Young, CPA, CGMA. The first three companies to sign to the program are: Liberty, Aon, and HP.

If you are a small business owner, the financial incentives of offering 401(k) benefits to your employees could pay for themselves. People management platform Gusto stated that workers are 40% less likely to leave in their first year when they are offered retirement benefits, saving employers tens of thousands in turnover costs.

In this newsletter:

• Inflation Slows More Than Forecast, Gives Feds Downshift Room
• Employers Embrace Apprenticeship Program for Finance Business Partners
• Small Businesses Can Save $100,000 Per Employee by Offering 401(k) Benefits
• Tax Changes in the Inflation Reduction Act of 2022
• National Taxpayer Advocate: 2022 Could Be “Groundhog Day” for IRS Backlog

Business Frame Weekly - November 15, 2022

Inflation Slows More Than Forecast, Gives Feds Downshift Room

U.S. inflation cooled in October by more than forecast, offering hope that the fastest price increases in decades are ebbing and giving Federal Reserve officials room to slow down their steep interest-rate hikes. The consumer price index was up 7.7% from a year earlier, according to a Labor Department report Thursday. Core prices, which exclude food and energy and are regarded as a better underlying indicator of inflation, advanced 6.3%, pulling back from a 40-year high. The core consumer price index increased 0.3% from the prior month, while the overall CPI advanced 0.4%. Both increases as well as the monthly rises were below the median economist estimates. Fed officials will have both another CPI report and jobs report in hand before the end of their two-day policy meeting in mid-December.

Employers Embrace Apprenticeship Program for Finance Business Partners

Paul Young, CPA, CGMA, recently announced the AICPA’s Registered Apprenticeship for Finance Business Partners program, the first of its kind for the accounting and finance profession. Monday in Chicago, as a part of National Apprenticeship Week, the AICPA and the U.S. Department of Labor (DOL) announced the signing of the first three companies to the program: Liberty, Aon, and HP. Liberty registered the first eight program apprentices last month. Aon will follow with 15 apprentices later this month, and HP will bring on 10 apprentices in March. "What makes this so exciting is that this program responds to the trends in the market, and most importantly, it's beginning to solve the number-one issue facing these finance and accounting teams — which is acquiring qualified, skilled, and diverse talent," said Tom Hood, CPA/CITP, CGMA, executive vice president–Business Engagement & Growth at the AICPA.

Small Businesses Can Save $100,000 Per Employee by Offering 401(k) Benefits

If you're a small business owner, it may feel next to impossible to offer your employees retirement benefits. But doing so may secure their financial future — and that of your company, too. While just 22% of small and medium-size businesses offer retirement benefits, compared to 65% for larger organizations, the financial incentives for doing so can pay for themselves. Research from people management platform Gusto found that workers are 40% less likely to leave in their first year when they're offered retirement benefits, saving employers tens of thousands in turnover costs. Luke Pardue, an economist at Gusto, stated, "By offering a 401(k), you can see returns of over $100,000 in reduced employee turnover costs. If we can increase take up, we can see a lot of return in both employee satisfaction and financial security."

Tax Changes in the Inflation Reduction Act of 2022

The Inflation Reduction Act of 2022 (IRA; PL 117-169) was signed into law on August 16, 2022. This massive measure, which is intended to tamp down inflation and reduce the federal budget deficit, includes many tax provisions affecting individuals and businesses. Most of the provisions become effective in 2023 or later, but some will impact 2022 returns. Tax changes for Individuals impact healthcare and green energy. Individuals who purchase their health coverage from the government marketplace may qualify for a premium tax credit. In regards to tax changes for Businesses, two of the big revenue raisers in the legislation apply only to large corporations. Starting in 2023, there will be a 15% alternative minimum tax on a corporation’s book income [IRC section 55(b)]. It is estimated that only about 200 corporations surpass this threshold.

National Taxpayer Advocate: 2022 Could Be “Groundhog Day” for IRS Backlog

According to a blog post last week by National Taxpayer Advocate Erin Collins, the IRS had its backlog of unprocessed returns down to under 8 million individual and business paper returns as of Oct. 21. That compares to a figure of 7 million for those same types of returns at this point in 2021, she wrote. Her post warned the danger of the IRS being in the same frustrating situation as it was at the end of 2021. Collins expressed concern that thousands of new IRS hires would spend their time answering the phone and not work on the paper backlog. The IRS said last month that it had hired 4,000 new customer service representatives (CSRs) to field taxpayers' questions on the phone during the 2023 tax season. "Although it will result in fewer calls being answered in the short term,” she said, “I recommend that CSRs rotate between both key roles during the 2023 filing season to provide the best possible service for taxpayers in the long term."

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