Please respond back to the three classmate Q/A below adding value or an experience that pertains;

Q9. Tax planners often tell their clients that "a tax delayed is a tax not paid." Can you provide a more formal explanation of this bit of wisdom?

The saying "a tax delayed is a tax not paid" means that putting off a tax bill is almost as good as not having to pay it at all, and here's why. First, money today is more valuable than money in the future. If you can delay paying the government $1,000 for a year, you get to keep, use, or even invest that money during that time. Second, your tax situation might change. You might be in a lower tax bracket next year, or the tax laws themselves might change to be more favorable. By delaying, you might end up paying that tax at a lower rate. So, while you will eventually have to pay the tax, the delay itself creates a real financial benefit, making the ultimate cost feel much smaller.

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8. Q- Firm A expects to receive a $25,000 item of income in August and a second $25,000 item of income in December. The firm could delay the receipt of both items until January. As a result, it would defer the payment of tax on $50,000 income for one full year. Firm A decides to receive the August payment this year (and pay current tax on $25,000 income) but delay the receipt of the December payment. Can you explain this decision?

A- This transaction mirrors the tax planning maxim of decreasing tax costs and increasing cash flows when a tax is deferred until a later tax year. By receiving the item of income valued at $25,000 in August and deferring the next $25,000 if income to next year, the firm is essentially spreading out their taxable income so that they are only assessed $25,000 of income for each year, rather than $50,000 in the current year or $50,000 in the next year. In other words, Firm A is maximizing the tax deferral benefit by deferring the tax they have to pay until next year.

Q3. Based off the serious problems with the IRS -

A- During the COVID-19 pandemic, Congress created the Employee Retention Credit to help businesses keep employees on the payroll. It has been expanded on since the initial creation, but the rules are complex and confusing. The problem with the ERC is there is currently a backlog. As of October 2024, around 1.2 million claims have not been processed, and it can take over a year for processing times. Along with the processing delays, there has also been little to no communication which leaves businesses with tough choices. They could adjust tax returns before refunds arrive or wait. Some businesses have closed or took on additional debt to remain open.

Another issue is that aggressive ERC promoters have misled businesses which resulted in invalid claims. This led to the IRS implementing stricter reviews which further delays legitimate taxpayers' claims. Not only has there been fraud, but some refund checks have been stolen.

Businesses are depending on the ERC refunds for survival but are facing uncertainty. The IRS has paid approximately $242 billion in ERC refunds and $8.1 billion in interest due to late payments. The ERC was supposed to provide vital relief to struggling businesses, but the backlogs and unresolved claims are jeopardizing some of these businesses.

Taxpayer Advocate Service. (2024).Most serious problem #1: Employee Retention Credit - IRS processing delays are resulting in uncertainty and are harming and frustrating business owners.InAnnual Report to Congress 2024(pp. 4-17). Internal Revenue Service.https://www.taxpayeradvocate.irs.gov/reports/2024-annual-report-to-congress/most-serious-problems/