Back in the 1960’s, the IRS had a plan to create what is known as a Digital Silo. This is a database that contains all of the 154M income tax returns that are filed annually.
The concept is that if all of them are housed in the same place, they’ll be easier to access. This in turn, should make the refund process faster and more accurate.
The Service initially employed IBM to create the Digital Silo back in the 60’s. The program is written in COBOL, a now almost extinct computer language. By 2018, the Service only had 17 programmers left that were considered “expert” in the language.
Newly minted IRS Commissioner Danny Werfel, recently told the press that the database won’t be ready until the 2026 filing season. He’d originally touted that it would be ready by next year.
No one has any idea what this thing has cost taxpayers so far but we know that the number is easily in the billions.
Commissioner Werfel said that the system is almost ready and simply needs more time to be checked and perfected. This is also the part where commissioners ask for more money.
They’ve had plenty of both while showing no demonstrable results in the past 60 years. We’ll see if in 2026, I write another column pushing it back a couple more years.
I guess it’s okay for the Service to be tardy, but not any of us. I wonder what the late penalty and interest would be on this one.
Let me leave you with this…
By now, I’m sure you’ve heard that the Federal Reserve dropped their Fed Funds rate by a full half point on Wednesday. In doing so, they demonstrated that they will do whatever they can to stop the economy from recessing.
The question becomes, how will this affect you and your business?
Commercial interest rates are already coming down. Banks normally price lending projects with plenty of security, great cash flow, and minimal risk at prime plus 4%.
Deals that aren’t as good are priced higher. But those projects you’ve been considering might begin to make more sense with the lower borrowing costs.
Line of Credit and Credit Card interest rates will come down as well. As entrepreneurs, one of our jobs is to limit the interest we pay on short-term liabilities, but this will help if you have outstanding balances
If you were planning on purchasing a home in the near future, 30 year fixed rates have already come down. Today, lenders are advertising rates in the high 6% range with good credit and a lower loan-to-value ratios.
But please realize that the borrowing cost decreases are just beginning.
The Federal Reserve must now walk a tightrope. They want to decrease interest rates to speed up the economy, but to not rev it up to a place where inflation again rears its ugly head.
They’ve already proven that they’re willing to be aggressive. But they can’t overdo it so be patient. All of these rates will probably come down to a more reasonable place sooner rather than later.
One more thing.
I’ve written extensively about the inverted yield curve being a harbinger of recessions. The 10 year treasury yield this morning is at 3.759 while the 2 year note is yielding 3.646. This means that bond traders believe there to be more risk in the longer term than the shorter one, which is how it should be.
If you’d asked me one short year ago whether or not it was possible for the Fed to engineer a soft landing, I’d have told you it would happen right around the time you saw a unicorn swimming the English Channel. But it looks like they may just pull it off.
Hopefully. We’ll see…
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
Schedule a Free Consultation, please click here.
Watch our Introduction Video here.
www.SalarySolutions.net
www.AccountingSolutionsLtd.com
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.