Week in Insights: SaaS Tax Platforms Are Tools, Not Replacements

The sudden announced shutdown of Bench.co, a software-as-a-service accounting provider, sent shockwaves through the small business and legal community. Bench’s subsequent reversal and seeming announcement of its acquisition by Employer.com has left many customers feeling unsettled—for good reason.

Many of its 35,000 customers, including legal professionals and attorneys, were left scrambling to retrieve critical tax and financial records. The abrupt development underscores the risks of over-relying on third-party accounting platforms without adequate contingency plans.

Unlike standalone software suites, which store data locally and typically remain accessible even if the provider itself ceases to operate, SaaS platforms often tie data access to the provider’s continued existence.

Bench suggested that customers immediately file for a six-month IRS extension to find a new bookkeeping service. This may provide temporary relief but indicates a deeper issue: Businesses entrust their financial lives to platforms that can vanish overnight, leaving no safety net for clients. Small businesses that can most benefit from a SaaS platform due to their limited accounting and information-technology resources are most hurt when such a service closes its doors.

Tax practitioners can use this as an opportunity to remind clients that technology is a tool—not a replacement for maintaining local records or retaining a professional to do so. Platforms such as Bench can simplify routine tasks, but they lack the accountability that trained accountants and tax professionals bring.

The rise and proliferation of SaaS in the tax and accounting world has been transformative, but it also has shown that prudence is as important as convenience. Bench’s trajectory is a cautionary tale for businesses and practitioners to think critically about the tools they depend on.

—Andrew Leahey

Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts analyzed energy tax credit transfers, how tax can be integrated into business strategy, and more.

The Exchange—It’s where great ideas on tax and accounting intersect.

—Curated by Daniel Xu

Insights

Holland & Knight’s Elizabeth Crouse predicts energy tax credit transfers will continue to grow and that a boom is expected in manufacturing credits under Sections 45X and 48C of the tax code.

Business at OECD’s Alan McLean examines the needs of the OECD’s two-pillar tax reform plan, saying communication will be key to overcome political and technical barriers.

EY America’s Kevin Flynn says tax can help with strategic business planning, and that corporate leaders must have direct, regular communication with their tax advisers.

Mayer Brown’s Jenny Austin, Jason Osborn, and Sonal Majmudar review the Treasury and the IRS’s notice on applying Amount B, noting that it marks the first time the US has directly incorporated OECD guidance into its own rules.

Columnist Corner

Technically Speaking design by Jonathan Hurtarte/Bloomberg Tax

The IRS should hire more auditors to improve tax compliance, and the Department of Government Efficiency initiative should empower the agency to do so, Andrew Leahey argues in his latest Technically Speaking column.

“Closing the tax gap would recover substantial revenue, restore confidence in the system’s fairness, and create a clear picture of what kind of government we can actually afford to maintain,” Andrew writes, adding that slashing spending doesn’t necessarily achieve efficiency. Read More

News Roundup

US Asks Supreme Court to Unblock Corporate Transparency Act

The US Department of Justice asked the US Supreme Court to halt a nationwide injunction against the Corporate Transparency Act, a move that would allow enforcement of the anti-money laundering law during an appeal. Read More

Crypto Backers Sue IRS for Decentralized Exchange Final Rule

The Blockchain Association sued the IRS, saying a recently finalized rule that requires certain cryptocurrency exchanges to comply with broker reporting requirements would harm the industry. Read More

Louisiana Voters Will Have Final Say on Governor’s Tax Ambitions

Louisiana Gov. Jeff Landry’s sweeping overhaul of the state tax code following a rapid-fire special legislative session is signed, sealed, and delivered, but the governor’s longer-term aim to be more competitive with surrounding states still faces a difficult test. Read More

Shifting Tax Law, IRS Priorities Bode Chaos Heading Into 2025

Tax practitioners are anticipating big changes in IRS enforcement priorities when the new administration takes over in January but also foresee an extension of most of the provisions in the 2017 GOP tax law. Read More

Tax Management Memorandum

If the contingent payment debt instrument rules don’t apply to a given contingency, expressly saying so may falsely imply that they could, Dentons’ Marshall Feiring, Ryan Zucchetto, and Joseph Benavides say, discussing concerns on alternative schedules, failures to redeem, and make-whole premiums.

Career Moves

Craig Panholzer joined Cooper Levenson as a partner in its tax, business, and estate planning and administration practice groups in Fort Lauderdale, Fla.

Michael Sykes joined White and Case as a partner in its global tax practice and global energy industry group in Washington.

Laura Cable was elected partner at Cox, Castle & Nicholson in Los Angeles.

Laura Hanks and Wendy Lacey were promoted to member at BMSS Advisors & CPAs.

Alma Soongi Beck, Suzanne Farley, and Beth Morrison were named partners at Lathrop GMP.

Joe Abbott, Justin Chubb Lurya, and Don Sabine were promoted to partner at Novogradac.

David Heeren joined Ward and Smith’s tax practice in North Carolina.

David Jutzi and Lee Sauer joined Miller Thomson as associate counsel in its corporate mergers and acquisitions and private client services practices in the Waterloo Region.

David Ashner was promoted to principal and Rina Fujii to of counsel at Groom.

If you’re changing jobs or being promoted, send your submission to TaxMoves@bloombergindustry.com for consideration.