Hurricane Ian Victims in Florida Qualify for Tax Relief


Hurricane Ian is likely to rank as one of the most destructive storms in U.S. history. The federal government has announced tax relief for all of Florida’s residents and businesses. If you’ve been affected by Hurricane Ian, visit the IRS’s dedicated webpage for details, updates, and resources:

The IRS has provided return filing and payment extensions to taxpayers who are located in FEMA-designated areas of Florida affected by Hurricane Ian. The relief postpones various deadlines that occurred starting Sept. 23, 2022, until Feb. 15, 2023. This means individuals who have a valid extension to file their 2021 tax returns due to run out on Oct. 17, 2022, now have until Feb. 15, 2023, to file. The IRS noted, however, that because tax payments related to these 2021 returns were due on April 18, 2022, those payments aren’t eligible for this relief. For more information:


Year-End Tax Planning Ideas for Individuals

Now that fall is officially here, it’s a good time to start taking steps that may lower your tax bill for this year and next. One of the first planning steps is to ascertain whether you’ll take the standard deduction or itemize deductions for 2022. Many taxpayers won’t itemize because of the high 2022 standard deduction amounts ($25,900 for joint filers, $12,950 for singles and married couples filing separately, and $19,400 for heads of household). Also, many itemized deductions have been reduced or abolished under current law. If you do itemize, you can deduct medical expenses that exceed 7.5% of adjusted gross income (AGI), state and local taxes up to $10,000, charitable contributions, and mortgage interest on a restricted amount of debt, but these deductions won’t save taxes unless they’re more than your standard deduction.

Bunching, pushing, pulling

Some taxpayers may be able to work around these deduction restrictions by applying a “bunching” strategy to pull or push discretionary medical expenses and charitable contributions into the year where they’ll do some tax good. For example, if you’ll be able to itemize deductions this year but not next, you may want to make two years’ worth of charitable contributions this year.

Here are some other ideas to consider: Postpone income until 2023 and accelerate deductions into 2022 if doing so enables you to claim larger tax breaks for 2022 that are phased out over various levels of AGI. These include deductible IRA contributions, child tax credits, education tax credits and student loan interest deductions. Postponing income also is desirable for taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances. However, in some cases, it may pay to accelerate income into 2022. For example, that may be the case if you expect to be in a higher tax bracket next year. If you’re eligible, consider converting a traditional IRA into a Roth IRA by year-end. This is beneficial if your IRA invested in stocks (or mutual funds) that have lost value. Keep in mind that the conversion will increase your income for 2022, possibly reducing tax breaks subject to phaseout at higher AGI levels. High-income individuals must be careful of the 3.8% net investment income tax (NIIT) on certain unearned income. The surtax is 3.8% of the lesser of: 1) net investment income (NII), or 2) the excess of modified AGI (MAGI) over a threshold amount. That amount is $250,000 for joint filers or surviving spouses, $125,000 for married individuals filing separately and $200,000 for others. As year-end nears, the approach taken to minimize or eliminate the 3.8% surtax depends on your estimated MAGI and NII for the year. Keep in mind that NII doesn’t include distributions from IRAs or most retirement plans.

It may be advantageous to arrange with your employer to defer, until early 2023, a bonus that may be coming your way. If you’re age 70½ or older by the end of 2022, consider making 2022 charitable donations via qualified charitable distributions from a traditional IRA — especially if you don’t itemize deductions. These distributions are made directly to charities from your IRA and the contribution amount isn’t included in your gross income or deductible on your return. Make gifts sheltered by the annual gift tax exclusion before year-end. In 2022, the exclusion applies to gifts of up to $16,000 made to each recipient. These transfers may save your family taxes if income-earning property is given to relatives in lower income tax brackets who aren’t subject to the kiddie tax. These are just some of the year-end steps that may save taxes.

Contact one of our experts to work on a plan that is best for you.

Financial Institutions and Banking

Bank Wire

New ACH rules issued for “micro-entries”

Earlier this year, the National Automated Clearing House Association (Nacha) adopted rule changes regarding micro-entries — the small ACH credits and debits originators or third-party senders use to validate customer account information. The changes are designed to standardize practices and formatting of micro-entries in order to improve the effectiveness of micro-entries as a means of account validation; better enable identification and monitoring of micro-entries; and improve ACH Network quality.

Effective September 16, 2022, micro-entries are defined as ACH credits of less than one dollar — and any offsetting debits — used for account validation. Credit amounts must equal or exceed debit amounts, and credits and debits must be transmitted to settle at the same time. Originators must use “ACCTVERIFY” in the company entry description field. In addition, the company name must be easily recognizable and similar to the name used in subsequent entries.

Effective March 17, 2023, originators must use commercially reasonable fraud detection, including monitoring micro-entry forward and return volumes.

Proposal would modernize Community Reinvestment Act

Under the Community Reinvestment Act (CRA), federal banking agencies periodically evaluate community banks’ records in meeting their communities’ needs and make those evaluations available to the public. They also consider a bank’s CRA rating when reviewing requests to approve mergers or acquisitions, charters, branch openings, and deposit facilities. Recently, the agencies issued a proposal to modernize their CRA regulations. Among other things, the proposed regulations would: 1) promote expanded access to credit, investment, and basic banking services in low- and moderate-income communities, 2) update CRA assessment areas to include activities associated with online and mobile banking, branchless banking, and hybrid models, and 3) provide greater clarity and consistency by adopting a metrics-based approach to CRA evaluations of retail lending and community development financing.

Black box credit models don’t excuse ECOA non-compliance

The Consumer Financial Protection Bureau (CFPB) has issued a warning to banks and other lenders that use complex algorithms (popularly known as “black box” models) to make credit decisions. A recent CFPB circular warned that the use of these models doesn’t allow lenders to avoid their obligations under the Equal Credit Opportunity Act (ECOA). The act requires lenders to provide applicants with specific reasons for the denial of credit or other adverse actions. The circular makes clear that a lender isn’t relieved of this obligation, even if a black box model prevents it from accurately identifying the specific reasons for an adverse action. According to the circular, “A creditor’s lack of understanding of its own methods is … not a cognizable defense against liability for violating ECOA.”

Contact one of our experts if you have any questions about the new ACH rules, the Community Reinvestment Act, or the Equal Credit Opportunity Act.

Financial Institutions and Banking

Is Blockchain the Future of Banking?

Blockchain, the technology behind Bitcoin and other cryptocurrencies, has been in the news a great deal in recent months. Headlines about the volatility of cryptocurrencies and their relative lack of regulatory oversight have generated widespread skepticism about the technology. But the uses of blockchain go well beyond cryptocurrency. And its potential benefits for banks have led many to believe that blockchain is poised to transform the industry.

What is blockchain?

The technology that powers blockchain is complex. But the concept is relatively simple: A blockchain is a distributed database (or “ledger”) that’s shared among thousands or even millions of computers or servers, called “nodes,” maintained by independent third parties (individuals or organizations).

The lack of centralized storage or control makes it extremely difficult for someone to tamper with the ledger. It can accept new transactions only if they’re verified by these third parties through established consensus protocols. As a result, the ledger is highly resistant to errors or fraud. In addition, the technology uses encryption and digital signatures to protect participants’ identities.

How can it be used in banking?

Blockchain generates validated, immutable records that are readily available to all parties. This helps establish trust while minimizing the need for intermediaries to authenticate or certify transactions. It’s well suited, therefore, for a variety of banking functions. Here are a few examples:

Processing payments and transfers. Payments and bank transfers, especially international transactions, can be costly and time-consuming. A simple bank transfer must wind its way through a complex system of correspondent banks, custodians, and other intermediaries to reach its destination, adding time and fees to the process. Blockchain makes it possible to clear and settle these transactions almost instantly, often outside traditional banking hours, without the need for multiple intermediaries. Most blockchain-based payments and transfers are made using stablecoins — cryptocurrencies that are tied to the value of a fiat currency, such as the U.S. dollar, thereby limiting volatility.

Verifying customers’ identities. “Know your customer” requirements can make it costly and cumbersome for banks to verify their customers’ identities. By storing customer information on a blockchain, the process can be streamlined. It allows various financial institutions, as well as business units within those institutions, to access and verify customer information while protecting customer privacy.

Processing mortgages and other loans. Blockchain has the potential to streamline loan processing. Using “smart contract” technology to create, store and execute documents, blockchain avoids confusion and errors by ensuring that everyone is working off of the same version of a document. It also prevents anyone from modifying it without alerting others. And if a change or correction is required, it’s added to the blockchain, together with supporting documentation, creating a permanent audit trail.

Blockchain also can greatly speed up the transaction process by automating some tasks. For example, funds can automatically be released from escrow upon verification of specific preconditions, such as title clearances or loan approvals.

Ready for prime time?

These examples are just a few potential uses of blockchain in the banking industry. The technology is still relatively new and might not be quite ready for prime time, especially for community banks. But given the potential benefits — in terms of efficiency, security, and cost savings — it’s definitely worth exploring further.

Contact one of our experts if you have questions about blockchain.

Financial Institutions and Banking

Stay On Top of Liquidity Risk

In an uncertain economy, with rampant inflation and other significant economic headwinds, it’s a good idea for community banks to ensure their loans are based on sound funding sources and that the degree of liquidity risk they’re carrying is reasonable and manageable for the foreseeable future. This means your bank needs to have adequate procedures in place to mitigate risk and stay solvent through tough times.

What are the problems?

The recent economic downturn is just one reason for the increase in liquidity risk. It’s also tied to loan growth accompanied by shrinking liquid asset holdings and increasing reliance on noncore and wholesale sources — such as borrowings, brokered deposits, internet deposits, deposits obtained through listing services and uninsured deposits — to fund loan growth.

Typically, these alternative funding sources are more expensive and volatile than insured core deposits. And they’re subject to legal, regulatory, and counterparty requirements that can create liquidity stress, particularly if a bank has credit quality issues or deteriorating capital levels.

The Federal Deposit Insurance Corporation (FDIC) recognizes that alternative funding sources can be an important component of a well-managed bank’s liquidity and funding strategy. But these sources can be problematic if a bank relies on them too heavily. Incorporating a balanced funding strategy into a comprehensive liquidity risk management plan is key to success.

How can you manage liquidity risk?

The FDIC urges banks to consult the federal banking regulators’ Interagency Policy Statement on Funding and Liquidity Risk Management, which outlines the essential elements of sound liquidity risk management. The statement notes that banks should balance the use of alternative funding sources “with prudent capital, earnings, and liquidity considerations through the prism of the institution’s approved risk tolerance.” Specifically, they should:

  • Ensure effective board and management oversight,
  • Adopt appropriate strategies, policies, procedures, and limits to manage and mitigate liquidity risk,
  • Implement appropriate liquidity risk measurement and monitoring systems,
  • Actively manage intraday liquidity and collateral,
  • Have a diverse mix of existing and potential future funding sources, and
  • Hold adequate levels of highly liquid marketable securities that are free of legal, regulatory, or operational impediments.

What’s the backup plan?

Banks also should design a comprehensive contingency funding plan (CFP) that sufficiently addresses potential adverse liquidity events and emergency cash flow requirements. Finally, they need to set up appropriate internal controls and internal audit processes.

For banks that rely heavily on volatile funding sources, it’s important to ensure that the banks’ risk tolerances and recovery strategies are reflected in their asset-liability management programs and CFPs. A well-developed CFP should help a bank manage a range of liquidity stress scenarios by establishing clear lines of responsibility and articulating implementation, escalation, and communication procedures. It also needs to address triggering mechanisms, early warning indicators, and remediation steps that cover the use of contingent funding sources.

CFPs should identify alternative liquidity sources and ensure ready access to contingent funding because liquidity pressures can spread during a period of significant stress. Examples of backup funds providers include federal home loan banks, correspondent institutions, and others that facilitate repurchase agreements or money market transactions.

An independent party should regularly review and evaluate the various components of a bank’s liquidity management process. The review should match the process against regulatory guidance and industry best practices as adjusted for the bank’s liquidity risk profile. The reviewer then should report the results to management and the board of directors.

How do you stay afloat?

Clearly, for community banks, managing liquidity risk is key to staying solvent and profitable. Without appropriate strategies in place for dealing with potential funding source issues, your bank could be left to flounder in an ocean of problems. Help your bank stay afloat by ensuring you have robust practices in place.

Contact one of our experts if you need help staying on top of liquidity risk.

Financial Institutions and Banking

Managing Transition Risk

8 tips for a successful succession plan

One of the biggest challenges community banks face today is a shortage of banking talent. So, it’s critical for banks to develop a solid succession plan to manage transition risk. When key management personnel retire or leave unexpectedly, a succession plan helps ensure that the bank is prepared for the change and proactively addresses the vacancy.

Tailor your plan

Keep in mind that your succession plan must be tailored to your bank’s size, complexity, location, culture, risk profile, product and service mix, management “bench strength,” and other characteristics. With that in mind, here are eight tips to get you started:

  • Look within. There are many advantages to identifying internal candidates to succeed the CEO and other key management personnel. They’re already immersed in your bank’s culture and are familiar with its operations, goals, and strategies. Another big advantage of promoting from within is that your board of directors is likely already familiar with internal candidates’ work and personalities.


  • Have a leadership development program. A formal program for developing potential successors improves your chances of identifying internal successors. By providing training, mentoring, and coaching, you help candidates develop the skills they need to succeed in a management role — and you have an opportunity to evaluate their performance over time. In addition, your investment in employees may help with retention.


  • Consider external candidates. Although promoting from within has significant advantages, in some cases considering external candidates may be necessary or desirable. For example, if a CEO or other executive departs unexpectedly, you might not have a suitable internal candidate. Or perhaps the board feels that your bank would benefit from an outsider’s fresh perspective or experience at other types of institutions.


  • Look beyond the CEO. Many banks’ succession plans are limited to the top role. But it can be equally important to plan for the departure of other key positions — such as the CFO, chief risk officer or chief technology officer — as well as division or department heads who are critical to the bank’s operations and success. As you review your bank’s organizational chart, examine each position, consider the potential impact of a sudden vacancy and plan accordingly.


  • Think both short- and long-term. It’s important to have a short-term plan in the event someone leaves unexpectedly. This may involve designating interim successors who can fill in until a permanent replacement is found (which, in some cases, may be the interim successor). To minimize disruptions, a bank can use cross-training to ensure the availability of backup staff who can assume management responsibilities on an interim basis.


  • Make implementation part of your plan. Outlining your succession goals and strategies isn’t enough. Your plan should also include a “playbook” that sets forth processes for implementing the plan. For example, if you plan to hire from outside the bank, the playbook should specify where you’ll look for candidates, where you’ll post job listings and how you’ll identify the right people for the job. It might include checklists or other tools for evaluating candidates.


  • Communicate your plan. Transparency is key. It’s important to communicate your plans to all involved and manage candidates’ expectations to avoid losing people when one person is selected as successor. Make sure participants view the process as a career development opportunity, not a competition, and that you have a clear career path for those who aren’t chosen.


  • Revisit your plan regularly. A succession plan isn’t something you can put on a shelf and forget about until it’s time to implement it. To ensure that your plan continues to make sense for your institution, review it periodically and update it if necessary to reflect changes in your bank’s strategies, size, product and service offerings, regulatory environment, or other circumstances. Suppose, for example, that three years after developing a succession plan, a bank implements mobile banking applications and other digital technologies and hires a CTO. Unless the plan is updated, the bank’s operations could be disrupted if the CTO leaves.


Start early

Ideally, succession planning should start several years before potential succession events. You’ll need to give yourself plenty of time to define the qualifications you’re looking for, draft job descriptions, and evaluate internal and external candidates. You’ll also need backup plans for unexpected departures. By planning for management transitions, you’ll head off transition problems before they have a chance to derail your bank.


Sidebar: Regulatory expectations regarding succession planning

Federal banking agencies view succession planning as a key governance and risk management tool. In a recently published Q&A on succession planning, Federal Reserve representatives note that “management capabilities and succession prospects are considered throughout the examination process” and that these factors influence the “assessment of the bank’s viability.”

The Q&A also says that “given the importance of maintaining qualified bank leadership, any significant disruption in the bank’s operations can have far-reaching, negative ramifications for a bank’s safety and soundness. Hence, an effective succession plan is nimble enough to respond to changes in bank leadership in a timely fashion.”

Contact one of our experts with any questions about managing transition risk.

News Press Releases



For more information contact:

Alexis Long, Marketing Director


Jackson, Tenn., September 22, 2022 – Alexander Thompson Arnold PLLC (ATA), a business advisory and CPA firm, is pleased to announce Lori Warden, CPA, CGMA will be joining the firm as an assurance partner.

Warden has a wealth of knowledge with more than 30 years of experience in the assurance field including a background in peer review. She will be the Assurance Practice Leader in her new role with ATA. Warden is a Certified Public Accountant as well as a Chartered Global Management Accountant. She received her undergraduate degree in accounting from Marshall University.

“Adding Lori to the ATA team will strengthen our bench of expertise in the assurance area,” says Managing Partner, John Whybrew. “With her extensive background, Lori is well positioned to play an integral role in growing and expanding the Assurance Services offered within ATA.”

Lori previously held positions on the Kentucky Board of Accountancy as secretary, treasurer, and president. She is also a former Kentucky Society of CPA’s Board Member, chair of the Kentucky Society Education Foundation, and AICPA Peer Review Board Member.

“I am excited to become a partner at such an outstanding firm. I look forward to the hard work and am excited to assume more responsibility through the advancement of the practice,” said Warden.

Lori and her family live in Kentucky just outside of Cincinnati, Ohio. Warden is currently treasurer for South West Ohio Residences, a local non-profit. She is also married and has a daughter, who is a nurse in the ICU.


About Alexander Thompson Arnold PLLC (ATA)

ATA is a long-term business advisor to its clients and provides other services that are not traditionally associated with accounting. For example, Revolution Partners, ATA’s wealth management entity provides financial planning expertise; ATA Technologies provides trustworthy IT solutions; Sodium Halogen focuses on growth through the design and development of marketing and digital products; Adelsberger Marketing offers video, social media, and digital content for small businesses; and ATAES a comprehensive human resource management agency.

ATA has 15 office locations in Tennessee, Arkansas, Kentucky and Mississippi. Recognized as an IPA Top 200 regional accounting firm, it provides a wide array of accounting, auditing, tax and consulting services for clients ranging from small family-owned businesses to publicly traded companies and international corporations. ATA is also an alliance member of BDO USA LLP, a top five global accounting firm, which provides additional resources and expertise for clients.


Time is Running Out for the October 17th Deadline

If you requested an extension from the IRS to file your 2021 tax return, the Oct. 17 deadline is coming up soon. Taxpayers who asked for an extension should file on or before the deadline to avoid a late-filing penalty. Although Oct. 17 is the last day for most people to file, certain taxpayers may have more time; including military members and others serving in a combat zone. They typically have 180 days after they leave the combat zone to file returns and pay any taxes due. Also, taxpayers in federally declared disaster areas who already had valid extensions are given more time. Contact us right away to prepare your return to avoid penalties and claim any refund due.


4 Steps for Building Resilience in Your Organization

To expand or contract a business as market conditions change requires flexibility, agility, and foresight. For companies who want to be positioned as well as possible at the forefront of a recession, taking concrete steps now can ease the pain of an economic downturn or other unforeseen challenges.


How can companies navigate economic uncertainty and build resilience in their organizations?


1. Contain costs. When met with financial constraints—or the need to rapidly invest in growth areas—it will be critical to contain unnecessary expenses. Consider what costs can be pared back:


  • Can you pause certain projects and initiatives and reallocate funds where there is the greatest opportunity for growth?
  • Do you need to maintain your physical workplace, or can you trim the overhead?
  • Can you consider alternative staffing models to reduce costs?


2. Build a safety net of liquidity. Whether your business needs a capital reserve to invest in areas of growth, or to pay the bills while waiting out the storm, conserving liquidity will help fortify the financial health of your company. Investigate all potential funding sources available, as well as the terms attached to potential loans and grants.


3. Cultivate a nimble workforce. An adaptable workforce is key to scaling your business up or down. Be prepared to: reskill and upskill your existing workers to fill new roles; staff for agility so workers can serve as pinch hitters to serve areas with spikes in demand; and consider hiring contractors and freelancers in roles with a lot of variance of demand.


4. Outsource infrastructural needs. One way to minimize fixed costs and ensure best-in-class operational agility is by hiring external experts for non-core business functions, such as technology, finance & accounting, and human capital resources. Business operations are critical to maximizing workforce productivity and financially navigating a challenging climate. External experts working with companies across industries to scale during a recession can offer tried and true best practices to chart what would otherwise be uncharted territory.


While it’s impossible to know precisely what lies ahead, companies that take these four steps will be better poised to contend with whatever comes their way—whether it be a recession or an unprecedented growth opportunity. Visit our Value Creation page to speak with our team to discuss best practices on applying these steps.


Helpful Articles

The Inflation Reduction Act: what’s in it for you?

You may have heard that the Inflation Reduction Act (IRA) was signed into law recently. While experts have varying opinions about whether it will reduce inflation in the near future, it contains, extends, and modifies many climate and energy-related tax credits that may be of interest to individuals. 


Nonbusiness energy property

Before the IRA was enacted, you were allowed a personal tax credit for certain nonbusiness energy property expenses. The credit applied only to property placed in service before January 1, 2022. The credit is now extended for energy-efficient property placed in service before January 1, 2033. The new law also increases the credit for a tax year to an amount equal to 30% of the amount paid or incurred by you for qualified energy efficiency improvements installed during the year, and the amount of the residential energy property expenditures paid or incurred during that year. The credit is further increased for amounts spent for a home energy audit (up to $150). In addition, the IRA repeals the lifetime credit limitation and instead limits the credit to $1,200 per taxpayer, per year. There are also annual limits of $600 for credits with respect to residential energy property expenditures, windows, and skylights, and $250 for any exterior door ($500 total for all exterior doors). A $2,000 annual limit applies with respect to amounts paid or incurred for specified heat pumps, heat pump water heaters, and biomass stoves/boilers.


The residential clean-energy credit

Prior to the IRA being enacted, you were allowed a personal tax credit, known as the Residential Energy Efficient Property (REEP) Credit, for solar electric, solar hot water, fuel cell, small wind energy, geothermal heat pump, and biomass fuel property installed in homes before 2024. The new law makes the credit available for property installed before 2035. It also makes the credit available for qualified battery storage technology expenses. 


New Clean Vehicle Credit

Before the enactment of the law, you could claim a credit for each new qualified plug-in electric drive motor vehicle placed in service during the tax year. The law renames the credit the Clean Vehicle Credit and eliminates the limitation on the number of vehicles eligible for the credit. Also, final assembly of the vehicle must now take place in North America. Beginning in 2023, there will be income limitations. No Clean Vehicle Credit is allowed if your modified adjusted gross income (MAGI) for the year of purchase or the preceding year exceeds $300,000 for a married couple filing jointly, $225,000 for a head of household, or $150,000 for others. In addition, no credit is allowed if the manufacturer’s suggested retail price for the vehicle is more than $55,000 ($80,000 for pickups, vans, or SUVs). Finally, the way the credit is calculated is changing. The rules are complicated, but they place more emphasis on where the battery components (and critical minerals used in the battery) are sourced. The IRS provides more information about the Clean Vehicle Credit here: 


Credit for used clean vehicles

A qualified buyer who acquires and places in service a previously owned clean vehicle after 2022 is allowed a tax credit equal to the lesser of $4,000 or 30% of the vehicle’s sale price. No credit is allowed if your MAGI for the year of purchase or the preceding year exceeds $150,000 for married couples filing jointly, $112,500 for a head of household, or $75,000 for others. In addition, the maximum price per vehicle is $25,000.

Contact us if you have questions about taking advantage of these new and revised tax credits. © 2022