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Staff Reporter

Businesses With Overseas Research Targeted by IRS Expense Rule

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The change in tax treatment of research and experimental expenditures under Internal Revenue Code Section 174, effective for tax years beginning after Jan. 1, 2022, could have additional impacts on US taxpayers that incur research costs overseas. Under previous rules, businesses had the option of deducting these expenses in the year they’re incurred, or capitalizing the costs and amortizing them over five or 10 years. Starting in 2022, businesses lose the option to deduct these costs in the year they are incurred.

Under the new rule, taxpayers must capitalize and amortize Section 174 expenses over a five-year period for research conducted in the US, or over a 15-year period for research conducted overseas. Many businesses need to review their expenditures to determine if costs they have deducted annually now qualify as “research and experimental expenditures” that must be capitalized and amortized for tax years beginning in 2022.

Taxpayers making payments for research outside the US will have some additional concerns. On its face, the new law imposes a longer amortization period on costs incurred for overseas research. So, some expenses that businesses deduct in full in 2021 will generate only one-thirtieth of that deduction in 2022, using the half-year convention to calculate the deduction in the year the cost is incurred.

The change also will have some secondary effects on calculating other items on the tax return, such as global intangible low-taxed income, foreign-derived intangible income, foreign tax credits, and base erosion and anti-abuse tax.

Capitalization of International Section 174 Expenses

Many businesses incur costs that meet the Section 174 definition of research and experimental expenditures. Until now, there has been little need to track those costs separately because they’ve been treated the same as other deductible expenses for tax purposes. Deductions for payments such as maintenance and overhead expenses on research facilities and wages for engineering and lab costs weren’t separated out from general building maintenance and wage accounts.

Businesses that have tracked costs in order to qualify for the research and experimentation tax credit may have systems in place to monitor some Section 174 expenses, but the Section 174 definition covers more types of expenditures than the limited list of costs that qualify for the R&E credit.

Businesses that make payments to service providers outside the US need to determine if the activities conducted qualify as “research” within the definition of Section 174. For example, if a business buys a raw material or a finished good from an overseas supplier, that cost probably doesn’t include a research component. But if it pays for engineering services or software development from an overseas supplier, some of the costs that have been fully deductible when incurred may now have to be amortized over 15 years.

Any business that relies on a global network of contractors and suppliers to develop products and deliver services likely will need a more detail-oriented system to track costs that qualify as Section 174 expenses and the jurisdiction in which they are incurred.

Special Concerns for Related Parties Overseas

Businesses whose global networks include related foreign subsidiaries may see additional consequences of this change. When Section 174 is applied to foreign R&D expenses incurred by controlled foreign corporations, taxpayers could see significant increases in tested income included in the GILTI calculation in the first year the rules are implemented. This will lead to additional GILTI inclusion and may result in residual GILTI tax.

In some cases, considering the new Section 174 rules, taxpayers that previously qualified for the high-tax exception under GILTI rules could become subject to the tax when foreign taxable income is recalculated for GILTI purposes. In most cases, the underlying tax paid in the foreign region will not change, as the foreign region will apply its own tax principles in computing taxable income without regard to US tax principles.

Double amortization concerns arise when a US taxpayer contracts a foreign subsidiary to perform R&D-related services. The payment to the foreign subsidiary is amortized over 15 years by the US business, and the related costs incurred by the foreign subsidiary are also amortized over 15 years for CFCs and foreign disregarded entities whose activities are includable in US income.

When this type of transaction occurs between multinational related parties, it can cause multiple layers of slower cost recovery that amplifies the impact on the taxable income of the US parent in the year the payment is made. This situation leaves the foreign subsidiary in the position of receiving the contract income for tax purposes in the year it’s earned with the benefit of only a small fraction of the deduction for related expenses.

The Section 174 change will also modify the taxable income number that provides the starting point for tax calculations such as FDII, BEAT, and the foreign tax credit. In some cases, the result could skew slightly in the taxpayer’s favor with these calculations, but the overall impact of this change will be a reduction in current-year deductions and a significant increase in current-year taxable income.

Many Questions Still Unanswered

Taxpayers applying the international aspects of the Section 174 expense amortization rules may benefit from IRS guidance. For instance, when engaging both unrelated and related foreign parties to conduct research on a taxpayer’s behalf, do both parties need to consider underlying expenses as capitalizable research? Or could a rights and risk model treat the payment as capitalizable research for one party and a deductible operating expense for the other? Additional guidance in this area could certainly help reduce the potential risk for dual amortization.

As there is no current path for this change to be deferred, taxpayers should review their expenses that could be subject to five- or 15-year amortization to project the tax impact of these new provisions on current-year tax liabilities. To learn more about how the amortization of Section 174 expenses and the related international aspects could affect your business, contact your tax adviser.

Authors Information

Robert Piwonski is an international tax senior manager at Plante Moran. He assists companies with global compliance and effective tax rate considerations, as well as advising on cross-border transactions, providing international tax due diligence, and offering continuous strategies to reduce worldwide cash taxes.

Caitlin Slezak is senior manager of Plante Moran’s national tax office. She advises colleagues and clients on emerging tax issues, focusing on technical tax accounting methods as they relate to tax revenue, expense recognition, and tax inventory accounting.

Jay Woods is an international tax manager at Plante Moran. As a member of the firm’s international tax services practice group, he works with internationally active clients, focusing on outbound operations and inbound services.

Originally Appeared Here

Filed Under: BUSINESS, ENTREPRENEURS

US Congress passes bill to boost chipmakers, compete with China

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The U.S. House of Representatives passed sweeping legislation on Thursday to subsidize the domestic semiconductor industry as it competes with Chinese and other foreign manufacturers, a victory for President Joe Biden and his fellow Democrats hoping to keep their slim majority in Congress in November midterm elections.

The final vote was 243 to 187, with one Democrat – Representative Sara Jacobs – voting present. Twenty-four Republicans joined 218 Democrats in backing the measure. Passage sends the bill to the White House, where Biden is expected to sign it into law as soon as early next week.

The Senate passed the “Chips and Science” act with bipartisan support on Wednesday, after more than a year of effort. A rare major foray into U.S. industrial policy, the bill provides about $52 billion in government subsidies for U.S. production of semiconductors used in everything from automobiles and high-tech weaponry to electronic devices and video games. It also includes an investment tax credit for chip plants estimated to be worth $24 billion.

The legislation would also authorize $200 billion over 10 years to boost U.S. scientific research to better compete with China. Congress would still need to pass separate appropriations legislation to fund those investments.

The bill passed hours after Biden had a telephone call with Chinese President Xi Jinping, in which Xi warned Biden against “playing with fire” over Taiwan. Aides had said the leaders of the world’s two largest economies also would discuss supply chain and other economic issues.

China had lobbied against the semiconductor bill. The Chinese Embassy in Washington said China “firmly opposed” it, calling it reminiscent of a “Cold War mentality” and “counter to the common aspiration of people” in both countries.

HEFTY SUBSIDIES FOR PRIVATE BUSINESS

Many U.S. lawmakers had said they normally would not support hefty subsidies for private businesses but noted that China and the European Union have been awarding billions in incentives to their chip companies. They also cited national security risks and huge global supply chain problems that have hampered global manufacturing.

Representative Michael McCaul, the top Republican on the House Foreign Affairs Committee, was one “yes” vote from his party. “We need to manufacture (chips) in this country, and not let it go offshore,” he told reporters before the vote.

“… This is vitally important to our national security,” McCaul said.

At the White House, Biden interrupted a meeting on the economy with corporate executives when told the House had passed the chips bill. “The House has passed it,” Biden said, looking delighted, to applause in the room.

House members cheered after the bill passed. The measure had been in the works for more than a year. The Senate passed a bill in June 2021 with strong bipartisan support, only to have it stall for months in the House as Republicans and Democrats disputed whether it should include provisions addressing issues such as climate change and China’s human rights record.

The chips bill passed the House by a narrower-than-expected margin after some Republicans pulled support at the last minute.

Republican party leaders told members to vote against the bill after the announcement on Wednesday of an agreement between Senate Democratic leader Chuck Schumer and Democratic Senator Joe Manchin that could pave the way for Senate passage of separate legislation to increase corporate taxes, reduce the national debt, invest in energy technologies and lower the cost of prescription drugs.

Democrats hope such legislative achievements will help them in the Nov. 8 midterm elections. Republicans hope to regain control of the Senate, and some polls have them favored to win a majority in the House of Representatives.

Originally Appeared Here

Filed Under: BUSINESS, TECH/SCIENCE

Chip and carmaker CEOs meet ahead of Biden signing

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The heads of chipmakers GlobalFoundries and Applied Materials and carmakers Ford Motor and General Motors Co were to meet at a closed-door summit with U.S. government officials on Monday to discuss administration plans to invest in semiconductors.

On Tuesday, President Joe Biden will sign legislation to subsidize the U.S. semiconductor industry and boost efforts to make the United States more competitive with China. The bill provides $52 billion in subsidies for chip manufacturing and research. It also includes an investment tax credit for chip plants estimated to be worth $24 billion.

GlobalFoundries CEO Thomas Caulfield said in a statement the chips legislation “protects U.S. economic, supply chain and national security by accelerating semiconductor manufacturing on American soil.”

The legislation aims to alleviate a persistent shortage that has affected supplies of goods from cars and weapons to washing machines and video games. Thousands of cars and trucks remain parked in southeast Michigan awaiting chips as the shortage continues to impact automakers.

The companies said the summit would bring them together with government officials to “discuss how these public investments can accelerate semiconductor and emerging technology manufacturing, support the electrification of automobiles with a ready supply of chips, including feature-rich chips, and strengthen the United States’ economy, supply chains, and national security.”

White House National Economic Council Director Brian Deese, Under Secretary of Defense for Acquisition William LaPlante and National Security Council official Tarun Chhabra were among officials due to attend.

Ford CEO Jim Farley said in a statement “a reliable domestic supply of chips, including legacy semiconductors needed in the automotive and defense industries, will keep American manufacturing lines humming.”

Originally Appeared Here

Filed Under: TECH/SCIENCE

Twitter whistleblower to testify at US Congress on September 13

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Twitter whisleblower Peiter “Mudge” Zatko is set to testify at US Congess on September 13 about allegation he leveled against the Parag Agrawal-led micro-blogging platform over misleading regulators about security practices and actual number of bot accounts.

Twitter’s former security chief Zatko will testify Twitter before the Senate about his allegations of security failures at the social network, the Senate Judiciary Committee announced.

According to The Wall Street Journal, the hearing is scheduled for September 13 and Zatko will appear “pursuant to a subpoena”.

“Zatko’s allegations of widespread security failures and foreign state actor interference at Twitter raise serious concerns. If these claims are accurate, they may show dangerous data privacy and security risks for Twitter users around the world,” said Senators Richard J. Durbin (D-Ill) and Charles E. Grassley (R-Iowa) from the Senate Judiciary Committee in a statement.

Zatko has met privately with Judiciary Committee staff, and has had three meetings on Capitol Hill, according to the report.

Twitter declined to comment on the hearing.

The company held a town hall on Wednesday in which senior company executives deliberated upon the whistleblower complaint.

Twitter is now facing privacy probes in the European Union (EU) after the whistleblower complaint.

Zatko’s complaints had references to European regulators, alleging that Twitter misled or intended to mislead regional oversight bodies over its compliance with local laws.

According to TechCrunch, Ireland’s Data Protection Commission (DPC) and France’s CNIL are following up on the whistleblower complaint.

Meanwhile, the US Securities and Exchange Commission (SEC) has also asked Twitter to explain its user metrics after Tesla CEO Elon Musk complained.

“We note your estimate that the average number of false or spam accounts during fiscal 2021 continues to represent fewer than 5 per cent of mDAU,” the commission wrote to Twitter.

“To the extent material, please disclose the methodology used in calculating these figures and the underlying judgements and assumptions used by management,” the SEC added.

Originally Appeared Here

Filed Under: TECH/SCIENCE

Six months into war, Russian goods still flowing into US

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Photo: The Canadian Press

On a hot, humid East Coast day this summer, a massive container ship pulled into the Port of Baltimore loaded with sheets of plywood, aluminum rods and radioactive material – all sourced from the fields, forests and factories of Russia.

President Joe Biden promised to “inflict pain” and deal “a crushing blow” on Vladimir Putin through trade restrictions on commodities like vodka, diamonds and gasoline in the wake of Russia’s invasion of Ukraine six months ago. But hundreds of other types of unsanctioned goods worth billions of dollars, including those found on the ship bound for Baltimore from St. Petersburg, Russia, continue to flow into U.S. ports.

The Associated Press found more than 3,600 shipments of wood, metals, rubber and other goods have arrived at U.S. ports from Russia since it began launching missiles and airstrikes into its neighbor in February. That’s a significant drop from the same period in 2021 when about 6,000 shipments arrived, but it still adds up to more than $1 billion worth of commerce a month.

In reality, no one involved actually expected trade to drag to a halt after the invasion. Banning imports of certain items would likely do more harm to those sectors in the U.S. than in Russia.

“When we impose sanctions, it could disrupt global trade. So our job is to think about which sanctions deliver the most impact while also allowing global trade to work,” Ambassador Jim O’Brien, who heads the State Department’s Office of Sanctions Coordination, told the AP.

Experts say the global economy is so intertwined that sanctions must be limited in scope to avoid driving up prices in an already unstable market.

Also, U.S. sanctions don’t exist in a vacuum; layers of European Union and U.K bans result in convoluted trade rules that can be confusing to buyers, sellers and policymakers.

For example, the Biden administration and the EU released separate lists of Russian companies that cannot receive exports, but at least one of those companies — which supplies the Russian military with metal to make fighter jets currently dropping bombs in Ukraine –- is still selling millions of dollars of metal to American and European firms, AP found.

While some U.S. importers are sourcing alternative materials elsewhere, others say they have no choice. In the case of wood imports, Russia’s dense birch forests create such hard, strong timber that most American wooden classroom furniture, and much home flooring, is made from it. Shipping containers of Russian items — groats, weightlifting shoes, crypto mining gear, even pillows — arrive at U.S. ports almost every day.

A breakdown of imported goods from Russia shows some items are clearly legal and even encouraged by the Biden administration, like the more than 100 shipments of fertilizer that have arrived since the invasion. Now-banned products like Russian oil and gas continued to arrive in U.S. ports long after the announcement of sanctions due to “wind down” periods, allowing companies to complete existing contracts.

In some cases, the origin of products shipped out of Russian ports can be difficult to discern. U.S. energy companies are continuing to import oil from Kazakhstan through Russian ports, even though that oil is sometimes mixed with Russian fuel. Trade experts warn that Russian suppliers are unreliable, and opaque corporate structures of most major Russian companies make it difficult to determine whether they have ties to the government.

“It is a general rule: when you have sanctions, you’ll have all kinds of murky schemes and illicit trade,” said Russian economist Konstantin Sonin, who teaches at the University of Chicago. “Still, sanctions make sense because even though you cannot kill 100% of revenues, you can reduce them.”

Many American companies are choosing to cut off Russian trade. Coors beer, for example, returned a shipment of hops to a state-owned Russian company in May as part of a commitment to suspend all business in the country, said Molson Coors Beverage Co. spokeswoman Jennifer Martinez.

Russia and the U.S. were never major trading partners, and so sanctioning imports is only a very small slice of the retaliatory strategy. Restrictions on exports from the U.S. –- of technology in particular –- cause more damage to the Russian economy, and sanctioning the Russian Central Bank has frozen Russia’s access to roughly $600 billion in currency reserves held across the U.S. and Europe.

Nonetheless, sanctions carry a symbolic weight beyond the financial harm they might inflict, particularly for American consumers horrified by the war.

Here’s a look at some of the goods that have flowed between the two countries:

METALS

Russia is a key exporter of metals like aluminum, steel and titanium; cutting off that trade could dramatically drive up prices for Americans already grappling with inflation, said Morgan Stanley economist Jacob Nell.

“The basic idea with sanctions is that you’re trying to act in a way that causes more pain to the other side and less pain to yourself,” he said.

Most American companies dealing in metals have longstanding relationships with Russian suppliers. Such trade, particularly of aluminum, has continued virtually uninterrupted since the beginning of the war.

AP found more than 900 shipments totaling more than 264 million tons of metals since February. Russia is one of the largest producers of unwrought aluminum outside of China and a significant global exporter. But the war has affected that global market as well.

“Like all manufacturers,” said Aluminum Association spokesperson Matt Meenan, “we have seen supply chain impacts in terms of increased energy costs and other inflationary pressures which the invasion exacerbated.”

Russian aluminum ends up in American car parts and airplanes, soda cans and cables, ladders and solar racks. The largest U.S. buyer at the start of 2022 was a subsidiary of Russian-owned global aluminum giant Rusal. In April, Rusal America’s senior executives bought the U.S.-based part of the company and rebranded it as PerenniAL. In July alone, PerenniAL imported more than 35,000 tons from Russia. The company did not respond to requests for comment.

Also, among the private companies choosing to source materials from Russia are U.S. government contractors supported by federal tax dollars. Boeing, the world’s largest aerospace company signed a federal contract for up to $23.8 billion in 2021; it imported 20 tons of aluminum in June from Kamensk-Uralsky Metallurgical Works. In March, the U.S. banned exports to Kamensk-Uralsky because it supplies metals to the Russian military, but placed no restrictions on imports. A Boeing representative said the company made the decision to end trade with Russia in March, and explained that the shipment that arrived in June had been purchased four months before.

Another metal importer, Tirus US, is owned by Russian company VSMPO-AVISMA, the world’s largest titanium producer. VSMPO also provides metal to the Russian military to build fighter jets. The company’s broad global footprint and specific product — titanium — underscores the challenges of isolating Russia from global trade. Tirus US sells titanium to more than 300 companies in 48 countries, including a range of U.S. buyers, from jewelry makers to aerospace companies. VSMPO did not respond to requests for comment.

WOOD

Russia’s vast forests are some of the largest in the world. After Canada, Russia is the second largest exporter of wood, and has some of the only mills that can make strong, solid Baltic birch plywood, flooring used throughout the U.S.

This year, the Biden administration began imposing tariffs on Russian wood exports, a move which infuriated Ronald Liberatori, a Nevada-based wood dealer who sells Russian grown Baltic birch to all the major furniture makers, construction companies and flooring manufacturers in the U.S.

“The problem here is Russia is the only country in the world that makes this product,” he said. “There’s no alternative source.”

He said that on top of the tariff, he had to put up an $800,000 bond to ensure he’d pay the tax, further driving up prices.

“Who’s paying for this? Who? You and every other individual in the United States,” he said. “We’re so damned upset with what Biden has done. This is a government versus government issue.”

Liberatori said decision-makers need to consider who is going to be more hurt by tariffs before imposing them.

Another wood and paper importer told AP that while it stopped any new orders in February, it had vast amounts of lumber in Russia that already had been paid for; the final shipment arrived in the U.S. in July.

FUEL

On March 8, Biden announced the United States is banning all imports of Russian oil, gas and energy, “targeting the main artery of Russia’s economy.”

“That means Russian oil will no longer be acceptable at U.S. ports, and the American people will deal another powerful blow to Putin’s war machine,” he said.

Within hours, there were reports that a ship carrying 1 million barrels of Russian oil to the U.S. changed course to France. But plenty of others pushed on.

That week, about a million barrels of Russian crude oil had arrived off the port of Philadelphia, bound for Delta Airlines’ oil refinery Monroe Energy. Meanwhile, a tanker with about 75,000 barrels of Russian tar oil pulled into the port of Texas City, Texas, bound for Valero’s refineries after a long north Atlantic crossing, according to trade records.

The shipments continued to Valero, ExxonMobil and others. ExxonMobil media manager Julie King told AP a July oil delivery was of Kazakh origin and not subject to sanctions. She said Exxon “supports the internationally coordinated efforts to bring Russia’s unprovoked attack to an end, and are complying with all sanctions.”

Monroe spokesman Adam Gattuso said the company has not received any more Russian fuel and doesn’t “anticipate doing so for the foreseeable future.” Valero did not respond to requests for comment.

Andrea Schlaepfer, a spokesperson for Dutch fuel exporter Vitol, said that all of its oil and gas shipments since April 22 have been from Kazakhstan, where pipelines and rail networks run from the landlocked country’s oil fields and refineries to neighboring Russian ports.

For the use of its port infrastructure, moorings and fees, Russia makes about $10 million each year.

Schlaepfer said U.S. Customs and Border Protection agents review and verify that its shipments entering the U.S. don’t contain Russian products. But CBP did not answer repeated questions about how it handles sanctions and bans on Russian goods. A CBP fact sheet says it plays a “critical role” in enforcing prohibitions on imports, however a spokesman repeatedly referred The AP to the State and Treasury departments.

OTHER

So far this year, almost 4,000 tons of Russian bullets have also arrived in the U.S., where they were distributed to gun shops and ammo dealers. Some were sold to U.S. buyers by Russian state-owned companies, while others came from at least one sanctioned oligarch. Those shipments slowed significantly after April.

AP also tracked millions of dollars worth of shipments of radioactive uranium hexafluoride from Russian state-owned Tenex JSC, the world’s largest exporter of initial nuclear fuel cycle products, to Westinghouse Electric Co. in South Carolina. Nuclear material is not sanctioned.

Westinghouse spokeswoman Cathy Mann said that as part of the nuclear fuel manufacturing process, their fuel fabrication facilities receive enriched uranium product and convert it into fuel pellets. She said Westinghouse doesn’t own the uranium used to make fuel. That material belongs to customers who operate nuclear power plants throughout the world.

“As a result, our customers have the accountability to determine where and from whom the materials are procured – some of which is sourced from Russia or enriched by a Russian company,” she said. “Westinghouse condemns Russia’s invasion and the resulting hostility and loss of life.”

In addition, some of the products sent to the U.S. from Russian ports continue on to Mexico and Canada. Toyota vehicle components, for example, arrived last month in New Orleans bound for a Mexican plant run by Toyota Tshusho, the car company’s trading arm.

Radioactive material sent from Russia to the U.S. is hauled north of the border to sterilize packaged medical supplies used throughout North America.

Although imports of some food items, such as seafood and vodka, have been restricted, the Treasury Department last month published a fact sheet reiterating that agricultural trade between the U.S. and Russia is still very much allowed.

The Red October chocolate factory sits just across from the Kremlin in Moscow. Today it’s a tourist attraction with apartments, stores and restaurants. But the company, Krasny Oktyabr, still makes and sells candy and other traditional treats from a production plant on the outskirts of Russia.

In Brooklyn, New York, Grigoriy Katsura, at the U.S. offices of Krasnyi Oktyabr Inc, said they continue to import delectables, a taste of childhood for Russian immigrants.

“Of course they’re used to it,” he said.

And so every few weeks, the shipments arrive at their warehouse from Russia: buckwheat, dried fruit and their world-renowned chocolate.

Originally Appeared Here

Filed Under: BUSINESS

Nestle unveils platform for young entrepreneurs

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VEVEY, SWITZERLAND — Nestle is launching a digital platform for young innovators and entrepreneurs. The Nestle Youth Entrepreneurship Platform will provide opportunities to learn new knowledge and skills, test ideas and grow businesses. Areas of focus range from food science and technology to the development of products and services, including regenerative agriculture and sustainable packaging.

“At Nestle we work with startups, entrepreneurs, innovators and researchers to drive innovation, bring good ideas to market fast and provide nutritious, sustainable and affordable products for a growing world population,” said Stefan Palzer, chief technology officer of Nestle. “Our new digital platform supports young people to bring great ideas to life across the food value chain, shaping the future of food.”

Bringing together existing innovation initiatives and programs, the platform offers access to the Nestle Entrepreneurship Academy, as well as customized content and resources from specific geographies. Programs include the Nestle R+D Accelerator, which brings together company scientists, students and startups to boost innovation and speed to market, plus pet care-focused Purina Unleashed and regional initiatives such as Ignite Ideas, Reto Culinario and CEO X Youth Connect.

Nestle introduced its global Nestle Needs YOUth initiative in 2013 to help young people gain important skills for future careers. The effort has benefited more than 4 million youth across the three pillars of employability, “agripreneurship” and entrepreneurship. Through its new platform, Nestle is investing in early-stage companies and empowering young entrepreneurs to bring innovative ideas to market.

“Young entrepreneurs need guidance, support, and above all, opportunities and platforms where their voices can be heard and their ideas realized,” said Laurent Freixe, Nestle’s chief executive officer for Latin America and founder of the Nestle Needs YOUth initiative. “This includes building their knowledge and skills, testing their ideas in real-life situations, getting feedback from their audiences and receiving support to take their concept to the next level.

“The Nestle Youth Entrepreneurship Platform will help equip them with the skills, experience and mindset they need to kick-start their idea and business.”

Access to the platform, at nestleyouthentrepreneurship.com, is free.
Originally Appeared Here

Filed Under: BUSINESS, ENTREPRENEURS

You can now chat with Google’s most advanced AI chatbot but at your own risk

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Google has opened its experimental artificial intelligence (AI) chatbot for the public and you can now register to chat with the AI-driven bot trained on the company’s controversial language model.

Google has already warned that early previews of its LaMDA (Language Model for Dialogue Applications) model “may display inaccurate or inappropriate content”.

‘AI Test Kitchen’ by Google is an app where people can learn about, experience, and give feedback on Google’s emerging AI technology.

“Our goal is to learn, improve and innovate responsibly on AI together. We’ll be opening up to small groups of people gradually,” said the company.

According to Alphabet and Google CEO Sunday Pichai, ‘AI Test Kitchen’ is “meant to give you a sense of what it might be like to have LaMDA in your hands”.

The ability of these language models to generate infinite possibilities shows potential, “but it also means they don’t always get things quite right”.

“And while we’ve made substantial improvements in safety and accuracy in the latest version of LaMDA, we’re still at the beginning of a journey,” said Google.

“We’ve added multiple layers of protection to the AI Test Kitchen. This work has minimised the risk, but not eliminated it,” it added.

Both Google and Meta (formerly Facebook) have unveiled their AI conversational chatbots, asking the public to give feedback.

The initial reports are scary as the Meta chatbot named BlenderBot 3 thought Mark Zuckerberg is “creepy and manipulative” and Donald Trump will always be the US president.

Meta said last week that all conversational AI chatbots are known to sometimes mimic and generate unsafe, biased or offensive remarks.

“BlenderBot can still make rude or offensive comments, which is why we are collecting feedback that will help make future chatbots better,” the company mentioned in a blogpost.

Last month, Google fired an engineer over breaching its confidentiality agreement after he made a claim that the tech giant’s conversation AI is “sentient” because it has feelings, emotions and subjective experiences.

Lemoine also interviewed LaMDA, which came with surprising and shocking answers.

Originally Appeared Here

Filed Under: TECH/SCIENCE

The U.S. Economy Is Expected To Experience “Pain” In The Near Future – How Can Companies Prepare?

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Economists have warned about an incoming recession for months now.  

While the Federal Reserve continues to hike interest rates to cool inflation, Fed chair Jerome Powell acknowledged that this move could lead to economic pain in the future.  

Recession impacts more than just companies – the workforce must be ready to adjust as well. This is particularly important for young Millennials and Gen Zers, both of whom have hardly experienced working through an economic downturn.  

There are ways for employers to prepare for a recession, but HR departments must be prepared to address the challenges that are likely to emerge from this.   

For starters, certain workplace incentives may not be as sustainable as they once were. For instance, providing lavish benefits to attract new talent could provide less value as people have less money to spend.   

But this doesn’t mean companies must get rid of incentives altogether. Instead, leaders must find alternative modes of keeping workers engaged that are not financial. For instance, nurturing company culture, providing workers with a clear path to progress and offering one-of-a-kind, fulfilling workplace experiences can all serve as incentives for workers. 

Another potential challenge in a recession is increased tension when it comes to remote work policies. Several large companies are eager to bring employees back into the office, but a recession may grow employees’ desire to be in the office as they cling to their wallets. 

In the future, leaders must reevaluate which roles are absolutely necessary to be performed in person and which can be effectively done remotely. 

Originally Appeared Here

Filed Under: BUSINESS

US bill to allow parents to sue social media over child addiction fails

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California lawmakers have rejected a much-anticipated bill allowing parents to sue social media platforms over their addictive features for kids has failed in the legislature.

The Social Media Platform Duty to Children Act (AB 2408) failed to pass out of committee for a full state Senate vote, reports Miami Herald.

The bill would have let local prosecutors sue social media platforms for up to $250,000 per violation for knowingly using tools that can make children addicted to their products.

“As we’ve said from the start, protecting children online is a priority but must be done responsibly and effectively,” Dylan Hoffman, executive director for California and the Southwest of TechNet was quoted as saying.

“We’re glad to see that this bill won’t move forward in its current form. If it had, companies would’ve been punished for simply having a platform that kids can access,” Hoffman said in the report that came out on Friday.

Supporters said that such rules are necessary to protect children from companies who turn a blind eye to the harm caused to their mental health by social media addiction.

The Bill applied to social networks that generate less than $100 million annually or are primarily intended for video games.

“I am extremely disappointed. The bill’s death means a handful of social media companies will be able to continue their experiment on millions of California kids, causing generational harm,” said bill author Jordan Cunningham.

The demise of the bill comes at a time when US President Joe Biden has called for new child safety protections online.

Critics of the bill argued that it would have pushed services toward privacy-threatening age verification.

“It hurts the kids by depriving them of valuable social outlets and educational resources,” according to Internet policy expert Eric Goldman.

Originally Appeared Here

Filed Under: BUSINESS, TECH/SCIENCE

Justice Dept. Has Reviewed Documents Seized in Mar-a-Lago Search

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The Justice Department has set aside documents seized from former President Donald J. Trump’s Florida estate potentially covered by attorney-client privilege, a maneuver that might make his efforts to have an independent arbiter review the materials unnecessary.

The disclosure, which came in a court filing on Monday, is based on the government’s initial analysis of the materials. It came as Mr. Trump’s lawyers pressed a federal judge in Florida to order the appointment of an outside expert, known as a special master, to review the trove of highly sensitive documents seized in a search of Mar-a-Lago, the former president’s private club and residence.

On Saturday, Judge Aileen M. Cannon of Federal District Court for the Southern District of Florida suggested she was leaning toward the appointment of a special master to look at the materials taken by federal agents from Mar-a-Lago. She ordered the Justice Department to respond by Tuesday and share a complete list of documents, some of them highly classified, taken in the search on Aug. 8.

Mr. Trump’s request for a special master — which was filed far later than is typical — is significant because it could provide his legal team with an opportunity to contest the government’s seizure of specific documents whose ownership, and possibly classification levels, they see as being in dispute.

But the Justice Department’s three-page filing on Monday, noting that its review of the materials was completed, threw up a significant obstacle to that request. In the filing, lawyers at the department disclosed that its privilege review team had finished its assessment of the documents and set aside “a limited set of materials that potentially contain attorney-client information,” a requirement that was mandated by the original search warrant issued by a federal magistrate judge in Florida this month.

Takeaways From the Affidavit Used in the Mar-a-Lago Search

The release on Aug. 26 of a partly redacted affidavit used by the Justice Department to justify its search of former President Donald J. Trump’s Florida residence included information that provides greater insight into the ongoing investigation into how he handled documents he took with him from the White House. Here are the key takeaways:

Takeaways From the Affidavit Used in the Mar-a-Lago Search

The government tried to retrieve the documents for more than a year. The affidavit showed that the National Archives asked Mr. Trump as early as May 2021 for files that needed to be returned. In January, the agency was able to collect 15 boxes of documents. The affidavit included a letter from May 2022 showing that Trump’s lawyers knew that he might be in possession of classified materials and that the Justice Department was investigating the matter.

Takeaways From the Affidavit Used in the Mar-a-Lago Search

The material included highly classified documents. The F.B.I. said it had examined the 15 boxes Mr. Trump had returned to the National Archives in January and that all but one of them contained documents that were marked classified. The markings suggested that some documents could compromise human intelligence sources and that others were related to foreign intercepts collected under the Foreign Intelligence Surveillance Act.

Takeaways From the Affidavit Used in the Mar-a-Lago Search

Prosecutors are concerned about obstruction and witness intimidation. To obtain the search warrant, the Justice Department had to lay out possible crimes to a judge, and obstruction of justice was among them. In a supporting document, the Justice Department said it had “well-founded concerns that steps may be taken to frustrate or otherwise interfere with this investigation if facts in the affidavit were prematurely disclosed.”

A deeper “classification review” of the intelligence implications of Mr. Trump’s retention of government documents by the F.B.I. and the director of national intelligence is continuing, the filing revealed. The government affidavit, filed to justify the search, revealed concerns in the intelligence community that Mr. Trump’s possession of highly classified materials could compromise “clandestine human sources” collecting information overseas.

In both court papers and public statements, Mr. Trump and his lawyers have argued that some of the material seized at Mar-a-Lago could be protected by executive privilege, a vestige of his service as president. But legal scholars and some judges have expressed skepticism that former presidents can unilaterally assert executive privilege over records from their time in the White House. That power, the scholars and judges say, generally resides with the current president.

While Mr. Trump and his legal team have advanced arguments about executive privilege, most of the cases they cited in their filing asking for a special master concerned independent reviews of seized documents for those shielded by attorney-client privilege.

The case involving Mr. Trump’s attempt to get a special master has been hindered from the start by sloppy legal work and unusual procedures. That has happened, in part, because the request for a special master was filed separately from a matter it is deeply entwined with: the court fight over unsealing portions of the warrant affidavit used to justify the search of Mar-a-Lago.

Last week, after receiving an initial attempt by Mr. Trump’s lawyers to request a special master, Judge Cannon asked them, in a rare rebuke, to send her clarifications about what precisely they were asking for and why she should handle the case and not Judge Bruce E. Reinhart, who handled the unsealing of the warrant.

More on the Trump Documents Inquiry

Then, after she received a supplemental filing from Mr. Trump’s legal team answering her questions, Judge Cannon took the unusual step of issuing a document that signaled her “preliminary intent” to appoint a special master even before she sought the Justice Department’s opinion on the matter or held a hearing on the questions. A hearing is set to take place on Thursday in West Palm Beach, Fla.

In advance of the hearing, the Justice Department is also expected to file on Tuesday a detailed inventory of the materials seized. But that list, which will go into greater depth than the nominal description in the search warrant that was unsealed this month, will be filed under seal.

Attorney General Merrick B. Garland and the department’s leaders have yet to decide if they will seek to unseal that document, according to officials.

Judge Cannon will now have access to the government’s own assessment of the materials, and she could have the information needed to rule on requests by Mr. Trump’s team to exclude individual documents.

Originally Appeared Here

Filed Under: BUSINESS

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