Hong Kong to relay concern to China over auditing ban proposal
Aipeng Soo of Bloombergreported yesterday that the Hong Kong government plans to meet with Chinese officials to discuss concerns over a proposal to ban foreign accounting firms without a mainland partner from auditing Chinese companies planning to list overseas.
Hong Kong will “reflect the concerns of the industry,” Ka-Keung Chan, the secretary for financial services, told reporters on Wednesday, according to his spokeswoman Shirley Wong. The city’s delegates will meet Chinese finance ministry officials early next month, the South China Morning Post reported on Thursday, citing Chan.
Last month, China’s Ministry of Finance issued draft rules requiring foreign accounting companies to team up with one of the nation’s top 100 firms to perform audits of Chinese companies seeking to list overseas, Soo wrote. The proposed rules come in the wake of a series of short-selling incidents targeted at China-related businesses and amid a six-month US ban on mainland firms auditing Chinese companies seeking an American listing.
Under Hong Kong’s listing rules, companies are required to hire local accountants to sign off on financial statements and the new rules mean they won’t be able to do the audit by themselves, the South China Morning Post reported Chan as saying. Relying on mainland staff members would lead global firms to scale back the hiring of Hong Kong’s professionals.
[Also, check out the China Accounting Blog, in which Paul Gillis wrote yesterday that the proposed rules will not change the way audits are conducted for most overseas-listed Chinese companies.]
House panel backs $287 billion tax cut on fast write-offs
The House Ways and Means Committee on Thursday voted 23 to 11 to let companies write off more than half the cost of some investments immediately, providing a $287 billion tax cut to capital-intensive industries, Richard Rubin of Bloombergreported yesterday.
The proposal would revive the bonus depreciation tax break that lapsed on December 31, 2013. The measure would extend indefinitely the tax break that began in 2008 to spur economic growth.
Rubin noted that the proposal, which is unlikely to become law any time soon, marks a shift for Republicans from the draft tax code revamp that Ways and Means Chairman Dave Camp (R-MI) released in February. In that plan, Camp proposed slowing write-offs to help pay for lower tax rates.
Democrats said bonus depreciation was designed as a temporary economic stimulus and would lose its effectiveness as an incentive if it has no expiration date. They also said that extending the policy indefinitely would increase the budget deficit.
The panel also approved five bills expanding tax breaks for charitable contributions. Those include indefinitely extending an expired provision that allows some direct transfers to charities from retirement accounts, Rubin wrote. As much as $100,000 per taxpayer over age 70 1/2 can be excluded from income annually. Another bill would let taxpayers make charitable contributions up to the April 15 individual tax-filing deadline and deduct them from taxes being filed then.
Dave Camp’s bonus depreciation flip-flop
Camp’s about-face on bonus depreciation that Rubin noted in his article above is the subject of a blog by TaxVox editor Howard Gleckman.
“Some supporters argue that temporary bonus depreciation can help jumpstart a stalled economy by encouraging businesses to accelerate investment while the tax cut is in effect,” Gleckman wrote. “But research suggests that the impact of even a temporary subsidy is quite small. And there is no credible evidence that making bonus depreciation permanent would increase investment at all over the long run.
“In part, that’s why Camp’s tax reform would have gone in a very different direction,” he continued. “He proposed eliminating all accelerated depreciation – including bonus depreciation and some inefficient industry-specific rules – to help finance a cut in the corporate rate from 35 percent to 25 percent. Accelerated depreciation allows firms to deduct the cost of equipment faster than it actually depreciates. Camp’s laudable goal: Depreciation rules that ‘would match more closely the true economic useful life of assets.’”
Assembly approves film and TV tax credit bill
The California State Assembly on Wednesday unanimously approved a bill that aims to halt the flight of film and TV production from the state, Richard Verrier of the Los Angeles Timesreported.
The Assembly voted in favor of AB 1839, which would renew and increase a state tax credit – amounting to as much as $400 million a year – to better compete with generous tax subsidies available in such states as New York, Louisiana, and Georgia, as well as in Canada and Britain.
Verrier noted that California currently allocates $100 million annually using a lottery system to award tax breaks to a limited number of production companies.
The bill would allow a broader swath of productions to qualify for the incentives, which enable producers to reduce their tax liability by as much as 25 percent of the cost of many production expenditures. It would also remove current restrictions that prevent movies with budgets greater than $75 million, as well as new TV network dramas, from qualifying for the incentives.
Moss Adams Foundation donates $60,000 to Oso mudslide relief efforts
The Moss Adams Foundation, the charitable arm of accounting firm Moss Adams LLP, is making a cash contribution to North Counties Family Services and the American Red Cross in support of rescue and relief efforts for the devastating mudslide in Oso, Washington.
According to a press release, the donations, which were made by Moss Adams employees, will direct $36,000 to North Counties Family Services and $24,000 to the American Red Cross to help with disaster relief and support the rebuilding process in the communities of Oso, Arlington, and Darrington.
“Being a native of La Conner and having spent most of my life in Skagit, Whatcom, and Snohomish counties, I know that heavy rains, floods, and similar events are not uncommon in this area,” said Moss Adams President and COO Dick Fohn. “But the magnitude of this event and the loss of lives are tragic. Some of our personnel have friends directly affected by the mudslide, and we want to support the relief efforts. This is a small token of that.”
The mudslide hits close to home for Moss Adams, which maintains an office of approximately 100 personnel in Everett. Many of the firm’s employees are familiar with the Oso area, and a number of its personnel know people impacted by this disaster, including those who died.
“Our hearts go out to the families, victims, and loved ones impacted by the mudslide,” said Moss Adams Foundation Chairman Rick Anderson. “This contribution reflects our commitment to Washington state. Individual donations were made by partners and employees at Moss Adams with matching funds contributed by Moss Adams and its foundation.”
Florida man owes record 150% penalty on Swiss account
A federal jury found that 87-year-old Florida resident Carl Zwerner owes the US government civil penalties amounting to 150 percent of the value of his Swiss bank account, the biggest such penalty by percentage on record, his lawyers said, David Voreacos and Susannah Nesmith of Bloombergreported on Thursday.
Zwerner must pay a 50 percent penalty on the annual value of the account in 2004, 2005, and 2006, a total of more than $2 million, for willfully failing to file a US Treasury form called a Report of Foreign Bank and Financial Accounts (FBAR), jurors in Miami ruled on Wednesday.
US District Judge Cecilia Altonaga will hear arguments on June 6 over whether the penalties against Zwerner violate the constitutional prohibition against excessive fines, said Martin Press, his lawyer, according to the article. She’ll ultimately decide on the size of the judgment, the US Justice Department said in a statement.
Voreacos and Nesmith wrote that prosecutors and the IRS have often used civil FBAR penalties, which sometimes exceed criminal fines, as a weapon in their criminal crackdown on offshore tax evasion. Many of the more than 70 taxpayers charged since 2009 have pleaded guilty, paying an FBAR penalty of 50 percent of the high account balance for only one year.
- Accounting may need help in revenue recognition implementation (Journal of Accountancy)
- Financial Accounting Foundation names two new members to Governmental Accounting Standards Advisory Council (FAF)
- Financial Accounting Foundation Annual Report now available in tablet form (FAF)
- Homeowners hit by Hurricane Sandy will be spared property tax hikes (New York Daily News)
- Hurricane tax holiday week starts Saturday (CBS Miami)
- Explaining the wormy morass of Obama’s FATCA tax evasion law (Forbes)
- Is it really worth your while to use bitcoin to pay your Dish bill? (Forbes)
- Illinois millionaire tax question passes Senate, sent to governor (State Journal-Register)
- North Carolina lawmakers adopt tax on electronic cigarettes (Reuters)
- How much knowledge is in an audit manual? (Tax Analysts)