Bramwell’s Lunch Beat: Detroit CPA Firms Give Top Prospects the ‘Detroit Experience’

Liberal groups object to bill barring taxes on Internet access
The Internet Tax Freedom Act hasn’t been a controversial bill. In fact, it’s so popular that senators are seeking to pair it up with a far more contentious measure to give states more power to tax online purchases. But groups like the Center on Budget and Policy Priorities (CBPP) and Citizens for Tax Justice say the online access legislation, which first became law in 1998 and expires on November 1, has outlived its usefulness, Bernie Becker of The Hill wrote on Sunday.

Those organizations say that the law was first put into place to give firmer footing to the fledgling Internet, and isn’t necessary anymore. Plus, they say an extension of the measure would put even further shackles on states struggling with tough budget situations, and that the House approach – which, among other things, makes the ban on Internet taxes permanent – goes way too far.

“We can’t be eroding the sales tax base for states,” said Michael Mazerov of the CBPP, according to the article. “It’s far too critical of a revenue source.”

In addition to extending the moratorium on Internet access taxes indefinitely, the House bill approved last week also removes a provision that grandfathered in seven states that taxed Internet access before 1998. Those states and localities would lose around $500 million a year, the CBPP says, while the other states wouldn’t have the chance to get around $6.5 billion a year in potential revenue, Becker wrote.

“Somehow, arguments that conservative lawmakers usually make about not interfering with the economy and respecting states’ rights have fallen silent as Congress rushes to pass a bill that provides special treatment for an industry that has grown very profitable and powerful,” wrote Steve Wamhoff of Citizens for Tax Justice, according to the article.

Demand for accountants brings rising salaries, signing bonuses
The competition to hire CPAs in metro Detroit has heated up, and accounting professionals are in enough demand that in some instances, salaries are rising and sign-on bonuses are possible, Vickie Elmer wrote on July 20 for Crain’s Detroit Business.

Some accounting firms, including Plante Moran, pay referral bonuses to current staff of up to $5,000 to help lure a CPA, and others use senior managers to wine and dine top candidates, tour them around beautiful neighborhoods, or take them to sporting events.

“It’s a candidate-short market. If you want a candidate, you have to move very quickly,” said Robin Ankton, regional vice president at Robert Half International, who works from Southfield, Michigan, and oversees four southeast Michigan offices, according to the article. Accounting “is very, very hot,” she added, and sometimes companies attempt to lure accountants from their competition or another employer.

Elmer wrote that at Plante Moran and Deloitte LLP, current staff will take out-of-state candidates and their spouses around Detroit.

“We give them a firsthand look at what it’s like to live and work in southeast Michigan,” said Hollis Griffin, Plante Moran’s recruiting director, according to the article.

Candidates may be taken to Detroit Tigers or Detroit Red Wings games, museums, or restaurants, said Mark Davidoff, managing partner of Deloitte’s Detroit office. They meet professionals and potential coworkers in the Renaissance Center and start to understand what Deloitte offers.

“Whether they’re from New York or New Delhi, we give them a good Detroit experience,” said Davidoff, who oversees about 900 professionals.

Lawmakers urge SEC chair not to allow choice of accounting rules
Sarah N. Lynch of Reuters wrote on Friday that the Congressional Caucus on CPAs and Accountants, a bipartisan group of US lawmakers, is urging US Securities and Exchange Commission (SEC) Chair Mary Jo White not to allow companies to choose between US and global accounting standards, a move they said could confuse investors and lead to legal challenges.

“A single set of high-quality globally accepted accounting standards is a goal worth striving for,” the 12 senators and members of the House of Representatives, who formed the accounting caucus last year, wrote in a letter to White, dated June 27, according to the article. But permitting the use of two different sets of rules “will set back the interests of investors in the name of global harmonization.”

Lynch wrote that White has not explicitly said whether she is considering proposing rules that would let companies choose between US Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). A spokeswoman for the SEC declined comment, according to the article.

However, in speeches earlier this year, White has said that one of her priorities is to have the SEC decide “whether to further incorporate” global accounting standards into the US financial system.

In the letter to White, the lawmakers said any expansion of the use of IFRS in the United States should be thoroughly vetted with the public first. “We invite you to come and share your thoughts on this process with us in greater detail,” the lawmakers added, according to the article.

Tax inversions turn into campaign fodder
Corporate inversions, the practice of US companies reincorporating overseas to avoid US taxes, have moved from the margins of the tax code to the midterm campaigns as Democrats are attempting to put heat on Republicans, John D. McKinnon and Kristina Peterson of the Wall Street Journal wrote on Sunday.

A new push from the White House last week elevated the issue and mobilized a Democratic drive for immediate legislation to tighten the rules on the practice.

Many Republicans say inversions should be addressed as part of a broader overhaul of the tax code, noting that the United States has the highest corporate tax rate in the developed world. They also accuse the Obama administration of using loaded campaign-type rhetoric on the issue, citing in particular Treasury Secretary Jacob Lew’s call in a letter to Congress last week for “a new sense of economic patriotism” to prevent the practice, McKinnon and Peterson wrote.

Republicans say they haven't seen any proposals from the White House that would solve the problem and warn that quick fixes could have unintended consequences. “The sooner we have real tax reform on the corporate and personal level, the sooner that we'll see this issue come to an end,” said House Speaker John Boehner (R-OH), according to the article.

Democrats have long proposed ending a variety of corporate tax breaks to pay for other investments and this year started targeting inversions more heavily. Among the proposals is one from Senator Carl Levin (D-MI) that would require that a foreign company's shareholders own at least 50 percent of the merged company, compared with 20 percent now, to avoid US taxes.

McKinnon and Peterson wrote that any quick policy change isn't likely in the currently divided and polarized Congress. In the meantime, Democrats see the issue as a strong pillar in their midterm message aimed at bolstering the middle class.

Tea Party groups’ suit against IRS moves forward
A federal judge has allowed a lawsuit by 10 Tea Party groups to move forward against the IRS, rejecting a request by the federal government to dismiss all the allegations that the agency subjected conservative groups to additional, often burdensome scrutiny, Amanda Lee Meyers of the Associated Press reported on Friday.

In her ruling last Thursday, Judge Susan Dlott allowed two of the Tea Party groups’ claims – including that the IRS discriminated and retaliated against them based on their views in violation of their free speech rights – to survive to trial.

Meyers wrote that the Cincinnati-based Dlott did dismiss a third claim, ruling the Tea Party groups could not pursue allegations of privacy violations on behalf of their individual members. The individuals themselves have to do that, she said.

Edward Greim, the lead attorney for the Tea Party groups, said on Friday he is pleased the case will move forward.

“If the government is right in this case, it means that from now on, no matter who the president is, the IRS can pick out a group of people that disagrees with the president and pull those people out, delay them, harass them, target them, and there's nothing anyone can do about it,” Greim said, according to the article. “And our position is very simple: That cannot be true and that's not the republic that we live in.”

Among the individuals named in the lawsuit is Lois Lerner, who headed the division that processes applications for tax-exempt status during a time when, the IRS has acknowledged, agents improperly scrutinized applications from Tea Party and other conservative groups.

IRS gives full account of lost Lerner emails
Speaking of Lerner and the controversy around her lost emails, Rachael Bade of Politico reported that according to a court filing, the IRS declared under oath and penalty of perjury on Friday that Lerner’s hard drive is irrecoverable after being wiped clean by tech staff and recycled with an outside contractor.

Although an outside company was able to identify the serial number for the computer, the hard drive was wiped clean, or “degaussed,” and then recycled after several attempts to recover the data by IRS tech personnel, including a career forensic specialist with 25 years worth of experience.

The filings will contribute to DC District Court Judge Reggie Walton’s looming decision about whether to appoint an independent computer forensics expert to examine the agency’s computers and make its own assessment about the lost emails, as requested by conservative group True the Vote, Bade wrote.

The IRS filed court-ordered sworn declarations by Stephen Manning, deputy chief information officer for strategy and modernization, and Todd Egass, director of technology operations and investigative services in the IRS criminal investigations unit, detailing the events surrounding the destruction of Lerner’s hard drive.

“To the best of my knowledge and according to discussions between the IT personnel involved, and as a result of the lack of tracking capability of component parts in the [IRS] IT inventory control system, when the hard drive was … batched with other damaged or obsolete miscellaneous equipment, it became impossible to specifically identity the hard drive through any [IRS] equipment inventory system,” wrote Manning in a document filed with the US District Court of the District of Columbia late Friday afternoon, according to the article.

Swiss banks use carrot and stick in addressing hidden accounts
John Letzing of the Wall Street Journal reported on Friday that Swiss banks are seeking to chip away at potential penalties from the US Justice Department by offering to compensate American clients who disclose their hidden accounts, according to people familiar with the matter.

More than 100 Swiss banks have signed up for a self-reporting program offered last year by the Justice Department, which can result in penalties for harboring undeclared American accounts. Banks can mitigate penalties by encouraging clients to pre-emptively disclose those accounts to the IRS.

Letzing wrote that some banks have dangled financial incentives in front of current and former clients to entice them to divulge accounts to the IRS. In some instances token amounts of around $5,000 are being offered, attorneys and financial advisers say. In other cases significantly larger offers are selectively being made to share the legal and accounting costs that accompany the voluntary disclosure process.

A client entering voluntary disclosure can face fees amounting to hundreds of thousands of dollars, attorneys say.

“It's a great trade-off” for banks to at least partially cover clients’ costs, said Milan Patel, a Zurich-based lawyer with Anaford AG, according to the article. Patel said he also is aware of some banks offering to help cover the penalties administered to clients as a result of disclosure, but he declined to identify specific banks offering payment.

[For some additional reading, Bloomberg reported that Swiss bank Credit Suisse Group AG is set for its biggest quarterly loss as a result of being fined $2.6 billion for helping American clients evade taxes.]

Quick Links:

  • Tired of the constant badgering, NQ Mobile has fired PwC (Going Concern)
  • Why is everyone so tight-lipped on the Ventas EY audit partner situation? (Going Concern)
  • Sarbox redux: Under PCAOB logic, the EY/Ventas affair will mean audit partner naming (Re:Balance)
  • Ernst & Young to buy consulting firm Parthenon Group (Wall Street Journal)
  • Perrigo, Actelion tax targets abroad for US drugmakers (Bloomberg)
  • Julius Baer buys Leumi’s Swiss unit amid US tax probes (Bloomberg)
  • Merger rush for offshore tax break bets on US stalemate (Bloomberg)
  • GOP: Tax evasion as a back door strategy (Huffington Post)
  • Republican populism and inversions (Tax Analysts)
  • Swiss Walgreens? $4 billion tax cut considered at corner of happy, healthy & tax-free (Forbes)
  • Valeant complains to SEC about Allergan’s war of words (Forbes)
  • 9 tips to help dig out of tax trouble on National Get Out of the Doghouse Day (Forbes)
  • Don’t be seduced by tax benefits and high yield – beware the MLPs (Forbes)
  • Wealthier New Yorkers aren’t fleeing the city for tax havens, a study says (New York Times)
  • Freedom from Religion group, IRS settle lawsuit (Associated Press)
  • Most Americans support carbon tax when revenue is earmarked (US News and World Report)
  • Britain to detail pensions overhaul with tax, annuity reforms (Reuters)
  • Dell becomes largest company to accept bitcoin (Los Angeles Times)
  • Tax cuts fallout put Kansas governor on defense (NPR)
  • Florida, Illinois pizza patrons sue Papa John’s over collection of sales tax on delivery charges (Don’t Mess With Taxes)
  • Philadelphia loses effort to collect $1.5 million from strip clubs (Don’t Mess With Taxes)
  • Banks get OK from US House to work with marijuana sellers (Don’t Mess With Taxes)

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