Bramwell’s Lunch Beat: KPMG Gobbles Up Another Tech Business
GOP vs. IRS chief: Part 2
During a hearing before the House Oversight and Government Reform Committee on Monday evening, IRS Commissioner John Koskinen again denied GOP accusations of an agency coverup, saying the agency had done its best to get the roughly two years worth of emails to and from ex-IRS official Lois Lerner, who was at the center of the Tea Party targeting scandal, that were lost due to a hard drive crash, Rachael Bade of Politico reported.
The IRS chief reiterated that the agency had recovered 24,000 lost emails by searching the names of more than 80 other IRS workers who talked to her regularly. Koskinen offered up new context showing that computer crashes happen often at the IRS due to its outdated technology, including 2,000 alone this year, Bade wrote.
Oversight Republicans lambasted Koskinen for promising in a late March hearing that they’d get all of Lerner’s emails eventually after several members chided him for taking so long to turn them over.
To drive home that point, they played a video flashing back to the exchanges at the beginning of the hearing. Koskinen did not mention that a few weeks earlier he learned that a massive chunk of Lerner’s emails seemed to be missing. Koskinen said he did not address it because it wasn’t clear they wouldn’t be able to retrieve them.
“You took an oath to tell the truth, the whole truth, and nothing but the truth. … Mr. Commissioner, at the minimum, you did not tell the whole truth of what you knew that day,” said House Oversight Committee Chairman Darrell Issa (R-CA), according to the article.
Koskinen said he did not lie, shooting back: “I did not say I would provide you emails that disappeared … I never said I would provide you emails we didn’t have.”
[Click here to read Dana Milbank’s column for the Washington Post on Issa’s “subpoena mania.”]
KPMG to boost health care practice with Zanett purchase
Michael Rapoport of the Wall Street Journal reported on Monday that KPMG LLP is buying Zanett Commercial Solutions, a Cincinnati-based technology consulting business that will help the Big Four accounting firm beef up the services it provides to health care clients.
Rapoport noted that the firm describes itself on its website as “a $50-plus million technology services industry leader,” and has a significant focus on the health care sector.
Buying Zanett will enable KPMG “to deliver leading health care technology solutions to enhance patient care and outcomes that accelerate the path to meaningful use of electronic health records,” KPMG said in a statement.
The Zanett acquisition is the latest in a string of recent technology-related acquisitions for KPMG. The firm acquired Cynergy Systems Inc., a digital and mobile technology business, last February; Link Analytics LLC, an analytical technology and data management company, in December 2013; and Optimum Solutions, a provider of management consulting and implementation services, in October 2011.
Click here to read the press release on the KPMG acquisition of Zanett.
Inversion frenzy rocks drug sector
The Wall Street Journal also reported that Ireland-based drug maker Shire PLC on Friday rejected a $46 billion takeover bid from US rival AbbVie Inc., in yet another attempt by an American company to buy a foreign address and the tax advantages that come with it.
The tactic, known as an inversion, has become popular among pharmaceutical companies in recent months as that industry scrambles to reshape itself amid rising pressure on health care spending and a number of patent expirations that threaten revenue growth, Hester Plumridge and Peter Loftus wrote.
The Obama administration proposed to tighten rules on inversions as part of corporate tax reform in this year’s budget. The US Treasury Department estimated the proposal to limit inversions would raise $17 billion over 10 years.
Plumridge and Loftus wrote that the Dublin-domiciled, UK-listed Shire has a tax rate on its income, measured by non-US accounting standards, of just 17 percent. AbbVie’s adjusted tax rate, which excluded intangible asset amortization and certain other costs, was 22.3 percent in the first quarter, and 23.8 percent by US accounting measures.
Still, some of the benefits of tax inversions may take companies longer to realize than popularly believed, they noted. For instance, future earnings of any acquirer using an inversion aren't automatically exempt from higher US corporate tax rates. That takes time and additional complex maneuvering, tax experts say.
Hillary Clinton: We pay our taxes
Republicans slammed Hillary Clinton on Sunday for an interview with the British newspaper The Guardian in which she said she and her husband pay full income taxes unlike “a lot of people who are truly well off,” and added that voters “don’t see me as part of the problem,” wrote Maggie Haberman of Politico.
Clinton was asked by The Guardian how she will convince voters that she’s not part of the problem at a moment when the issue of income inequality is gaining increased focus.
“But they don’t see me as part of the problem,” she told the paper, adding, “because we pay ordinary income tax, unlike a lot of people who are truly well off, not to name names; and we’ve done it through dint of hard work,” according to the article.
The Republican research group America Rising blasted out a story about The Guardian quotes, with the subject line: “What?”
“If Hillary is going to run for president she might be advised to take a lengthy sabbatical from her $200k per pop speaking tour and private shopping sprees at Bergdorfs to try and reconnect with what’s happening back here on Earth,” America Rising spokesman Tim Miller wrote in the email, according to the article.
Kevin McCarthy slams the breaks on a gas tax hike
Newly elected House Majority Leader Kevin McCarthy (R-CA) said over the weekend that he opposes a bipartisan effort in the Senate to boost the 18.5-cents-per-gallon federal gasoline tax by an additional 12 cents over the next two years in order to fix the Highway Trust Fund, wrote Eric Pianin of the Fiscal Times.
“No, that’s a Democrat idea,” McCarthy said during an appearance on Fox News Sunday, according to the article. “Continue to raise taxes on the families going forward. Why don’t we find a broader solution?”
McCarthy, who was overwhelmingly elected by the GOP Conference last Thursday to succeed Eric Cantor (R-VA) as majority leader, didn’t precisely offer up a strong – or realistic – alternative to the gas tax increase idea floated by senators Bob Corker (R-TN) and Chris Murphy (D-CT).
The new majority leader mentioned in passing an idea that Republicans had kicked around in recent years to “open up federal lands for exploration” and somehow use the government’s proceeds “to help build the bridges and roads that we need.”
White House rejects raising gasoline tax for highway fund
It seems the Obama administration is also against a gas tax hike. According to a Reuters article on Monday, White House spokesman Josh Earnest told reporters, “That's something that we've said a couple of times that we wouldn't support.”
To repair the Highway Trust Fund, raise the fuel tax
The editorial board of the Los Angeles Times wrote on Monday that it supports an increase in the federal gas tax.
“Last week, Republican Senator Bob Corker of Tennessee and Democratic Senator Chris Murphy of Connecticut offered a common-sense proposal to raise the fuel taxes by 12 cents over the next two years and set future annual increases at the rate of inflation – so it won't take another two decades and another transportation funding cliff to keep the money coming in,” the Times editorial board wrote. “Usually any bill that raises taxes in an election year is a nonstarter. We hope Congress makes an exception for this bipartisan proposal. After all, President Reagan presided over a gas tax increase, as did Clinton. Americans place a high priority on infrastructure and should recognize that a user fee cannot stay flat for 20 years without repercussions.”
Instead of raising federal fuel tax, let states keep revenue
The editorial board of the Las Vegas Review-Journal took a different stance on Monday, suggesting that instead of boosting the federal fuel tax, Washington should stop collecting the tax altogether and let each state keep 100 percent of the existing levy.
“States know their infrastructure needs far better than Congress,” the editorial concluded. “Stop making Americans pay the federal fuel tax and then beg for it back.”
Washington plan to tax yoga leads to political posturing
The Washington, DC, council is trying to expand its sales tax to include services such as yoga instruction and gym memberships. In response, yoga aficionados have united with gym owners, CrossFit trainers, cycling instructors, and acupuncturists to unleash a no-holds-barred lobbying barrage, Michelle Hackman of the Wall Street Journal wrote on Monday.
“I think there’s a sense of easygoingness in the community,” said Ian Mishalove, a co-owner of Flow Yoga Center who attended a recent protest in Freedom Plaza on the proposed tax, according to the article. “But it doesn’t mean that the community is filled with a bunch of pushovers.”
The 5.75 percent levy, variously known as the “Yoga Tax,” the “Gym Tax,” or, as fitness activists prefer, the “Wellness Tax,” is one component of a larger budget package likely up for a vote before the 13-member council on Tuesday.
Hackman noted that proponents say the sales tax – a more stable source of revenue for the city than income taxes – needs to be broadened to cover a range of services, from carwashes to tanning salons, to better capture where residents spend their money. The package would also cut the city’s income tax, which they contend would more than offset the added cost of taxing yoga classes.
But taxing yoga services may be a difficult position to achieve. At least seven other state legislatures have proposed measures that would apply sales taxes to service industries. Most have died, or, in the case of Maine, passed the legislature only to be repealed by a voter initiative.
- Master’s in accounting grads becoming more popular with employers (Going Concern)
- Kidnapping prostitutes is not a good way to claim dependents for tax purposes (Going Concern)
- EU to consider financial industry tax to fund watchdogs (Reuters)
- Monsanto said to have weighed $40 billion Syngenta deal (Bloomberg)
- Former Bush official calls for carbon tax (The Hill)
- Why Lord Stern’s estimate of the carbon tax is too high and Paul Krugman is wrong (Forbes)
- Even small business owners can use these tax breaks (Forbes)
- Grover Norquist: US is ‘abusively taxing’ overseas citizens, corporations (Newsmax)
- Adolf Hitler: Billionaire tax-dodger? (Newser)
- In Japan, Abe proposes tax cuts and greater role for women (New York Times)
- Former DC mayor defends nonexistent yogurt tax (MSNBC)
- Lost Lerner emails latest example of IRS death wish (Tax Analysts)
- Save space and trees: Digitize your tax records (Don’t Mess With Taxes)
- Financial Accounting Foundation names Washington state investment officer Gary Bruebaker to its board of trustees (FAF)