Bramwell’s Lunch Beat: Medtronic Deal Spurs More Tax Reform Talk
GOP: Lost Lerner emails may hurt inquiry
Congressional Republicans acknowledged on Tuesday that losing a string of emails from former IRS official Lois Lerner could imperil their investigation into the agency’s improper scrutiny of Tea Party groups, Bernie Becker of The Hill wrote.
Top GOP lawmakers insisted they weren’t ready to say that a trove of Lerner’s emails from 2009 to 2011 is totally unrecoverable, even as the IRS was telling them that her hard drive from that period had been destroyed.
“I don’t think that stuff just disappears,” Senator John Thune (R-SD), a senior member of the Senate Finance Committee, told reporters, according to the article. “I think that’s more of an excuse of convenience right now for people who don’t want to submit that type of information.”
Thune also acknowledged that the investigation would take a hit without the emails.
“I think it’s going to be very limiting in terms of what the investigation can discover about this case if you don’t get her missing emails,” he said.
House GOP investigators made clear on Tuesday that they would do everything in their power to retrieve Lerner’s emails, and that IRS Commissioner John Koskinen should expect sharp questioning when he appears before Congress in the coming days, Becker wrote.
[For some additional reading, check out this Politico article on how the computer crashes that resulted in the lost emails might have occurred]
US Senate’s tax writer sees 15-month ‘window’ for tax reform
Senate Finance Committee Chairman Ron Wyden (D-OR) said on Tuesday that he vowed to work on overhauling the federal tax code by August 2015, citing a move by Medtronic Inc. to shift its tax home base to Ireland as a spur to congressional action, Patrick Temple-West of Reuters reported.
During a Wall Street Journal conference yesterday, Wyden said he wants to cut the corporate income tax rate to 24 percent from 35 percent, chiefly by eliminating loopholes – something he has advocated for years. He noted there will be an opening for tax reform between now and Congress’ August 2015 break. After that, lawmakers will be consumed by 2016 presidential election-campaign politics, he said.
“There is a prime 15-month window from now until the August recess of 2015,” Wyden said, according to the article. “We do need to go after some of these loopholes. You go in there, clean those out, and use the money to hold down the rates.”
Temple-West noted that tax reform efforts in both the Republican-controlled House and the Democrat-controlled Senate stalled this year amid deep disagreement over tax and spending policies.
Medical device maker Medtronic announced it has agreed to buy Dublin-based Covidien Plc for $42.9 billion. As part of the deal, known as an “inversion,” Medtronic would shift its tax home base to Ireland from Minnesota.
White House adviser signals concern over tax inversions
Vipal Monga, senior editor of the Wall Street Journal’s CFO Journal, wrote on Tuesday that White House Council of Economic Advisers Chairman Jason Furman used the debate over corporate tax inversions to call for broader tax reform during the Wall Street Journal CFO Network conference in Washington, DC.
Calling the tax code “deeply broken,” Furman cited President Obama’s recent budget, which proposed making it more difficult for companies to move their domiciles offshore to avoid paying US taxes on their offshore earnings.
He added that broader tax reform, including lower corporate rates, could encourage companies to stay in the United States.
SEC official: Financial reporting, audit fraud are ‘next frontier’
So says Andrew Ceresney, head of enforcement at the US Securities and Exchange Commission (SEC), as reported by CFO Journal Senior Editor Emily Chasan.
During the Wall Street Journal CFO Network conference on Tuesday, Ceresney noted the SEC is “virtually past” its work on financial-crisis-era litigation and now has the time to devote to other areas, such as financial reporting and market structure.
But financial reporting and audit fraud are areas where cases were reduced while the SEC’s “resources were elsewhere,” he said, according to the article. Ceresney added the agency’s watchdogs are looking both at corporations and audit firms in this area.
Federal insurance exchange subsidies cut premiums by average of 76%, HHS reports
Americans who qualify for tax credits through the new federal insurance exchange are paying an average of $82 a month in premiums for their coverage – about one-fourth the bill they would have faced without such financial help, according to new government analysis from the US Department of Health and Human Services (HHS), Amy Goldstein of the Washington Post wrote on Wednesday.
However, Goldstein noted that the analysis shows wide variations among states in the premiums that people are paying for their new insurance, the amount the government is picking up, and the proportion who qualify for the subsidies.
The 28-page report from HHS is the government’s first effort to gauge the affordability and availability of health plans under the Affordable Care Act, now that the first insurance sign-up period has ended.
Health officials said they have not yet analyzed the incomes of people who qualified for the subsidies. But overall, the report shows, the average monthly tax credit this year is $264, Goldstein wrote. Without the federal help, the average premium chosen by people eligible for a tax credit would have been $346 per month, and the subsidy lowered the consumers’ premiums, on average, by 76 percent. The result is that four out of five people with subsidies are paying premiums of no more than $100 a month – although that does not include money they might need to spend for insurance deductibles and other out-of-pocket costs.
US tax case deal to trigger Swiss bank consolidation
Joshua Franklin of Reuters reported on Tuesday that an expected resolution to the US tax-evasion probe into Swiss banks will likely be a catalyst for consolidation in the country's private banking industry, senior bank executives say.
“At the moment there's not a lot of acquisitions because of the risks associated and uncertainties,” Georg Schubiger, head of the private banking arm of Vontobel Holding AG, told the Reuters Wealth Management Summit in Geneva, according to the article. “If that were resolved, then probably acquisitions would happen more frequently and the larger banks would play a more active role in consolidation.”
Other speakers at the Summit, also taking place at Reuters offices in New York and Singapore, also saw scope for more acquisitions once the US tax issue has been resolved – part of a slew of changes hitting one of Switzerland's mainstay industries, Franklin wrote.
Some 106 Swiss banks have reason to believe they may have helped wealthy Americans evade taxes and are facing fines and high legal costs. They have until July 31 to turn over the necessary information to the US Justice Department.
Juerg Zeltner, head of private banking at UBS, which in 2009 paid $780 million to settle charges it sheltered US citizens from the taxman, said the tax case would remain a burden for those involved.
“It’s a poison pill until it’s solved,” Zeltner told the Summit, according to the article.
Ex-Madoff accountant expected to plead guilty
Bernard Madoff’s former accountant, Paul Konigsburg, is expected to plead guilty to charges in connection with the convicted swindler's massive Ponzi scheme, a US prosecutor said at a Tuesday court hearing, Joseph Ax of Reuters reported.
Konigsberg, a former senior tax partner at Konigsberg Wolf & Co., will likely enter a guilty plea next week under a cooperation agreement with the government, Assistant US Attorney Matthew Schwartz said, according to the article.
Konigsberg would be the 15th defendant to plead guilty or be convicted at trial in connection with Madoff's fraud, estimated to have cost customers more than $17 billion in principal, Ax wrote. Konigsberg, who is in his 70s, was charged in September with two counts of conspiracy and three counts of falsifying records and statements.
Prosecutors accused him of manipulating trades, including by backdating transactions, to make it appear that Madoff’s customers were receiving their promised investment returns. Konigsberg was also charged with helping Madoff conceal the fraud by arranging for customers to receive “amended” account statements that included fake trading records.
Konigsberg also faces a parallel civil lawsuit from the SEC.
AICPA names new technical director for Center for Plain English Accounting
The American Institute of CPAs (AICPA) has named Thomas J. Groskopf as the new technical director for the AICPA Center for Plain English Accounting (CPEA), a resource hub for local and regional CPA firms seeking detailed, clearly explained guidance on complex accounting and assurance issues.
Groskopf, a nationally known authority on those topics, succeeds the late Tom Ratcliffe, PhD, founder of Plain-English Accounting LLC, a highly regarded advisory service acquired by the AICPA last fall and expanded into the CPEA. Firms must be members of the AICPA’s Private Companies Practice Session (PCPS) to join the center.
Groskopf continues as a CPA with Barnes, Dennig & Co., a regional firm with offices in Ohio and Kentucky. He is a member of the Private Company Council, which works with the Financial Accounting Standards Board to determine if and how US Generally Accepted Accounting Principles should be adapted for private companies.
Groskopf has also served on the AICPA’s PCPS Technical Issues Committee, including one year as chair of its accounting subcommittee. As a client engagement partner, the AICPA said he will bring valuable insight and extensive experience to private company accounting issues, as well as expertise in audit, review, compilation, and attestation services.
The CPEA features a dedicated staff of subject-matter experts and can draw on the larger resources of the AICPA when needed. Heading the AICPA staff is Robert Durak, CPA, CGMA, the AICPA’s director of private company financial reporting.
“CPAs are used to dealing with growing complexity – that’s a fundamental part of our job,” AICPA Chairman Bill Balhoff, CPA, CGMA, CFF, said in a June 18 press release. “But even the most knowledgeable professionals occasionally encounter issues that fall outside their expertise. The CPEA provides a great go-to resource for firms that need clear, timely guidance from time to time so they can ensure superior service to clients. CPEA is another PCPS firm benefit that helps build successful practices.”
- Ackman’s SEC filing on bid for Botox maker Allergan contains an error (DealBook)
- Cocaine Ponzi schemes and tax prep – not a good mix (Forbes)
- North Carolina progressives demand billions in higher taxes, 80 percent corporate tax (Forbes)
- US House may soon kill the death tax (Forbes)
- The Clintons have a very complicated tax life. Here’s how to understand it. (Washington Post)
- DC tax cuts are in question after budget passed by council is challenged by CFO (Washington Post)
- About those tax cuts … (Washington Post)
- DC lunges into “yoga tax” battle (Fiscal Times)
- Let Ireland keep its tax rates (Bloomberg View)
- The tax-shopping backstory of the Medtronic-Covidien inversion (TaxVox)
- Stick a fork in it: Is the corporate income tax done? (Tax Analysts)