Bramwell’s Lunch Beat: Ready or Not, FATCA Is Almost Here

Issa: ‘We’ll probably never know’ what happened to Lerner’s hard drive
Dana Davidsen of CNN wrote that in an interview with CNN’s Candy Crowley on Sunday, House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) said that though the hard drive belonging to former IRS official Lois Lerner is “physically gone,” there's evidence that she was in violation of some agency regulations and laws.

“What we do know from the discovery we have gotten from emails, that we've gotten from multiple sources, is she broke some regulations. She broke some laws,” he told Crowley during the show, State of the Union. “Trying to get prosecution apparently, she sent 1.1 million tax records over to the Department of Justice including inappropriate or actually illegal … disclosures on behalf of conservative groups.”

The computer crash, the latest turn in the already convoluted investigation, has further inflamed Republican suspicions that Lerner has something to hide, Davidsen wrote.

“Obviously she had 30 years of experience,” Issa said, according to the article. “She knew under the federal records act that she had an obligation for these documents to be preserved, these emails. And to not have print to paper, which is the policy that she had to know, is pretty hard to believe – that there aren't paper copies.

“So do I believe that she printed paper? Yes. She’s an attorney of long standing and it’s kind of hard to believe that you wouldn’t cover with your own paper copies,” he continued.

[For some additional reading, The Hill reported that Issa said the White House had never been a central focus of his committee’s investigation into the IRS’s improper scrutiny of Tea Party groups. Also, Politico reported that Lerner’s lawyer, William Taylor III, told Crowley after Issa’s appearance on the show that it’s convenient for the GOP to demonize Lerner, especially during an election year.]

Offshore tax crackdown opens with 30% penalties for banks
The Foreign Account Tax Compliance Act (FATCA) goes into effect on Tuesday, and the US government will start imposing 30 percent taxes on many overseas payments to financial institutions that don’t share information with the IRS.

No one knows yet how successful the law will be in combating tax evasion, Richard Rubin of Bloomberg wrote on Monday. Still, it allows the United States to scoop up data from more than 77,000 financial institutions and 80 governments about its citizens’ overseas financial activities.

“I don’t think anything on this scale has ever been tried before,” said John Harrington, a former international tax counsel at the US Treasury Department who is now a partner at Dentons in Washington, according to the article. “The idea that it would go off without a hitch is sort of hard to imagine.”

Under FATCA, US banks and other companies making certain cross-border payments – such as interest and dividends – to foreign financial institutions must withhold a 30 percent tax if the recipient isn’t providing information about its US account holders.

Later phases of the law will apply to a broader set of cross-border payments, such as gross proceeds from stock sales. Many nonfinancial companies will be affected, too, Rubin wrote.

So far, the United States has reached final or provisional agreements with more than 80 jurisdictions, allowing for government-to-government information exchange or streamlined business-to-government exchanges.

SEC judge suspends two KPMG auditors from auditing public companies
A US Securities and Exchange Commission (SEC) administrative law judge on Friday suspended two KPMG LLP auditors from auditing public companies, ruling they didn't properly audit a Nebraska bank that later failed, Michael Rapoport of the Wall Street Journal reported.

Judge Carol Fox Foelak said the two auditors, John Aesoph and Darren Bennett, engaged in “highly unreasonable conduct” when they didn't properly scrutinize the loan-loss reserves at TierOne Bank of Lincoln, Nebraska. She ruled that Aesoph, a KPMG partner, should be suspended for one year and Bennett, a senior manager, for six months.

According to Rapoport, TierOne, which had $2.8 billion in assets, failed in June 2010, and regulators have said the bank hid millions of dollars in losses on troubled loans. The bank’s former chief executive and president both have settled SEC allegations without admitting or denying wrongdoing. SEC allegations still are pending against a third executive of the bank.

Judge Foelak said the KPMG auditors didn’t comply with professional standards and didn’t have a reasonable basis for their audit estimates when they gave the bank a clean bill of health on its finances, even though they knew the bank’s bad-loan reserves merited “heightened scrutiny.”

Enforcement Division’s Chief Operating Officer Adam Storch to leave SEC
Adam Storch, COO and managing executive of the SEC Enforcement Division, is leaving his post, the agency announced on Friday.

Storch has served in the position since its creation in 2009 to manage all strategic planning and operational aspects of the division. He played a key role in the design and implementation of the most significant restructuring in the Enforcement Division’s history, including the creation of specialized units, as well as the Office of Market Intelligence and the Office of the Whistleblower to improve the collection and analysis of the tips, complaints, and referrals received by the agency each year. Storch also oversaw the recent establishment of the Enforcement Division’s Center for Risk and Quantitative Analysis.

“As our first managing executive, Adam has left an indelible mark and helped transform our operations and technology functions,” Andrew Ceresney, director of the SEC Enforcement Division, said in a written statement. “Adam has been a strong advocate for the enforcement program, a well-respected voice on agency-wide issues, and an invaluable advisor.”

Storch, whose areas of oversight included project management, IT, human capital strategy, risk management, and process improvements, said it was an honor to have served as the division’s first COO and managing executive.

“I’ve had the unique opportunity to serve under three directors during a time of extraordinary change and progress in the Enforcement Division, and I’m privileged to have worked alongside such a talented team of professionals dedicated to public service and investor protection,” he said.

Employees from ‘Big Four’ accounting firms disown anti-Occupy Central ad
Stuart Lau of the South China Morning Post wrote on Monday that employees of the “Big Four” accounting firms have responded to an anti-Occupy Central advertisement published by their bosses last week – with an ad of their own saying last week’s announcement does not represent their views.

A quarter-page ad in Monday’s Apple Daily reads: “Boss, your statement doesn’t represent our stance.” The ad’s creators called themselves a “group of Big Four employees who love Hong Kong.”

The Occupy Central movement has threatened to blockade streets in Hong Kong in protest if the government fails to deliver a plan for the 2017 chief executive election that guarantees a genuine choice between candidates for voters, Lau wrote.

Last Friday, the city’s four biggest accounting firms – Ernst & Young, KPMG, Deloitte, and PricewaterhouseCoopers Hong Kong – issued a joint statement condemning the nonviolent sit-in planned by Occupy Central.

The accounting firms said the sit-in could have an “adverse and far-reaching impact” on the local legal system, social order, and economic development. They also said that multinational corporations and investors might move their regional headquarters out of the city or even withdraw their business because of the instability created.

[Read Bloomberg View columnist Adam Minter’s take on the Big Four’s reaction to the Occupy Central protest here.]

AICPA launches site on future of learning for CPAs
A new website launched by the American Institute of CPAs (AICPA) on Monday is designed to spark a profession-wide reevaluation of how CPAs engage in lifelong learning and measure competency in a fast-changing world.

The site, futureoflearning.aicpa.org, contains the findings of the AICPA Task Force on the Future of Learning – a working group of public accounting firm leaders, industry CPAs, regulators, association leaders, and educators – and examines the latest innovations in professional development and education. The task force report, delivered to the AICPA governing council in May and now released publicly for the first time, is presented through a mix of text, videos, and graphics in an interactive, online format.

“The AICPA has always provided best-in-class training to assist CPAs in maintaining their skills throughout their careers,” said Anthony Pugliese, CPA, CGMA, CITP, senior vice president and COO of the AICPA and co-chair of the Task Force on the Future of Learning, said in a written statement. “But the way CPAs learn has to evolve to reflect the transformation we’re seeing in technology, the workplace, and the changing expectations of our clients, employers, and peers.”

Visitors to the site are encouraged to comment on the task force’s recommendations, share them through social media and other means, and join idea exchange groups on the future of learning. The ultimate goal is to identify and nurture the most promising learning advancements that will strengthen career development and skill mastery for current and future CPAs.

“Meaningful change won’t be accomplished by any single organization working alone, which is why we’re reaching out to tap the collective wisdom of the profession,” said Lawson Carmichael, AICPA senior vice president of strategy, people, and innovation and co-chair of the task force.

Quick Links:

  • How to create a CPA exam study schedule that guarantees failure (Going Concern)
  • Retire from EY, receive a free scrapbook of career highlights (Going Concern)
  • Michigan accountant accused of killing boss over embezzlement (ABC News)
  • Louis XIV’s accounting shenanigans and the threat they pose today (PBS)
  • Walgreen considers headquarters move: Is tax loophole unpatriotic? (Chicago Tribune)
  • House hypocrisy on insider trading (New York Times)
  • DC workout tax sparks strong backlash (CBS News)
  • Missouri’s next tax reform frontier: Ending the special interest giveaways (Forbes)
  • Congress needs to act to keep the Internet tax-free (Roll Call)
  • In corporate tax reform, Abenomics giveth, and taketh away (Reuters)
  • Self-destruction through taxes (National Review Online)
  • Misguided expansion of the child tax credit (TaxVox)
  • NC police discover that some crime does pay … them! (Don’t Mess With Taxes)
  • Congress wants to consolidate the many education tax breaks (Don’t Mess With Taxes)

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