Bramwell’s Lunch Beat: Mr. Wyden, Tell Us What You Really Think About the US Tax Code
On K Street, tax extender skepticism
New Senate Finance Committee Chairman Ron Wyden (D-OR) has stated that he wants to move “quickly” to extend more than fifty expired tax breaks before the November elections, but lobbyists and other tax observers aren’t sure that Wyden will succeed, Bernie Becker of The Hill reported yesterday.
The tax provisions, known as tax extenders, which expired at the end of last year, are frequently extended retroactively but are often tacked on to a broader legislative measure, the article stated. If there is no big measure, it’s unclear how they’d move before the lame-duck session after voters head to the polls in November.
According to Becker, House Ways and Means Chairman Dave Camp (R-MI) has not backed away from his promise to deal with the expired tax breaks as part of his efforts on tax reforms, and he hopes to release a broad overhaul plan in the coming weeks.
One tax lobbyist told Becker, “Camp had certainly made it clear extenders weren’t moving before reform.”
Tax code a ‘rotten, dysfunctional mess,’ new Senate Finance chairman says
Besides wanting to extend the fifty or so expired tax breaks as previously mentioned, Wyden said on Bloomberg TV’s Political Capital over the weekend that the current tax code is a “rotten, dysfunctional mess.” But he believes renewing the tax extenders can be a “bridge” on which both Democrats and Republicans can agree, Julian Hattem of The Hill reported.
“To reform the tax code, Wyden said he would begin with groundwork that was laid in the 1980s with former President Ronald Reagan and a number of Democratic senators,” the article stated. “That plan would set a threshold for people to count some of the money they made from investments as normal income under the tax code, instead of capital gains.”
IRS overwhelmed by identity theft fraud
New IRS Commissioner John Koskinen recently told the Boston Globe: “I’ve had a police chief tell me ‘street crime is down because everybody is now filing false IRS returns.’”
In just the first six months of last year, 1.6 million taxpayers were affected by identity theft, compared with 271,000 for all of 2010, the article stated. While the IRS said it discovered many of the incidents, the cumulative thefts have resulted in billions of dollars in potentially fraudulent refunds.
“While Koskinen stressed that the IRS uses a series of ‘filters’ that are increasingly successful in catching identity thefts before refunds are paid, he acknowledged that ‘this problem has exploded’ and that the agency is in a constant race to keep its detection techniques a step ahead of the thieves,” Michael Kranish wrote.
Koskinen said: “It is a little like ‘Whac-a-Mole,’ knock them down here and they come up over there.”
Startups scope out suitors
Emily Chasan, senior editor of the Wall Street Journal’s CFO Journal, reported today that CFOs in a variety of industries say they are facing a surge of inquiries from companies seeking to be acquired. She wrote that behind the influx is the shrinking pool of financing available to late-stage startups and the huge piles of cash held my many larger companies that are looking to buy growth.
“The scramble to find a corporate partner reflects a bottleneck created during the financial crisis,” the article stated. “Venture capitalists and angel investors focused heavily on providing seed funding to startups. But when capital markets seized up in 2008, the firms couldn’t exit many of their larger investments. That left many later-stage companies looking for other funding possibilities, such as finding a deep-pocketed parent.”
HP, Autonomy investigation: Tangled web of hardware and resellers
Daniel Thomas and Richard Waters of the Financial Times reported that in 2012, barely a year after paying $11.1 billion for the British software company Autonomy, Hewlett-Packard (HP) claimed to have been misled about the true state of Autonomy’s business and took a $5 billion write-down.
“A trail of audit papers, accounting documents, and internal e-mails seen by the Financial Times, along with interviews with people familiar with the deals made by Autonomy, sheds light for the first time on the tangle of claims and counter-claims at the heart of the dispute,” Thomas and Waters wrote.
“Among the findings: Some of the deals at the centre of the allegations were signed off by Autonomy’s auditors in documents seen by the Financial Times, with other parts of the audit packs acknowledging the extensive sale of hardware by the British software company,” the article continued. “HP has said that it was not aware of the alleged accounting misrepresentations until a whistle blower came forward in May 2012.”
Deloitte, Autonomy’s auditor, says it “categorically denies any knowledge of any accounting improprieties or misrepresentations in Autonomy’s financial statements.”
Did John Wall get his dunk inspiration from an Ohio State senior?
During the NBA’s all-star festivities this past weekend, Washington Wizards star John Wall won the Slam Dunk Contest. But Dan Steinberg of the Washington Post wrote yesterday how Jared Watson, a twenty-one-year-old senior accounting student at Ohio State University, had tweeted a YouTube video to Wall on February 8 that showed footage of dunks that had never been attempted in a dunk contest. On Saturday night, Wall used one of the dunks on the video to win the competition.
“Somebody sent me a YouTube link on my Twitter and said ‘27 dunks that haven’t been done in the NBA dunk contest,’” Wall said during an interview after he won. “And the first one was that one, and it seemed hard, but for me it came out to be easy. So it worked out in my favor.”