Bramwell's Lunch Beat: SEC Turns to Deloitte for Top Accounting Job
Bipartisan Cooperation on Tax Refund Fraud
As noted in Politico, Senators Wyden and Hatch have introduced a tax refund fraud bill. According to a summary from Senator Hatch's office, the bill would enhance "the ability of the Internal Revenue Service (IRS) to identify and prevent fraudulent tax refund claims that are made with the use of stolen taxpayer identities (tax refund theft)." It would also assist those who have been victims of this crime and require the IRS to establish a new security feature that individuals can use to protect their tax return filings.
Among other things, businesses would be required to report both employee compensation and certain non-employee compensation to the government earlier in the return filing season. "This change would enhance the IRS's ability to identify and prevent fraudulent refund claims."
Paid preparers would be required to file individual income tax returns and most information returns electronically. In addition, the electronic filing requirement for persons that file over 250 returns would be scaled back to 20 returns, over a three year period. "Electronic filing enhances the IRS's ability to identify and prevent fraudulent refund claims."
SEC May Turn to Big 4 to Fill Top Job
As reported in the Wall Street Journal, "people familiar with the matter" say that SEC Chair Mary Jo White is considering James Schnurr, a former senior partner in Deloitte's national accounting office, to succeed Paul Beswick as the SEC's chief accountant. Beswick announced earlier this year he was stepping down from the post.
He'll have his hands full: The article notes that the next chief accountant will be deeply involved in International Financial Reporting Standards (IFRS), now sued by more than 100 countries. "A person familiar with his thinking" told the WSJ that Schnurr doesn't currently have a position on the standards, but has expressed support for them in the past. Schnurr retired from his post at Deloitte earlier this year, and was long involved with SEC technical accounting issues during his career, said the article.
Since assuming the chairmanship last year, said the article, White "has indicated that the SEC plans to revisit the issue of whether to expand U.S. use of IFRS." It noted that in a May speech, she said the issue was a priority and may have more to say on it "in the relatively near future."
Bank Overdraft Fees Still a Problem, Say Regulators
A New York Times article explained that four years after the passing of new rules to battle overdraft fees, the Consumer Financial Protection Bureau is still faulting banks for the high fees that banks charge overdrawn customers. The article said that in a report issued earlier this week, the agency indicated overdraft fees were piling up for many bank customers, particularly the young. Most debit card overdraft fees—which average about $34 each—involve transactions of $24 or less and are paid back within three days.
These may not sound like large amounts of money, but on a percentage basis they're huge. "If a consumer were to get a loan on those terms, that would equate to an annual percentage rate of over 17,000 percent,'' the agency's director, Richard Cordray said in a call with reporters.
The article noted that for years, regulators and consumer advocates have been concerned that such hefty fees particularly hurt lower-income customers, many of whom end up leaving the banking system entirely.
In 2010, federal regulators began requiring banks to obtain a customer's consent before charging them overdraft fees on ATM and debit card purchases. Other banks have voluntarily ended some overdraft practices: Bank of America, according to the article, has stopped charging for overdrafts on debit card purchases and now simply denies the purchase if there are insufficient funds.
Very, Very Bad Tax Cheat Pleads Guilty
Forbes Tax Columnist Kelly Phillips Erb summarized the ending of one of the biggest tax fraud cases in history. Elian Matlovsky pleaded guilty to one count of conspiracy to defraud the United States and one count of theft of government property—sentencing is later this year.
As described by Erb, Matlovsky and cohorts allegedly filed more than 8,000 fraudulent U.S. income tax returns seeking more than $65 million in tax refunds. They apparently stole personal identifying information, including Social Security numbers and dates of birth, and used that information to file false returns claiming refunds.
The defendants were a little more on the ball than others who have pulled the same scam: They allegedly obtained the Social Security numbers from U.S. citizens who reside in Puerto Rico. These residents are entitled to Social Security numbers but generally they don't have to file federal income tax returns. Since those numbers are therefore not being reported to the Internal Revenue Service, the fraudsters were able to file returns undetected for some time.
Feds and States Hit Firms Cheating Service Members
As reported in The Hill, credit firms will forgo $92 million in outstanding debt after federal and state authorities accused them of cheating U.S. military members with hidden charges. The Consumer Financial Protection Bureau and attorneys general from 13 states obtained the debt relief from divisions of Rome Finance.
Allegedly, Rome Finance lured as many as 17,000 service members and other consumers with offers of credit and promises of no money down and instant financing for purchases of computers and other electronics. These translations generally took place at mall kiosks near military bases. Rome Finance apparently masked finance charges with inflated prices in marketing materials, omitting key information in monthly bills.
The article noted that the CFPB, under Dodd-Frank, can take enforcement action against firms implicated in such schemes. "Under the terms of a consent order, the firms associated with Rome Finance must cease collections on roughly $60 million in contracts still in effect for an estimated 12,000 consumers."
- MoneyPak, a Popular Prepaid Money Card, Opens Path to Fraud Schemes (NYT)
- Inversions May Be the Least of U.S. Corporate Tax Issues (NYT)
- Issa asks Holder to turn over docs on mortgage fraud settlements (The Hill)
- IRS Moves to Stop Section 901(m) Abuse Through Check-the-Box Elections (Bloomberg BNA)
- "You Got to Know When to Fold 'Em" (Tax Policy Center)
- U.S. Energy Firms Rewarded With Tax Deferrals (WSJ)
- Free Online Tools for Optimizing Social Security Benefits (WSJ)
- Middle class jobs are finally coming back (CNN)
- Seersucker Day returns to Capitol Hill, but lawmakers can't deduct their special summer duds (Don't Mess with Taxes)
- Guy Can't Pay Bill, Capital One Sends New Keyboard (Newser)