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GAO Report: IRS Has 'Material Weaknesses' in Security Controls

The Internal Revenue Service and other Department of Treasury agencies, continue to have "material weaknesses" in security controls designed to protect the confidentiality, integrity and availability of their systems, a new General Accounting Office (GAO) report concludes.

SEC Chairman Calls For Tighter Regulation of Mutual Funds

The chairman of the Securities and Exchange Commission outlined a plan for tighter regulation of mutual funds before Congress Tuesday, and responded to criticism that the SEC failed to find problems in the industry early enough.SEC Chairman William H. Donaldson told Congress that he supported a plan to force mutual fund chairmen and three-quarters of the directors to be independent. Half of the board is required to be independent now, the New York Times reported. Under the proposals, fund directors would be required to perform annual evaluations of their effectiveness.

KPMG’S Statement Regarding Hearing in the “U.S. Tax Shelter Industry”

KPMG LLP issued the following statement in regard to a hearing today of the U.S. Senate Permanent Subcommittee on Investigations, at which current and former KPMG partners testified on the subject of tax services formerly offered by the firm: At the invitation of the Subcommittee, KPMG partners and former partners participated in the hearing today examining the activities of accounting firms, banks, investment advisors and law firms in offering aggressive tax strategies to their clients in the late 1990s and early 2000s.

IRS Fines Tax Preparers $2.4M, But Doesn’t Collect

The Internal Revenue Service has fined tax preparers over $2.4 million in the past two years, but has collected only a fraction of that amount, according to congressional auditors.The General Accounting Office (GAO) said IRS collected just $291,000, or 12 percent of the penalties due.

Congress Aids Military With Tax Cuts

After Congress approved President Bush’s $87.5 billion spending package to pay for the rebuilding of Iraq and Afghanistan, legislators took steps to take care of the people in uniform. The Senate, enhancing the House’s bill passed unanimously last week, doubled to $12,000 the death gratuity paid to families of soldiers killed while on active duty and eliminated all taxes on the benefit. "It's long overdue," Rep. Sam Johnson, R-TX, told the Associated Press.
Community News

Criminal Indictment Handed Up in HealthSouth CEO Case

Conspiracy, securities fraud, wire fraud, mail fraud, making false statements, providing false certifications and money laundering are the charges former HealthSouth Corp.’s chairman and chief executive Richard M. Scrushy will face. The charges carry a possible sentence of 600 years in prison. An indictment was handed up by a grand jury in Birmingham, AL, last week and unsealed yesterday by the U.S. Department of Justice, charging Scrushy with the counts above in the accounting fraud at the health care company he founded.

Freddie Mac May Face $30 Million Tax Bill

Freddie Mac, the nation’s No. 2 mortgage finance company, has estimated it will owe as much as $30 million in back taxes, the Wall Street Journal reported.That figure is just a fraction of the $4.5 billion the company expects to report in income when it restates earnings. Freddie Mac board member George Gould said in a letter to U.S. Rep. Christopher Shays (R-Conn.) that the back taxes won’t materially affect earnings.

'Heads should roll' at the SEC, says NY Attorney General Spitzer

The Securities and Exchange Commission found itself in the hot seat at a Senate hearing yesterday for failing to act sooner to clean up the mutual fund sector.Charges against the industry range from illegal—including 10 percent of the fund firms that allegedly have participated in late trading, which allows favored investors to trade after the 4 p.m. deadline-to questionable, including marketing timing, in which larger, more savvy investors trade in and out of a fund quickly to make a better profit.

GAO Releases Study Showing Improvement in IRS Performance

During the tax filing season, millions of taxpayers file their returns and seek assistance by calling or visiting IRS’s offices or Web site. The Government Accounting Office was asked to assess IRS’s 2003 filing season performance in five areas: processing returns, refunds and remittances; electronic filing; telephone service; walk-in assistance, and Web site.

States Band Together on Tax Authority For Online Purchases

Dozens of states have joined together to persuade Congress to allow them to force out-of-state Web and catalog merchants to collect sales taxes on goods shipped into their states.Many catalog and online retailers believe they shouldn’t be forced to collect sales taxes, pointing to the complexity and variety of state and local tax laws, which number in the thousands. Thirty-four states responded by agreeing to adopt a highly uniform tax system to simplify management for remote vendors.For state and local governments, billions of dollars in taxes on Internet sales are at stake.

Tax Shelters Once Again Under Scrutiny by Senate, PCAOB

A KPMG senior manager testified at a Senate Finance Committee hearing on Tuesday that his refusal to sign off on an audit client’s questionable tax transactions hurt his career at the Big Four firm. Michael Hamersley, a five-year KPMG employee, filed suit against the company in June and the case is pending.
Community News

UAL Seeks IRS, Congressional Assistance With Pension Fund Shortfalls

Cash-strapped UAL, parent company of United Airlines, put employees on notice that it has asked the Internal Revenue Service to allow waivers to its original plan to restore its pension plans to 100 percent funded status. Earlier this year Northwest Airlines was allowed by the IRS to put off $454 million in payments it was required to make to its pension plans this year. Instead Northwest will make those contributions over five years beginning next April.

Will Corp. Annual Reports Follow the Homeland Security Color Scheme?

If Homeland Security Secretary Tom Ridge has his way, an additional element of disclosure in annual reports of publicly traded companies will soon include a statement of what companies are doing internally to safeguard computer security systems.Secretary Ridge met with SEC Chairman William Donaldson last week to explore the benefits of additional disclosure statements.

California Enacts Strict Anti-Spam Law

With half of all e-mail now estimated to be unsolicited spam mail, California is getting tough with Gov. Gray Davis signing the nation’s strictest anti-spam law on Tuesday. A key provision of the law is that unsolicited mail can’t be sent to anyone who doesn’t "opt in" to the mailing. In the past, the mail could be sent unless a recipient had "opted out." This is a key difference to those who use e-mail to market everything from prescription drugs, discount travel, low mortgage and insurance rates to pornography.

Survey: Tax Reductions Not Likely to Spur Capital Investment

In a survey of senior tax executives conducted by Big Four firm Deloitte & Touche, a majority of executives indicated that a reduction in the top corporate tax rate would not be enough to encourage an increase in capital investments.Nearly half of those surveyed (48%) said that a change in class lives would encourage capital investments.

Senate Banking Committee Takes on Auditor Independence

The Senate Banking Committee held hearings on Tuesday September 23 to examine the need to further rein in accounting firms by barring certain additional consulting services to public companies that they audit.Sean Harrigan, president of the California Public Employees' Retirement System - the nation's largest pension fund - is among the biggest supporters of a ban on providing tax advice to audit clients.

Congress Considers Manufacturing Tax Cuts

With time running out to eliminate an export tax the World Trade Organization has called "illegal," Congress is considering two bills that would eliminate the cut by the year’s end deadline and make up the difference through tax cuts to the manufacturing sector.Charles Grassley (R-IA), chair of the Senate Finance Committee, introduced a bill last week that would immediately cut tax rates for domestic manufacturers and phase in all others by 2013. The reduction would save domestic manufacturers $50 billion over 10 years."U.S.
Community News

Enron Deal Reached For Merrill Lynch, Andersen Attorney Says 'What About Us?'

Merrill Lynch and Arthur Andersen were both large professional services firms working with the Enron Corporation, and allegedly involved in certain elements of its downfall. But the two firms faced a very different fate - with Merrill Lynch reaching a settlement last week to avoid prosecution and Arthur Andersen ending up in a jury trial which essentially destroyed the 90 year old firm.Merrill Lynch's deal, announced last week, calls for the firm not to engage in business deals that might appear to mislead investors about the financial situation of a company.

IRS, States Partner to Target Abusive Tax Avoidance

The Internal Revenue Service and state tax officials announced this week the establishment of a new nationwide partnership to combat abusive tax avoidance. Under agreements with individual states, the IRS will share information on abusive tax avoidance transactions and those taxpayers who participate in them.The agreements creating this partnership are designed to enable both state and federal governments to move more aggressively in the fight to ensure all taxpayers pay their fair share.

Business Taxes Paid to State and Local Governments Jumps in FY 2003

Businesses across the country paid nearly $400 billion in state and local taxes in fiscal year 2003—a $20.3 billion (5.3 percent) increase over fiscal year 2002, according to a new report from a business tax watchdog organization.The Council on State Taxation (COST) represents 550 corporations in an effort to "preserve and promote the equitable and nondiscriminatory state and local taxation of multi-jurisdictional business entities," according to its mission statement.


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