32-year streak at the Garden: No taxes paid
Madison Square Garden, the home of the NBA’s New York Knicks and the NHL’s New York Rangers, has a sweet deal with New York City. Since 1982, the Garden – an enormously successful, for-profit business – has not paid a dime to the city in property tax for the land and the building it occupies from 33rd to 31st Street between Seventh and Eighth avenues, Jim Dwyer of the New York Times wrote.
A state law enacted 32 years ago granted the Garden a tax exemption that has no expiration date, a favor given to no other property in the state, Dwyer noted. It also has remained impervious to reform or repeal, though another effort has been started this month by the City Council and is gaining support in the state Legislature.
How did this deal happen? Dwyer explains: “Pleading hard times and high costs in the early 1980s, a ragged era in the city, the Garden said it needed concessions from its unions and tax breaks from the city. Edward I. Koch, who was mayor at that time, said in 2002 that he believed he had agreed in 1982 to a tax exemption that would last for 10 years. But the language of the deal was read to mean that as long as the Knicks and the Rangers played their home games at the Garden for 10 years, the break would continue.
“And so it has.”
Rep. Dave Camp: Take uncertainty out of tax code
In an op-ed for the USA Today on Tuesday, House Ways and Means Committee Chairman Dave Camp (R-MI) believes that the nation’s broken tax code is the reason why hardworking families are struggling in today’s economy, wages are flat, and businesses aren’t growing.
The first step in fixing the tax code: addressing tax extenders. “The United States has the highest corporate rate in the world and is the only country that allows important pieces of its tax code to expire on a regular basis,” he wrote. “Businesses cannot grow and invest when the tax code is riddled with uncertainty.”
Dems proposal on tax avoidance misses real problem
Fourteen Democratic senators and 10 House Democrats introduced legislation in their respective chambers yesterday that would make it much more difficult for US-based companies to execute a “corporate inversion” by merging with a foreign-based company and declaring that company’s home country the new “domicile” of the combined firm.
But as Rob Garver of the Fiscal Times wrote yesterday, business leaders criticized the legislation for failing to go after the root cause of inversions: the outdated US tax code.
“The legislation is wrong in so many ways,” said former Michigan Governor John Engler, now president of the Business Roundtable, according to the article. “What’s right about it is that it recognizes how bad the current tax code is. What’s wrong about it is that it makes no effort to fix it.”
Garver noted that when the current 35 percent corporate tax rate was implemented in the United States, it was roughly the average rate for most industrialized countries. Since then, though, countries around the world have slashed their corporate rates, leaving US taxes among the world’s highest. Most have also adopted a territorial taxation system, which means that corporations are only taxed on their domestic earnings.
“To be sure, many corporations have devised strategies that allow them to avoid some or all of US taxes, but many still pay at rates twice as high as their competitors overseas, meaning that until the US system is reformed, there will be billions of dollars’ worth of reasons for businesses to continue concocting schemes to avoid paying taxes in the United States,” Garver concluded.
Issa subpoenas Justice Department on IRS
Bernie Becker of The Hill reported yesterday that House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) issued a subpoena to the US Justice Department for documents about the IRS targeting controversy, saying the agency was stonewalling his investigation.
In a letter to Attorney General Eric Holder, Issa wrote that the Justice Department had already blown past a May 5 deadline that the Oversight Committee had set for documents about the department’s interactions with the IRS. Issa added that Justice Department official Richard Pilger, whom the committee views as a key witness, refused to answer almost three dozen questions in a recent interview upon the advice of a Justice lawyer, Becker wrote.
“Because you have failed to comply with this request for documents and because the department has obstructed the committee's oversight, the committee has no choice but to issue a subpoena compelling your cooperation with this important matter,” Issa wrote to Holder, according to the article.
Tuesday’s subpoena is at least the third Issa has issued in his yearlong investigation into the IRS, which started after former agency official Lois Lerner acknowledged and apologized for the IRS’s improper scrutiny of Tea Party groups seeking tax-exempt status.
Deloitte partner sanctioned over conflict of interest with casino client
Rachael Abrams and Floyd Norris of the New York Times wrote yesterday about how James Adams broke auditor independence rules: “James T. Adams, a partner at the accounting firm Deloitte & Touche, would not ordinarily have gotten in trouble for borrowing money at a casino where he liked to gamble.
“In this case, Mr. Adams also happened to be a partner in Deloitte, the casino’s auditor, and was playing a major role in the audit at the same time he was borrowing – and evidently losing – tens of thousands of dollars.
“That conflict of interest led the Securities and Exchange Commission to bar Mr. Adams, who also served as the chief risk officer for the Deloitte LLP subsidiary, from practicing as an accountant for at least two years.”
Crocodile injured by falling accountant
Our odd news story of the day comes from the Moscow Times: “A dangerous reptile sustained injuries after being squashed by a portly circus accountant on a roadtrip in northern Russia on Tuesday.
“The two-meter-long crocodile was peacefully snoozing on the floor when the tour bus hit a bump in the road, triggering an unfortunate chain of events that caused a 120-kilogram female passenger to be thrown into the crocodile and said crocodile to vomit for several hours afterward, RIA Novosti reported.
“Both reportedly sustained shock and minor injuries. But the crocodile, named Fedya, apparently fared worse than the accountant. He vomited for three hours after the accidental full body slam, though a medical examination found he was clear of any internal injuries, Komsomolskaya Pravda reported.”
- PCAOB: Audit firms missing the point of auditing (Going Concern via Compliance Week)
- Internet companies monkey with accounting (USA Today)
- The answer isn’t blowing in the wind (US News and World Report)
- Measuring the return on marketing investments (Wall Street Journal CFO Journal)
- Ahold to pay $297 million to settle class-action lawsuit (Wall Street Journal)
- Credit Suisse CEO Brady Dougan nearly lost job during tax probe (Wall Street Journal)
- Credit Suisse investors shrug off tax plea (New York Times)
- Pfizer scrambles to keep Astra bid alive (Financial Times)
- Tax Court threatens to sanction courtroom commando Mac MacPherson (Forbes)
- Still looking for your tax refund? Errors, 4464C letters and other explanations (Forbes)
- Congress, ignoring history, considers turning over tax debts to private collection agencies (Forbes)
- National Taxpayer Advocate joins fight to stop private debt collection of delinquent tax bills (Don’t Mess With Taxes)
- Moore, Oklahoma, still recovering from horrific 2013 tornado; other areas receive tax relief for 2014’s severe storms (Don’t Mess With Taxes)
- Thomson Reuters Checkpoint Learning launches online continuing education subscription package for corporate tax and accounting professionals (Thomson Reuters)
- Thomson Reuters releases Affordable Care Act content marketing solutions for tax, accounting, and employee benefits firms (Thomson Reuters)
- Virginia Society of CPAs announces officers and board of directors (VSCPA)
- 2014 Young Professionals Leadership Conference: Connect Effect [May 30] (Illinois CPA Society)
- ParenteBeard appoints three principals (ParenteBeard)