SEC failed to guard sensitive information
An internal government report obtained by The Hill said the US Securities and Exchange Commission (SEC) has failed to properly guard sensitive nonpublic information.
The 16-page report from the Office of the Inspector General (OIG) said the agency failed to clear the room during nonpublic executive session votes of the five-member board, Kevin Cirilli of The Hillreported on Monday. It also found that officials didn’t keep complete attendance records during at least one high-profile meeting involving a J.P. Morgan settlement worth $200 million.
The OIG didn’t blame an individual for leaking information, but it raised questions about how the agency conducts routine business. SEC experts told The Hill that the findings are damaging because it exposes nonpublic market-sensitive information to lawyers, staffers, and the general counsel of SEC commissioners who aren’t authorized to see it. Experts also say the information could be used improperly by people with inappropriate access to make stock trades, Cirilli wrote.
SEC Chairwoman Mary Jo White declined to comment through a spokesman when asked if she’s made changes to SEC policy as a result of the report. SEC spokesman John Nester also declined to comment, according to the article.
One senior Washington lobbyist, who frequently handles cases with the SEC and as a result asked not to be named, told The Hill that the report showed “a complete lack of thoroughness” on behalf of the SEC board.
“Given that the SEC’s mantra is to prevent leaking insider information, it’s ironic that their meetings are so loosey-goosey,” said the lobbyist, according to the article.
IRS relaxes renewable energy project tax credit rule
Ted Mann of the Wall Street Journalreported on Friday that the IRS lowered a threshold for renewable energy projects to qualify for federal tax credits, potentially providing a boon to developers and investors in the wind-power industry who had been uncertain how heavily they could rely on them for financing.
In Notice 2014-46, which was released on August 8, the IRS and the US Treasury Department said renewable energy projects could qualify for a pair of tax credits if they had incurred at least 3 percent of the total project cost before the beginning of 2014, down from the previous threshold of 5 percent. Credits would be proportionally reduced in value below the 5 percent threshold, the IRS said.
The guidance also clarified what sort of construction qualified as work of a “significant nature,” another test by which project developers – and their investor partners – can be assured that they have qualified for the credits, which provide the financial backbone of most major wind-farm projects, Mann wrote.
This marked the third attempt by the federal government to clarify how projects could qualify for the tax credit program, which expired at the end of 2013 but is still open to developers, provided they began installation in that year.
Regarding the “significant nature” of a wind project, the IRS cited examples of construction that would help qualify wind-power developers for credits, including having begun excavating foundations for wind towers, installing the anchor bolts that hold towers in place, and pouring the enormous concrete pads on which the towers sit.
Delphi vows to protect UK-based status, fight IRS
John D. Stoll and John D. McKinnon of the Wall Street Journalreported on Friday that Troy, Michigan-based auto supplier Delphi Automotive LLP, which incorporated in the United Kingdom after its bankruptcy, plans to “vigorously contest” pressure from US tax authorities to begin filing income taxes as if it were a domestic corporation.
The development, disclosed in a recent filing with the SEC, comes amid widespread scrutiny of companies that have expatriated to lower tax liabilities and efforts by President Obama to curb corporate tax inversions he labels as unfair. The IRS delivered its opinion to Delphi on June 14, nearly five years after the automotive supplier incorporated under the laws of England and Wales, the company said.
The IRS points to Delphi's acquisition of certain assets of the old Delphi pursuant to its bankruptcy plan as reason that the company should be treated like a US-based company, Stoll and McKinnon wrote. The company, a part of General Motors Co. well before the auto maker's bankruptcy, still operates from a Detroit suburb and has filed US federal partnership tax returns between 2009 and 2011, although its limited-liability partnership allows the company to save significant money on tax obligations.
Delphi said it has reviewed the IRS's opinion and disagrees. “We intend to vigorously contest the conclusions” through the IRS appeals process, the company said, and will litigate if necessary, according to the article.
Out the inversion
US-based data protection firm SafeNet may very well be able to slash its tax rate as part of a cross-border deal. But instead of doing so by acquiring an overseas company – a move known as an inversion – it is selling itself for $890 million to Dutch digital security outfit Gemalto, what Jeffrey Goldfarb of Reuters Breakingviews called an “unversion” in an August 8 article. The deal shows the limitations of a possible Washington ban on inversions.
He noted that sales of US firms to overseas buyers are not in the crosshairs; yet, SafeNet’s deal could have a similar effect to an inversion. Presumably its tax home can shift from Baltimore to Amsterdam, where its new $8 billion parent company is located. Over half of SafeNet’s sales last year were generated outside the United States, Gemalto said on Friday, and would therefore be eligible for a reduced tax rate under a new domicile.
“As M&A goes, the SafeNet deal is relatively plain vanilla,” Goldfarb wrote. “The buyer’s shares even went up on the news, as often happens these days. For the anti-inversion crowd, though, it may signify something more important. A Washington crackdown won’t necessarily stop US companies from emigrating. In lieu of seeking a target with a cheaper tax domicile, they may just hang out for-sale signs to attract foreign suitors.”
Lott joins lobbying push to keep up corporate inversions
Annie Linskey of Bloombergwrote on Saturday that former US senators Trent Lott and John Breaux are part of a lobbying effort by companies that want to preserve the option of reducing their corporate taxes by moving their legal addresses overseas.
According to Linskey, Minneapolis-based Medtronic Inc., which is seeking to acquire Dublin-based Covidien PLC, paid the Breaux-Lott Leadership Group $200,000 in June to block anti-inversion legislation from moving forward. Breaux, a Democrat, was once a member of the Senate Finance Committee. Lott, a Republican, is a former Senate majority leader.
One company that hasn’t publicly announced an intent to move its address abroad – Kimberly-Clark Corp., the Dallas-based maker of Kleenex tissues and Huggies diapers – added opposition to such legislation to its lobbying report. Kimberly-Clark is spinning off a healthcare unit.
“There are a lot of reasons why tax reform is stuck in Congress, and one of them is because big companies with vested interests want it to be stuck,” said Adam Rappaport, a senior counsel at Citizens for Responsibility and Ethics in Washington, which flagged the Medtronic lobbying activity, according to the article.
Coburn: Big banks claim tax credit for the poor
Senator Tom Coburn (R-OK) said on Sunday that large banks and corporations are taking advantage of a tax credit that was intended for struggling communities, wrote Ramsey Cox of The Hill.
In a report, Banking on the Poor, Coburn said companies and banks have claimed more than $1 billion a year from the New Markets Tax Credit program.
“The New Markets Tax Credits is a reverse Robin Hood scheme paid for with the taxes collected from working Americans to provide payouts to big banks and corporations in the hope that those it took the money from might benefit,” Coburn said, according to the article.
Coburn said the New Markets Tax Credit was created to spur new markets in struggling communities, but instead it is subsidizing Emmy award-winning producers, Goldman Sachs, Starbucks, and “silly projects,” such as a sculpture in the desert, Cox wrote.
The Accounting Hall of Fame inducts two new members for 2014: Abraham Jacob Briloff and William Rudolph Kinney
Two distinguished accountants were inducted into the Accounting Hall of Fame during the American Accounting Association Annual Meeting in Atlanta on August 4.
The 2014 inductees are the late Abraham Jacob Briloff, Emanuel Saxe Distinguished Professor of Accountancy emeritus at Baruch College, and William Rudolph Kinney Jr., Charles and Elizabeth Prothro regents chair in business and PricewaterhouseCoopers Fellow at the University of Texas at Austin.
The award was presented to Kinney by Zoe-Vonna Palmrose, professor of accounting, and Kermit O. Hanson, professor in business administration, at the University of Washington.
Floyd Norris, chief financial correspondent for the New York Times, presented the award to Briloff’s daughter, Leonore A. Briloff. Leonore became a partner in her father’s CPA firm and was a co-author on many of his publications.
The Accounting Hall of Fame’s international board of electors select one or two honorees each year. Ninety-two influential and respected accountants from academe, accounting practice, government, and business have been elected to the Accounting Hall of Fame since its establishment in 1950 at Ohio State University.
- It’s completely understandable someone might sign over 200 audit reports by mistake (Going Concern)
- Jules S. Reich joins WeiserMazars LLP as tax partner within the Transaction Advisory Services Group (WeiserMazars)
- Warren Martin joins Cherry Bekaert’s growing Technology & Life Sciences Group (Cherry Bekaert)
- A sales tax holiday is an empty gimmick, not a rational policy (Boston Globe)
- Do sales-tax holidays boost back-to-school shopping? (Washington Post)
- Tax code tweaks won’t be enough to stop corporate inversions (Denver Post)
- Coons sounds off on inversions (Politico)
- For businesses, leaving US isn’t an easy decision (The Hill)
- The Social Security earnings test is not a tax (Forbes)
- Gretchen Morgenson doesn’t seem to understand the Windstream Holdings tax case (Forbes)
- The Guardian whines that Care UK doesn’t pay profits tax on profits that Care UK doesn’t make (Forbes)
- IRS imposes new limits on tax refunds by direct deposit (Forbes)
- Robert Redford sues New York over $1.6 million Sundance tax bill (Forbes)
- Actor Robert Redford sues NY tax office over $1.6 million bill (Don’t Mess With Taxes)
- The libertarian case for BEPS (Tax Analysts)
- Claims court rejects four-year limitations period under TEFRA (Tax Litigation Survey)