House passes highway funds patch, eyes shift to Senate
The House overwhelmingly passed a bill to shore up the beleaguered Highway Trust Fund on Tuesday with little more than two weeks before the US Department of Transportation has to cut funding for highway projects around the country, Adam Snider of Politico reported.
But Senate Majority Leader Harry Reid (D-NV) wants votes on three separate proposals, a move that will keep state transportation departments nervously waiting for a last-minute solution ahead of an August 1 deadline for action.
The House passed a 10-month patch that shores up the fund through May 2015 with $11 billion on a lopsided 367-to-55 vote. Nearly every member who spoke on the floor – both Democrat and Republican – said they preferred a long-term bill, but failing that, they didn’t want to see the trust fund run out of money, Snider wrote.
Meanwhile, Reid is seeking to set up votes for three separate proposals: the House-passed bill, a Senate Finance Committee alternative that is similar to the House bill, and a plan from Senator Barbara Boxer (D-CA) to extend current policy only through December in order to force Congress to act on a long-term bill in the lame-duck session.
During floor debate on the House bill, Representative Tom Petri (R-WI), the highways and transit panel chairman who will retire from Congress after this year, scolded lawmakers for not addressing the problem in a meaningful way, according to the article.
“This is not what the American people sent us here to accomplish,” he said, noting that the gas tax has not been hiked in over two decades. Echoing the thoughts of many lawmakers in both parties who want a long-term bill, though, Petri said Congress can’t let the trust fund run dry because some would rather see a multiyear measure.
“We can’t let the quest for the perfect stand in the way of the good or the acceptable,” he added.
US seeks legislation to curb offshore tax deals
The Obama administration called for immediate congressional action to stop US companies from using cross-border mergers to escape the country’s tax system, the latest trend in corporate deal-making, Richard Rubin of Bloomberg wrote on Tuesday.
In a letter calling for a “new sense of economic patriotism,” Treasury Secretary Jacob J. Lew said Congress should approve tax changes retroactive to May.
“We should prevent companies from effectively renouncing their citizenship to get out of paying taxes,” Lew wrote in the letter to top congressional tax writers, which was dated yesterday, according to the article. “We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes.”
But Rubin noted that Lew’s letter may not be enough to prompt Congress to move quickly. Congressional Democrats, including Representative Sander Levin (D-MI) and his brother, Senator Carl Levin (D-MI), have already introduced bills that echo the administration’s sentiment. However, those measures haven’t advanced because of Republicans’ insistence that changes be made as part of a broader revamp of the tax code, which isn’t likely to happen until 2015 at the earliest.
The administration and lawmakers in both parties favor major tax code changes that would lower the 35 percent US corporate rate and tighten international tax rules. However, they’ve been unable to agree on the details or on changes to individual taxation, Rubin wrote.
[You can download the letter here, courtesy of Politico.]
Treasury starts on tax report, decades later
Rubin also wrote for Bloomberg on Tuesday that Senator Charles Grassley (R-IA) has been asking the US Treasury Department to finish a report that Congress asked for in 2004. The study is supposed to examine the effectiveness of congressional limits on tax inversions.
Congress called for the study in 2004 when it changed the law in response to a first wave of inversions in 2001 and 2002. Lawmakers set a December 31, 2006, deadline for the report.
Now, more than eight years after the due date, with another wave of inversions underway by such companies as Medtronic Inc. and AbbVie Inc., the Treasury told Grassley in a July 14 letter that it has “begun work” on the study.
Alistair Fitzpayne, Treasury assistant secretary for legislative affairs, wrote that the department wanted to wait until it had issued “comprehensive regulatory guidance” on the issues involved, according to the article.
Washington, Beijing make progress on inspection of Chinese audit firms
Michael Rapoport of the Wall Street Journal reported on Tuesday that US and Chinese regulators have made significant progress toward working out a way for the United States to inspect the work of Chinese audit firms, and the first such inspection is expected before the end of the year.
While no formal agreement has been reached yet, the two countries’ regulators have held “productive” meetings discussing the issue at last week’s Strategic and Economic Dialogue high-level talks in Beijing. The two sets of regulators have also “committed to moving forward” with a mechanism to allow for inspections, Public Company Accounting Oversight Board (PCAOB) Chairman James Doty told the Wall Street Journal.
“We continue to work out the details of such cooperation and expect the two sides to be able to reach agreement on a set of protocols in the coming months,” said Doty, who took part in last week’s talks, according to the article.
Rapoport wrote that an agreement on inspections would be a significant breakthrough. US and Chinese regulators have long tussled over how much oversight the United States should be allowed to exert over Chinese companies that trade on US markets and the Chinese accounting firms that audit them, including Chinese affiliates of the Big Four accounting firms.
The Senate that taxed the Internet
On Tuesday, the House of Representatives approved by voice vote a bill, the Permanent Internet Tax Freedom Act, that would permanently ban state and local governments from taxing Internet usage – a rare Washington example of bipartisan cooperation to encourage economic growth.
But just because a bill is sensible and popular doesn't mean it can get through Majority Leader Harry Reid's Senate, the Wall Street Journal wrote in an op-ed on Tuesday. And it may not matter that this is about the only substantive legislation that can win bipartisan majority support in Congress this year.
“A cabal of state tax and local collectors is lobbying the Senate to hold the Internet Tax Freedom Act hostage,” the op-ed stated. “Their plan is to tie an extension of the longstanding ban on email taxes to their controversial plan to give states and municipalities new powers to collect sales taxes on transactions far outside their borders. Illinois Senator Dick Durbin, the number two Democrat, is mulling whether to lead the hostage-taking for these taxing interests.
“Since this sales-tax scheme has been going nowhere in the House, the Durbin gang could end up shooting the hostage, as the Internet Tax Freedom Act is due to expire on November 1,” the op-ed continued. “And that may be the outcome they really want anyway, given how deep in the fiscal hole states like Illinois are.”
Senators renew Internet sales tax push
As the Wall Street Journal mentioned in its op-ed above, Senate supporters think the Internet Tax Freedom Act is the perfect vehicle for the chamber to pass an online sales tax bill, known as the Marketplace Fairness Act.
According to an article by Kate Tummarello and Bernie Becker of The Hill, several senators released their new bill on Tuesday, which would attach the online sales tax measure to a 10-year extension of the Internet freedom bill.
“Why wouldn’t we?” Senator Mike Enzi (R-WY), a longtime supporter of online sales tax legislation, said when asked if he planned to attach the Marketplace Fairness Act to the bill. “They’re a perfect fit.”
Tummarello and Becker noted that the move sets up a potential showdown between the House, where GOP leadership and a key committee chairman have shown little interest in online sales tax legislation, and the Senate, which passed its bill more than a year ago with bipartisan support.
The Internet Tax Freedom Act expires November 1, meaning providers could send out warnings about potential new taxes on online access just weeks before the election, an outcome that neither supporters nor opponents of the online sales tax legislation particularly want.
Crowe Horwath LLP announces CEO succession plan
Chicago-based accounting firm Crowe Horwath LLP announced on Tuesday that James “Jim” Powers, 58, will succeed Charles M. Allen as CEO, effective on April 1, 2015. Allen is completing his second four-year term as CEO of the firm.
Powers is currently the managing partner of the firm’s Indianapolis office. He will split his time between Indianapolis and Chicago.
As CEO, Powers will focus on continuing the expansion of the firm’s national footprint, service offerings, and brand. For more than 36 years, he has provided audit services to publicly and privately owned businesses in a variety of industries, concentrating on client and stakeholder needs, relationships, and opportunities. In addition, Powers has extensive experience in all aspects of corporate finance, including mergers and acquisitions, private and public securities offerings, and in the areas of strategic planning and business process re-engineering.
He currently chairs Crowe Horwath’s retirement plan investment committee and represents the firm globally as its liaison partner to Crowe Horwath International.
“During my career with Crowe, we’ve transformed from a tiny firm in northern Indiana to a national firm that’s globally branded,” Powers said in a written statement. “We accomplished this by focusing on technical and industry specialization that provides innovative solutions to our clients and by keeping our people highly engaged. I plan to build on these same foundations to continue our success.”
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