IRS must take oath on Lerner emails: judge
Mackenzie Weinger of Politicoreported on Thursday that a federal judge ordered the IRS to explain under oath how it lost emails connected to Lois Lerner, the ex-IRS official at the center of the Tea Party targeting scandal.
The action is the latest in conservative watchdog group Judicial Watch’s bid to discover more on the missing emails after the group won a Freedom of Information Act (FOIA) lawsuit against the IRS.
Judge Emmet Sullivan gave the government 30 days, until August 10, to file a declaration signed by “appropriate” IRS officials under oath – sworn to be the truth under penalty of perjury – addressing the lost emails, Weinger wrote. The judge said the declaration, which should also include ways to recover the emails, will help inform the court about whether there is a need for limited discovery as requested by Judicial Watch.
Sullivan also ordered that the government and Judicial Watch meet with Magistrate Judge John Facciola until September 10 to discuss how the IRS can possibly obtain or recover the lost emails and documents from other sources. Judicial Watch is seeking information on what kinds of efforts the IRS has gone to in order to recover the lost information, as well as how the agency is identifying additional sources, such as Lerner’s assistant, to try to find them.
Weinger noted that Judicial Watch has had success using FOIA to get emails in other controversies, including the killings in Benghazi.
Steve Stockman pushes House GOP to arrest Lois Lerner
Representative Steve Stockman (R-TX), who you may remember crafted “The Dog Ate My Tax Receipts Act” last month as a tongue-in-cheek rebuke of the IRS and its handling of Lerner’s missing emails, filed a resolution on Thursday that wasn’t so tongue-in-cheek.
Stockman filed a motion on Thursday directing congressional police to arrest Lerner for contempt of Congress and take her to the DC jail for questioning, wrote Rachael Bade of Politico.
The resolution instructs House Speaker John Boehner (R-OH) to issue a warrant for Lerner’s arrest, commanding the Sergeant-at-Arms “to arrest and take into custody forthwith, wherever to be found, the body of Lois G. Lerner, and bring her to the bar of the House without delay to answer to the charge of contempt of its authority, breach of its privileges, and gross and wanton insult to the integrity of its proceedings,” according to the article.
He added in a statement: “Asking the Justice Department to prosecute Lois Lerner for admittedly illegal activity is a joke. The Obama administration will not prosecute the Obama administration. … It is up to this House to uphold the rule of law.”
House Republicans held Lerner in contempt in early May for refusing to answer questions about her role in the Tea Party targeting controversy. Bade noted that Congress has the power to arrest individuals it holds in contempt to strong arm them into doing what it wants – a power it hasn’t used in years. Lerner would theoretically be held for not complying with a subpoena, and her release would likely be contingent on her talking.
IRS staffer suspended for Obama cheerleading
An IRS employee has been given a 100-day suspension for exhorting taxpayers seeking assistance to vote for President Obama, Bernie Becker of The Hillwrote on Thursday.
The US Office of Special Counsel said that the employee “repeatedly urged” those calling the IRS’s help lines in 2012 to back the president “by delivering a chant based on the spelling of the employee’s last name,” according to the article.
The counsel’s office said that amounted to a violation of the Hatch Act, which limits the amount of political activity that practically all executive branch employees can engage in both on and off the job.
In accepting the 100-day suspension, “the IRS employee acknowledged that he had used his authority and influence as an IRS customer service representative for a political purpose and did so while at work,” the Office of Special Counsel said in a statement, according to the article.
Short-term highway fund boost gets both parties’ support
Laura Litvan and Richard Rubin of Bloombergreported on Friday that lawmakers in Congress are uniting behind a plan to replenish the US fund for road and mass-transit projects through May 2015 as they delay a debate over raising taxes for long-term infrastructure financing.
Separate bills approved by the House Ways and Means and Senate Finance committees on Thursday would provide almost $11 billion to avoid a shortfall in the Highway Trust Fund next month that would slow construction.
Litvan and Rubin noted that while the measures have some differences, both would be financed by higher customs fees and by letting companies delay contributions to employee pension plans. Republicans and Democrats expressed confidence they can agree on the short-term plan before Congress’ August break.
The biggest difference between the proposals is the Senate plan’s inclusion of two tax-compliance changes projected to generate $3.4 billion over the next decade. It would require banks to give the IRS more information about mortgages, including the unpaid balance and property address. That would provide the IRS with additional tools in auditing taxpayers’ mortgage-interest deductions, Litvan and Rubin wrote.
Another tax-compliance provision would give the IRS more time to pursue taxpayers who overstate their basis in certain transactions and thus underreport capital gains.
[For additional reading, Howard Gleckman of TaxVoxasks: Is it time to end the Highway Trust Fund fiction?]
Ventas audit reports pulled due to inappropriate relationship
Chicago-based Ventas Inc. announced on Wednesday that its chief accounting officer, Robert Brehl, had separated from the company and that it had dismissed Ernst & Young LLP (EY) as the company's auditor “as a result of an inappropriate personal relationship” between an EY partner and the chief accounting officer, Robert Whelan of the Wall Street Journalreported.
The health care real-estate investment trust company also announced that the accounting firm had notified Ventas that it has withdrawn its audit reports for 2012 and 2013, according to a Ventas filing with the US Securities and Exchange Commission (SEC). EY also notified Ventas that its procedures for reviewing Ventas financial statements for the first quarter of 2014 “should no longer be relied upon.”
Whelan noted that EY took those steps after concluding “it was not independent of the company due solely to an inappropriate personal relationship” between an accounting firm partner “and an individual in a financial reporting oversight role” at Ventas, according to the SEC filing.
Ventas's filing said that EY hasn't brought any other matters to its attention “that would affect the company's financial statements or internal control over financial reporting.”
In a statement, EY said, “This partner's actions were a flagrant violation of our firm's code of conduct and professional standards. Upon our learning of this matter, the partner was promptly terminated,” according to the article.
Ventas said the senior EY partner who signed the 2012 and 2013 audit reports “was not the individual involved in the inappropriate relationship.” Ventas also announced it had appointed KPMG LLP as its new independent public auditor.
Maloy addresses speculation over LB&I course change
In an interview with Tax Analysts, Heather Maloy, IRS Large Business and International (LB&I) division commissioner, dismissed rumors that she has decided to make changes that might compromise the division's international operations. She emphasized that while change is inevitable, she wants to preserve, though maybe not expand, the line authority granted to LB&I’s deputy commissioner (international) over international examiners as a result of the 2010 realignment.
“We haven't made any decisions about anything with respect to our structure, but I think I've been pretty transparent with our employees that we're always looking at our structure,” said Maloy, in an article written by Amy S. Elliott. “We don't have any current working model of a decision of a structure that we're moving toward.”
Elliott wrote there was speculation that change was brewing at LB&I when several international executives abruptly stepped down or announced their departures. Michael Danilack, former LB&I assistant deputy commissioner (international), left the agency on July 2, and Samuel Maruca, transfer pricing director, and Diana Wollman, director of international strategy, submitted their resignations earlier that same week.
Some practitioners suspected the departures were in protest over a possible unforeseen change in LB&I’s international strategy, but according to the article, Maloy said “there are no plans to move LB&I international examiners back under the industries.” She said that just as the shift away from the old structure of the Large and Midsize Business (LMSB) division wasn't “the perfect, last change, going from LMSB to LB&I is not the perfect, last change.” Maloy added the realignment was a step in the right direction and that LB&I will “absolutely not” go back to the way the organization was structured before.
Long-silent SEC offers guidance, warnings on XBRL
After taking its time to assess the state of eXtensible Business Reporting Language (XBRL) compliance and start calling for needed corrections, the SEC has issued some new cautions regarding XBRL filings to public companies: Don't forget to provide your calculation relationships, and particularly for smaller companies, reduce your use of custom tags, Tammy Whitehouse of Compliance Weekwrote on July 8.
The SEC Division of Corporation Finance published an open “Dear CFO” letter as a sample of correspondence sent directly to certain public companies indicating they weren't including all the required calculation relationships in their XBRL filings.
Whitehouse noted that the guidance is long overdue in the eyes of XBRL and open-data advocates who say investors can't rely on data produced by XBRL because of persistent errors.
Calculation relationships in an XBRL filing explain the additive or summation relationships between parent-child items in financial statements. In the balance sheet, for example, calculation relationships would show how current assets and noncurrent assets add up to a total asset figure, Whitehouse wrote. The SEC's Dear CFO letter reminds companies to take a look at the EDGAR Filer Manual for information on how to comply with the requirement to provide calculation relationships in filings.
Separately, SEC staff also published observations on custom tags, or extensions, that are used to express numbers that are not readily found in the US Generally Accepted Accounting Principles Taxonomy that all companies follow to tag their financial data and disclosures.
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