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Bramwell’s Lunch Beat: FASB Officially Says So Long to Extraordinary Items

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Jan 14th 2015
Staff Writer and Editor AccountingWEB
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IRS to lose tax collectors, do fewer audits in 2015
The IRS will lose 1,800 tax collectors through attrition and do 46,000 fewer audits this year because of congressional budget cuts to the tax agency, IRS Commissioner John Koskinen told IRS employees on Tuesday, wrote Gregory Korte of the USA Today. But the cuts could also be bad news for some taxpayers. Identity theft prevention efforts will be delayed, refunds could be held up, and taxpayer services available by telephone will see longer wait times – if taxpayers can get through at all, Koskinen said. The IRS chief even raised the possibility of a two-day shutdown before Sept. 30, sending IRS employees on unpaid furlough.

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FASB jettisons extraordinary items from financial statements
In its quest to simplify accounting standards, the Financial Accounting Standards Board (FASB) has adopted a new provision in US GAAP that spares companies the requirement to display extraordinary and unusual items in financial statements, wrote Tammy Whitehouse of Compliance Week. The FASB adopted Accounting Standards Update No. 2015-01 to revise requirements for the income statement that have long instructed companies to separately present any items that are unusual or occur infrequently. In practice, FASB says, companies rarely presented extraordinary items in the income statement, so the revision to accounting rules now spares them the analysis that companies typically undertake to determine whether specific transactions or items should be treated as extraordinary.

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Lawmakers target Obamacare device tax
A bipartisan group of 10 senators is reintroducing legislation to kill Obamacare's levy on medical devices, wrote Elise Viebeck of The Hill. The measure from Sens. Orrin Hatch (R-UT) and Amy Klobuchar (D-MN) would repeal the healthcare law's 2.3 percent excise tax on medical products and equipment. With support from members of both parties, as well as industry, the bill is one change to the healthcare law that seems likely to pass Congress this year. “Both Republicans and Democrats understand just how bad this tax really is, and we owe it to the American people to ensure the development of life-saving medical devices are not plagued by high costs that will, ultimately, be passed on to patients,” Hatch said in a statement on Tuesday.

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New analysis challenges arguments for repealing tax on medical devices
A tax on medical devices, imposed by the Affordable Care Act, has become a prime target for Republicans, some Democrats, and a small army of lobbyists for the industry. But a new report from the Congressional Research Service challenges economic arguments that are being made to justify repealing the tax, wrote Robert Pear of the New York Times. Critics of the tax say it is destroying jobs and encouraging manufacturers to move operations overseas. But in its report, the Congressional Research Service said that many of the concerns were unfounded. The effects on jobs, research, and company profits are “relatively modest,” the report said. As a result of the tax, it estimates, 47 to 1,200 workers could lose their jobs. They account for one one-hundredth to two-tenths of 1 percent of jobs in the industry.

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Dems bring back ‘Buffett Rule’
Sen. Sheldon Whitehouse (D-RI) rolled out new tax measures aimed at the wealthy and corporations on Tuesday, as Democrats ramp up their efforts to shape the debate over tax reform, wrote Bernie Becker of The Hill. The bills from Whitehouse and Democrats aren’t new – all three, including so-called “Buffett Rule” legislation, were introduced in the last Congress and stand little chance of progressing on a GOP-controlled Capitol Hill. More than 15 other Senate Democrats, including Minority Leader Harry Reid (NV) and Minority Whip Dick Durbin (IL), signed on to the “Buffett Rule” bill. The measure is named for billionaire investor Warren Buffett and would install at least a 30 percent effective tax rate on the country’s highest earners.

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Whitehouse and Doggett introduce Stop Tax Haven Abuse Act
Another of the bills introduced by Whitehouse, along with Rep. Lloyd Doggett (D-TX), on Tuesday was the Stop Tax Haven Abuse Act, which would close a number of offshore tax loopholes, eliminate many tax incentives for US companies to move jobs and operations offshore, and modify rules on corporate inversions for businesses dodging US taxes. “Big corporations shouldn’t be allowed to play games with the tax code and benefit from shipping jobs overseas,” Whitehouse said in a statement. “This bill would force corporations that are dodging their responsibilities to pay their fair share of taxes and create an even playing field for American companies that already play by the rules.”

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Whitehouse and Cicilline reintroduce bill to end tax incentive for offshoring jobs
The third bill rolled out by Whitehouse on Tuesday reintroduces the Offshoring Prevention Act in both the Senate and House of Representatives. The bill, which was co-sponsored by Rep. David Cicilline (D-RI), would eliminate a tax break for companies that send jobs overseas and level the playing field for manufacturing businesses here at home. The Offshoring Prevention Act would require companies that send factories and jobs overseas to play by the same rules as ones supporting jobs in the United States, removing an offshoring incentive and helping local businesses compete, according to a press release. “By giving special tax deals to companies that ship jobs overseas, we put local small businesses at a disadvantage,” Whitehouse said in a statement. “Ending this costly tax giveaway will help keep jobs in America and generate nearly $20 billion in new revenue – a true win-win.”

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Pressure rises on tax-trading strategies
Fallout from government investigations into controversial trades used by investors and banks to reduce taxes is mounting, with a London hedge fund recently closing and Bank of America Corp.’s European investment-banking unit being pushed for information about the trades, wrote Jenny Strasburg of the Wall Street Journal. The investigations are focused on a type of dividend-arbitrage strategy known as “cum/ex.” Investment firms used cum/ex trades to claim rebates on withholding-tax payments despite not having actually paid such taxes in the first place. Investigators are also looking at how asset-management firms, banks, and brokerages made trades that authorities say profited by improperly exploiting European tax loopholes.

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Nominations open for 2015 ‘Top 10 Public Accounting Professionals’ awards
The National Academy of Public Accounting Professionals (NAPAP) is now accepting nominations for the 2015 “Top 10 Public Accounting Professionals” awards in each state. In addition, the NAPAP is also accepting nominations for the newly established “Top 10 Public Accounting Professional Rising Stars” awards, which will recognize outstanding accountants with less than 15 years of experience. To achieve this award, the accountants must first be nominated by industry peers or satisfied clients. The nominees are reviewed by the NAPAP research committee, which evaluates each nominee’s credentials against the award criteria, and compiles a list of finalists from which the NAPAP Board of Governors selects the top 10. Selection criteria include education, years of experience, areas of expertise, certifications, publications, awards, leadership, and client satisfaction. Click here for more information.

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2 Connecticut accounting firms merge
Two southern Connecticut accounting firms, New Haven-based Beers, Hamerman & Co. and Cohen, Burger, Schwartz & Sax of Fairfield, have merged and created a firm now known as known as Beers, Hamerman, Cohen & Burger PC, wrote Luther Turmelle of the New Haven Register. The merger will create what David Migani, managing partner of Beers, Hamerman & Co., said is a full-service firm, offering a full range of accounting, audit, and assurance services. Among the services that Beers, Hamerman, Cohen & Burger will offer are: tax preparation and planning, business advising and valuations, litigation support, forensic accounting, and estate and trust services.

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ACG acquires El Paso accounting firm in merger
Albuquerque, New Mexico-based Accounting & Consulting Group (ACG) announced Tuesday that it is merging with El Paso, Texas-based accounting firm White + Samaniego + Campbell, wrote Mike English of Albuquerque Business First. ACG said the merger with White + Samaniego + Campbell increases the firm's expertise in governmental audits, adds to its construction industry knowledge base, and also brings new expertise in the areas of internal audits and providing audit services to the gaming industry.

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Accounting firm Kroening Stangel Swetlik & Zinkel merging with Schenck
The Manitowoc, Wisconsin-based accounting and tax services firm Kroening Stangel Swetlik & Zinkel LLP has agreed to be merged into Schenck SC, a regional accounting and tax services firm based in Appleton, Wisconsin, wrote David Schuyler of the MilwaukeeBusiness Journal. The merged firm will conduct business under the name Schenck. The merger is expected to close in May. Terms of the transaction were not disclosed. Kroening Stangel Swetlik & Zinkel is led by partners and CPAs Gene Stangel, Dennis Swetlik, and Tim Zinkel. The firm's employees will move to Schenck's Manitowoc office in May.

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