Bramwell’s Lunch Beat: Lawmakers Mull ‘Patent Box’ Tax Break on Researchby
Watchdog: IRS wrongly gives billions in education credits
The IRS is wasting billions of dollars a year by giving education tax breaks to students who are ineligible or haven't filed the correct paperwork, the Treasury Inspector General for Tax Administration (TIGTA) said on Tuesday, wrote Bernie Becker of The Hill. The IRS might have wrongly handed out more than $5.6 billion in education incentives in 2012 to some 3.6 million taxpayers, according to a report. TIGTA said it had previously warned that billions of dollars in education credits were being mishandled, and the IRS still didn't have a good system in place. In a statement, the IRS said it thought the inspector general was overstating the amount of money that was wrongly being given out for education credits, and the agency had already “taken a number of steps” to protect the incentives. The IRS asked Congress to both streamline the preferences for education and to give it more tools to check student eligibility for the incentives.
Lawmakers embrace patent tax break
Leading congressional tax writers in both parties are getting behind a major new tax break for profits made on patent portfolios as part of their ongoing effort to make the tax code business-friendlier, wrote John D. McKinnon of the Wall Street Journal. Various versions of the tax break, known as a “patent box” or “innovation box,” already have been adopted by many developed countries. A patent box imposes a special and ultralow tax rate on business income that is derived from intellectual property. A major aim of patent boxes is to give companies more incentive to keep research – and the resulting innovations – at home. Many American firms do research in the United States, but hold the resulting patents in tax-haven countries, where the profits can avoid the relatively high US corporate tax rate indefinitely. “Whether it’s high tech, pharma, or high-end manufacturing, we believe research is best kept here,” said Sen. Charles Schumer (D-NY), one of the main advocates of the patent box idea for the United States.
GOP senators to SEC Chief Mary Jo White: No more money needed to examine more advisors
Republican senators on Tuesday pushed US Securities and Exchange Commission (SEC) Chairman Mary Jo White to do more with the agency’s current budget, which they say has received significant recent increases, instead of asking for more funding to strengthen investment advisor oversight, wrote Mark Schoeff Jr. of InvestmentNews. White defended the SEC’s $1.72 billion budget request for fiscal 2016, a 15 percent increase from current levels, in front of the Senate Appropriations Subcommittee on Financial Services and General Government. She said a funding priority is to hire hundreds of more investment advisor examiners to increase the agency’s 10 percent annual examination rate. Sen. John Boozman (R-AR), chairman of the subcommittee, suggested the SEC should do more with its recent funding increases. White argued that more funding for the agency is necessary to boost advisor exams.
Paper companies’ bid to cut tax bills curtailed by IRS
Packaging companies won’t be able to separate their containerboard operations into tax-advantaged vehicles, under rules proposed on Tuesday by the IRS, wrote Richard Rubin of Bloomberg. The rules include a narrow definition of the timber-related activities that can be housed inside a master limited partnership (MLP), which doesn’t pay corporate-level taxes in the United States. That language limits paper companies’ ability to mimic the tax structure used by oil pipelines. The IRS noted that processing of timber includes making sawdust, untreated lumber, and woodchips. The tax break is unavailable once chemicals or foreign substances are added and it’s turned into paper, pulp, and plywood. “This is something that no one really expected,” said Robert Willens, a tax consultant in New York, who added that the biggest surprise is “it certainly eliminates the possibility of putting containerboard activities into an MLP.”
Overseas Americans ramp up bid for tax relief
Organizations representing millions of Americans who work abroad are storming Capitol Hill in a push for tweaks to tax and banking policy, wrote Megan R. Wilson of The Hill. Some, such as the American Chamber of Commerce (AmCham) Abu Dhabi, are stepping up their Washington advocacy, visiting with business groups, lawmakers, and administration officials, just as Congress grapples with tax reform. Their message: Well-meaning policies aimed at stopping money laundering and offshore tax evasion have translated into unworkable realities for Americans overseas. AmCham Abu Dhabi recently took its message to tax-writing committees in Congress and met with US Treasury Department officials, explaining the costly process of doing taxes and frequently troublesome task of basic banking. “We’re looking to make Americans working abroad more competitive,” said Sharief Fahmy, chairman of AmCham’s public affairs committee for the United States and the United Arab Emirates.
ISS challenges some Mondelez directors over past accounting errors
Mondelez International Inc. said that the biggest proxy adviser in the United States is recommending shareholders withhold votes from the board’s lead director and members of the company’s audit committee, wrote Lisa Beilfuss of the Wall Street Journal. According to a Mondelez filing with the SEC, Institutional Shareholder Service (ISS) is challenging lead director Mark Ketchum and four audit committee directors for what it calls material weakness in the company’s internal control for income tax accounting. ISS said the audit committee failed to provide sufficient oversight over the company’s financial reporting process during the past year. Mondelez, maker of Oreo cookies and Ritz crackers, disagreed with the ISS, saying that in 2013 it identified certain tax-related errors in prior interim and annual periods, but the errors weren’t material to any previously reported financial results.
Recent AccountingWEB Articles That You Can’t Afford to Miss:
Creating a Psychologically Fit Firm Benefits Employees – and the Bottom Line
Today’s CPAs expect employers to minimize workplace stress, promote a healthy lifestyle, and keep up firm morale.
Tax Credit Impacted Refunds of Many Obamacare Customers, H&R Block Says
Two-thirds of Advance Premium Tax Credit recipients owed an average of $729; potential refunds slashed by 33%.
FASB Seeks Public Comment on One-Year Deferral of New Revenue Recognition Rule
US standard-setter issues proposed Accounting Standards Update on effective date delay; comment period ends May 29.
Clarified Auditing Standards: Assessing Risks of Material Misstatement – Part 3
A look at the requirements of AU-C Section 315 that auditors need to understand regarding an entity’s internal control.