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Bramwell's Lunch Beat: SEC Suffering From Congressional Rulemaking Fatigue

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Jun 18th 2015
Staff Writer and Editor AccountingWEB
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CFOs mindful of ‘Cadillac Tax’ in upcoming union talks
For companies with unionized workforces, the excise tax on high-cost healthcare benefits set for 2018 is a pressing concern for finance chiefs, as contract negotiations with several unions begin this year, wrote Kimberly S. Johnson and Vipal Monga of the Wall Street Journal’s CFO Journal. For example, Verizon Communications Inc. is set to begin negotiations for a new contract with its unions next week. The issue of health plans will be the subject of “very difficult negotiations,” said Verizon CFO Fran Shammo, who added that the so-called Cadillac tax will be “a huge deal” for the company. He said the company’s negotiators will be trying to redesign its plans, including finding ways to encourage more workers to use urgent-care centers instead of more expensive hospital emergency rooms. “It’s something we have to manage,” he said.

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SEC should set own agenda, director says
Emily Chasan of CFO Journal wrote that the US Securities and Exchange Commission (SEC) is starting to tire of writing rules for Congress. The 2010 Dodd-Frank financial reforms had 90 different provisions requiring the SEC to write rules. It was quickly followed by the 2012 Jumpstart Our Business Startups (JOBS) Act, which called for at least 10 additional rules. Between the JOBS Act and Dodd-Frank, what Congress has directed the SEC to do has been “pretty breathtaking,” said Keith Higgins, director of the SEC’s Division of Corporate Finance. “I think that the commission could probably set its own course,” he added. Higgins, who joined the SEC two years ago, said he’s spent most of his tenure writing congressionally-mandated rules on topics ranging from conflict minerals disclosure to those examining the ratio of chief executive-to-median worker pay. But he said he wasn’t sure whether all the rules Congress required “have really been all that helpful in setting the SEC’s agenda.”

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Bill with $838 million IRS cut advances in House
The House Appropriations Committee on Wednesday advanced a spending bill that would cut $838 million from the IRS for fiscal 2016, wrote Rebecca Shabad of The Hill. The reduction would be more than double the $350 million Congress cut from the agency’s budget for 2015. For the next fiscal year, which begins on Oct. 1, the IRS would receive $10.1 billion, which is below the agency’s sequester limit and returns the agency to funding levels last seen in 2004. Rep. Ander Crenshaw (R-FL), the chairman of the subcommittee that oversees the bill, admitted the “brunt” of the cuts targeted the IRS and the General Services Administration. “Frankly, they both have recent histories of inappropriate behavior,” he said. Democrats slammed the cuts to the IRS. “These efforts to harm the IRS ultimately hurt the taxpayers by reducing the deficit and reducing taxpayer services,” said Rep. Jose Serrano (D-NY), the ranking member of the subcommittee that compiled the bill.

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Report: Budget cuts weaken IRS operations
Speaking of the IRS budget being slashed, a report from the Treasury Inspector General for Tax Administration on Wednesday found that the recent IRS budget cuts are taking a taxpayer-unfriendly toll. Lower IRS budget funding and collection resources have led to declines in taxpayer service, tax case closures, and collections of overdue federal taxes, according to the report. The IRS's annual budget was cut by more than $1.2 billion between federal fiscal years 2010 and 2015, the report said. During that period, budget reductions and reassignments resulted in a 21 percent reduction of Automated Collection Service representatives and a 28 percent decline in Field Collection revenue officers, staffers who pursue nonpayment cases. Also, taxpayers who managed to get their calls answered spent an average of 15.9 minutes waiting for a contact representative in 2014, up from 8.1 minutes in 2011.

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House panel clears state tax bills
The House Judiciary Committee on Wednesday approved a trio of bills dealing with states' taxing powers in the increasingly digital economy, wrote Bernie Becker of The Hill. One measure, which passed the panel by voice vote, would prevent consumers from getting taxed by multiple states for the same goods or services. Another bill, the Business Activity Tax Simplification Act, would only allow states to tax a company if it has physically been doing business in the state for at least two weeks. Previous versions of the bill passed the committee in 2006 and 2011, but didn't get a vote on the House floor. The committee also passed a bipartisan measure that would only allow states to charge income taxes on nonresidents if they worked in the state for at least 30 days.

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Ryan: ‘I’m against raising the gas tax’
House Ways and Means Committee Chairman Paul Ryan (R-WI) said on Wednesday that he is “against raising the gas tax” as lawmakers seek a solution for the looming gap in highway funding, wrote Keith Laing of The Hill. Transportation advocates have pushed for a gas tax increase to help pay for a long-term extension of an infrastructure funding measure that is scheduled to expire on July 31. But Ryan started off a long-awaited hearing on the topic of infrastructure funding by ruling out such a hike. “Ever since 2008, the [highway] trust fund has spent more than it took in. And the reason is simple: People have been using less gas. They’re driving more fuel-efficient cars. You get a lot more miles to the gallon than you used to. And so gas just doesn’t track use as well as it used to. And we can’t just chase fuel efficiency with higher taxes,” he said. The gas tax, currently 18.4 cents-per-gallon, has not been increased since 1993.

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