Bramwell’s Lunch Beat: The Tax Plan Obama’s Going to Unveil Later Tonightby
KPMG: Financial executives express concerns about regulatory mandates
More than half of corporate finance executives rank future regulatory mandates as their highest compliance concern, according to a new survey by KPMG LLP. Of the 450 financial reporting executives KPMG recently polled, nearly 51 percent pointed to future regulations as a key concern, with another 16 percent citing the navigation of current regulatory compliance issues as a top worry. Tax compliance (22 percent) and data infiltration and IT security (11 percent) also were identified as leading concerns. For year-end reporting, 32 percent rated the new revenue recognition accounting standard as their top concern, and almost 64 percent of those surveyed said they still had not settled on a way to adopt the new standard.
5 things about Barack Obama’s Robin Hood tax plan
President Obama would take from the rich and give to everyone else as part of a sweeping tax plan he intends to push on Tuesday in his State of the Union address, wrote Brian Faler of Politico. The Robin Hood-style proposal would raise taxes on capital gains and close various breaks for the wealthy in order to finance more generous education, family, and retirement benefits for those further down the income ladder. However, the president’s proposal faces long odds in the Republican-controlled Congress, where lawmakers have bitterly complained about a string of recent tax increases on the wealthy. The five key components of the tax plan are increasing the capital gains tax, expanding middle- and low-income family tax credits, extending education tax breaks, targeting the “Mitt Romney loophole,” and imposing a seven-basis-point fee on the nation’s biggest banks. In his article, Faler explains each of the five components in greater detail.
President’s $110 billion bank tax would hurt economy, financial industry group says
The Securities Industry and Financial Markets Association (SIFMA) said President Obama’s plan to raise $110 billion over the next decade through a new tax on financial companies could stifle economic growth and make banks less likely to lend, wrote Jesse Westbrook of Bloomberg. SIFMA said the seven-basis-point fee the proposal would impose on the nation’s biggest banks, investment firms, and insurers is an unnecessary attempt to rein in risk on Wall Street, following the approval of the 2010 Dodd-Frank Act. The “targeted tax increase on America’s most productive financial institutions could have far-reaching, unintended consequences that will curtail economic growth,” SIFMA President and CEO Kenneth Bentsen said in a statement.
Dems ready new push on offshore tax deals
Congressional Democrats are preparing new efforts to curb the offshore tax deals that drew the ire of President Obama last year, wrote Bernie Becker of The Hill. Senate Minority Whip Dick Durbin (D-IL), Sen. Jack Reed (D-RI), Rep. Sandy Levin (D-MI), and Rep. Lloyd Doggett (D-TX) will introduce legislation on Tuesday seeking to stop the maneuver known as inversions, in which companies can slash their tax bill by shifting their legal address abroad. Levin and Doggett will be reintroducing a bill they first rolled out last year, Democratic aides said. That measure sought to essentially ban US multinational corporations from taking over a smaller foreign competitor and reincorporating offshore. Durbin and Reed are expected to introduce a companion bill at a news conference on Tuesday, featuring all four Democratic lawmakers.
EU considers taxing Google, other US Internet firms
The European Union (EU) is considering imposing a tax on US Internet companies, such as Google Inc., as part of a new plan to build a single digital market across the region, wrote Frances Robinson and Tom Fairless of the Wall Street Journal. EU digital chief GÃ¼nther Oettinger said in an interview on Monday that Europe is currently a “loser” in the IT sector but that the situation could be reversed with investment and by creating a level playing field for all digital companies. He stressed the importance of maintaining the region’s edge in the automotive sector, which looks set to be disrupted by Internet companies. “Taxing is an option but not the decided solution,” Oettinger said of the EU’s plan for a digital single market. The European Commission, the bloc’s executive arm, is expected to announce the plans by May. Asked whether Google might be taxed for showing copyright material, he said yes.
HP-Autonomy accounting probe dropped by UK prosecutor
A two-year battle between the managers of Hewlett-Packard Co. (HP) and Autonomy Corp. over the $10 billion takeover of the software company has come to an end in the United Kingdom after the Serious Fraud Office (SFO) closed its investigation on Monday, wrote Suzi Ring of Bloomberg. The SFO dropped its probe after finding “insufficient evidence for a realistic prospect of conviction,” the agency said. The US Department of Justice is still investigating, and the SFO said it gave its files to the US authorities. HP has alleged that before it agreed to buy Autonomy in 2011, the Cambridge, England-based software company gave an overly rosy representation of its financial health. The next year, HP wrote down $8.8 billion connected to the acquisition and said more than $5 billion was the result of accounting improprieties by Autonomy.
Established markets boost Grant Thornton revenue
Grant Thornton International Ltd. announced on Monday revenue of $4.7 billion for its fiscal year ended in September, fueled by a 4.6 percent jump in US dollar revenue, wrote John Kester of the Wall Street Journal’s CFO Journal. The audit firm’s worldwide workforce rose to 40,197, up 4.3 percent from the previous financial year. “It’s a combination of both organic and merger [growth],” said Ed Nusbaum, global CEO for Grant Thornton. The firm added member firms from Afghanistan, Myanmar, and Tanzania, among other countries, but “had growth even in the more established markets like the United States, Canada, and particularly in the United Kingdom,” Nusbaum said. The Americas region took home more revenue than any other area with nearly $2.1 billion, a 2.8 percent jump from the previous financial year. Europe came next with a 6.3 percent rise to almost $1.9 billion.
New IAASB standard changes auditor’s reporting model
New international auditing standards issued on Jan. 15 are designed to change how auditors communicate about their work in their reports, wrote Ken Tysiac of the Journal of Accountancy. Auditors of listed entities’ financial statements will be required to communicate “key audit matters” in auditor’s reports, according to the standards released by the International Auditing and Assurance Standards Board (IAASB). The key audit matters will be those that the auditor views as most significant, with an explanation of how they were addressed in the audit. The IAASB also has increased auditors’ focus on going-concern matters and added more transparency in the auditor’s report about the work the auditor performs.
Sainsbury’s drops PwC after 20 years
Sainsbury’s has dropped PwC as its auditor of 20 years while the Big Four firm faces an investigation into its role in the 263 million-pound Tesco accounting scandal, wrote Robert Lovell of AccountingWEB UK. EY will now audit the supermarket giant’s accounts from March after a formal tender process was conducted last year, as stated in its 2014 accounts. Sainsbury's said it decided to drop PwC following a recommendation by its audit committee and as a result of increased audit rotation. A Sainsbury’s spokesman also said the company flagged its intention to review its auditors last year and the decision was unrelated to events at Tesco. Last month, the Financial Reporting Council launched a probe into Tesco's accounting black hole and audit work undertaken by PwC. The matter is also being investigated separately by the Serious Fraud Office.
IRS technical guidance roundup (week of Jan. 12)
The IRS issued the following technical guidance last week:
Notice 2015-3 provides rules for claimants to make one-time claims for the retroactively extended 2014 biodiesel mixture and alternative fuel excise tax credits. It also provides guidance for claimants to claim the other retroactively extended credits for 2014, including the alternative fuel mixture excise tax credit.
Notice 2015-04 provides guidance on the energy credit under section 48 of the Internal Revenue Code. Specifically, this notice provides performance and quality standards that small wind-energy property must meet to qualify for the energy credit under section 48.
Notice 2015-06 describes the rules for filing Form 8922, Third-Party Sick Pay Recap, an annual form filed with the IRS, which replaces third-party sick-pay recaps that were filed with the Social Security Administration. Form 8922 is used to report total amounts of certain sick pay paid to employees by a third party (an entity other than the employee’s employer). Form 8922, which applies with respect to sick pay paid on or after Jan. 1, 2014, must be filed if liability for the payment and reporting of Federal Insurance Contributions Act (FICA) taxes with respect to third-party sick pay is split between the employer and a third party under applicable regulations. The notice also describes the requirements for payment and reporting of FICA taxes, Federal Unemployment Tax Act taxes, and income tax withholding with respect to sick pay.
Notice 2015-08 provides guidance on section 45R for certain small employers that cannot offer a qualified health plan (QHP) through a Small Business Health Options Program (SHOP) exchange because the employer’s principal business address is in a county in which a QHP through a SHOP exchange will not be available for the 2015 calendar year. (The counties, which are listed in the notice, are all in Iowa.)
Revenue Ruling 2015-2 sets forth the prevailing state assumed interest rates that are used by insurance companies to determine their reserves under section 807 for contracts that are issued in 2014 and 2015. The ruling supplements, in part, Rev. Rul. 92-19.
Revenue Procedure 2015-13 updates and revises the general procedures under § 446(e) of the Internal Revenue Code and § 1.446-1(e) of the income tax regulations to obtain the consent of the commissioner of internal revenue to change a method of accounting for federal income tax purposes. Specifically, this revenue procedure provides the general procedures to obtain the advance (nonautomatic) consent of the commissioner to change a method of accounting and provides the procedures to obtain the automatic consent of the commissioner to change a method of accounting described in Rev. Proc. 2015-14, 2015-5 I.R.B., (or successor) (list of automatic changes).
Revenue Procedure 2015-14 provides the list of automatic changes to which the automatic change procedures in Rev. Proc. 2015-13, 2015-5 I.R.B., (or successor) apply. The definitions in section 3 of Rev. Proc. 2015-13 apply to this revenue procedure.
Revenue Procedure 2015-15 provides the 2015 monthly national average premium for qualified health plans that have a bronze level of coverage for taxpayers to use in determining their maximum individual shared responsibility payment under § 5000A(c)(1)(B) of the Internal Revenue Code and § 1.5000A-4 of the income tax regulations.
Poll: Personal finances dramatically improve
People’s personal financial situations have improved dramatically compared to a year ago, according to a Gallup survey released on Jan. 16, wrote Rebecca Shabad of The Hill. Forty-seven percent said they are financially better off now, while 28 percent said they are worse off. A year ago, only 35 percent said their situations were improving and 21 percent said they were getting worse. Nearly two-thirds of the public said they expect to be better off a year from now, and only 15 percent expect to be worse off. The worst assessment Gallup measured in the last 40 years was in May 2009, when more than half said their situations were worse and 23 percent said they were better than a year earlier.