Bramwell’s Lunch Beat: IRS Rehired Ex-Workers Who Had Bad Behavior, TIGTA Saysby
SEC, Big Four accounting firms in China settle dispute over audit documents
The Chinese affiliates of the Big Four accounting firms agreed on Friday to pay $500,000 each to settle a dispute with the US Securities and Exchange Commission (SEC) over their refusal to turn over audit documents to the SEC about US-traded Chinese companies that were under investigation, wrote Michael Rapoport of the Wall Street Journal. The firms – the Chinese arms of PwC, Deloitte Touche Tohmatsu, KPMG, and EY – also must take specific steps to satisfy SEC requests for similar materials over the next four years. But the settlement spares the firms from a six-month suspension from auditing US-traded companies.
IRS rehired hundreds of former workers with behavior problems – audit
Poor screening led the IRS to rehire hundreds of ex-workers with records of bad behavior, according to the Treasury Inspector General for Tax Administration (TIGTA), wrote Jason Lange of Reuters. Between 2010 and 2013, the IRS gave jobs to 323 people who had displayed unsavory conduct during prior stints at the agency, according to a TIGTA report released on Thursday. The audit looked at roughly 7,000 workers rehired in the period to fill mostly temporary positions. Among the 323, five workers had “serious misconduct” issues, a category that includes threats and sexual harassment. Another five had willfully failed to file federal tax returns. Seventeen falsified employment forms or other documents. IRS Human Capital Officer Daniel Riordan said the agency looks into people's backgrounds before hiring them, and some “issues” may have happened so long ago they don't pose a risk.
Minnesota stops taking TurboTax returns due to possible fraud
Minnesota has stopped accepting tax returns filed through TurboTax because of possible fraudulent activity, wrote Mary Lynn Smith and Ricardo Lopez of the Minneapolis Star Tribune. Minnesota Revenue Department officials made the urgent announcement late Thursday after two taxpayers reported that they had logged into Intuit’s TurboTax to file but were advised a return had already been filed. Because it could indicate fraud, state officials are blocking new TurboTax returns from coming in. They also are reviewing a “couple of thousand” returns that have already been filed using TurboTax. “If we identify a problem, we will contact the taxpayer,” said Revenue Commissioner Cynthia Bauerly. Revenue Department officials said they were made aware of the issue with TurboTax on Wednesday night and “worked around the clock” to investigate the problem.
Utah Tax Commission: Thousands of potential fake returns likely to delay tax refunds
The Utah State Tax Commission said on Thursday that fraudsters are using stolen personal information to file fake tax returns for real Utah residents, hoping to steal refund money, wrote Lee Davidson and Dan Harrie of the Salt Lake Tribune. The commission has identified 28 fraudulent filings so far, but has flagged 8,000 others as potential frauds. Extra screening to detect fake returns means Utah residents can likely expect a delay in processing of their refunds, commission spokesman Charlie Roberts said. He noted the commission found that personal information has been stolen from previous returns filed through third-party software. The problems were found through the commission's fraud-detection systems. It also said it was contacted by some taxpayers who tried to file returns through TurboTax who received a message that their return had already been filed.
TurboTax temporarily halts e-filing in all states amid fraud concerns
As a result of the instances of fraud reported in Minnesota, Utah, and several other states, Forbes tax contributor Kelly Phillips Erb reported on Friday that Intuit has temporarily halted the transmission of all state e-filing tax returns. Intuit will be working with the states today to begin turning transmissions back on. “We understand the role we play in this important industry issue and continuously monitor our systems in search of suspicious activity,” said Intuit President and CEO Brad Smith. “We’ve identified specific patterns of behavior where fraud is more likely to occur. We’re working with the states to share that information and remedy the situation quickly. We will continue to engage them on an ongoing basis in an effort to stop fraud before it gets started.” Intuit stressed that this action does not affect the filing of federal income tax returns.
Manufacturing association CEO blasts Obama budget
The head of the most influential manufacturing trade group in the United States lambasted President Obama’s 2016 budget proposal on Thursday, saying the $4 trillion plan is a “plan for losing,” wrote Lauren Abdel-Razzaq of the Detroit News. During a speech at the Detroit Economic Club, Jay Timmons, president and CEO of the National Association of Manufacturers, said, “If the administration’s taxing and spending plan becomes law, business headquarters will be lost and investments will go elsewhere.” Instead of the president’s proposed one-time 14 percent tax on overseas corporate earnings, which will go toward funding US transportation projects, Timmons called on lawmakers to adopt a plan that focuses on a more streamlined and competitive tax code.
Hasbro pays Mexico tax authorities $65 million in settlement after probe
The world's No. 2 toymaker, Hasbro Inc., has paid $65 million to Mexican tax authorities in a settlement, a spokeswoman for the company said on Wednesday, following a probe into the company for possible tax avoidance, wrote Alexandra Alper of Reuters. The deal resolves outstanding tax assessments for all open years from 2000 to 2013, spokeswoman Julie Duffy said. Last year, Mexico said it had launched a probe of 270 companies for allegedly exploiting loopholes that have led to the loss of potential tax revenue for years. Reuters reported in September 2014 that Hasbro, along with household product maker Procter & Gamble Co., were at the heart of the probe.
Investors and companies should talk revenue recognition: FASB member
Investors have an opportunity to influence how much information public companies disclose about how they book sales, according to the annual outlook released on Thursday by the Financial Accounting Standards Board (FASB), wrote John Kester of the Wall Street Journal’s CFO Journal. Many businesses, notably in the telecom, auto, and computer industries, will start to provide more details in their next annual reports. Thousands of companies are changing the way they recognize revenue in order to comply with new FASB standards effective Jan. 1, 2017. Companies have the choice to explain the new models to investors in the body of their reports, or relegate it to footnotes, according to FASB member Marc Siegel. He encouraged investors and businesses to “begin an ongoing dialogue about how companies will communicate about the new financial language of revenue.”
Apollo-backed Athene yanks report amid material weakness
Athene Holding Ltd., the insurer tied to Apollo Global Management LLC, withdrew its first-quarter financial results amid flaws tied to its accounting for reserves and taxes, wrote Zachary Tracer of Bloomberg. The data for the period “can no longer be relied upon and have been removed from the AAA website, effective today,” Athene CFO Brenda Cushing said in a letter published Thursday on the website of Apollo Alternative Assets. The company’s review will probably show an increase in net income and book value, she wrote. Athene is working to improve financial reporting as it plans for the possibility of a public offering. The lapses relate to its control over financial reporting tied to the purchase of a US life and annuity business from Aviva PLC in 2013.
Broadwind Energy settles with SEC over accounting violations
Broadwind Energy will pay $1 million to settle civil charges over alleged accounting and disclosure violations that the SEC said kept investors in the dark about reduced business and a decline in the company's financial prospects, wrote Sarah N. Lynch of Reuters.