Pfizer abandons bid for AstraZeneca
On the final day for Pfizer to decide whether to abandon the plan, it said it did not intend to make an offer for AstraZeneca, Jenny Anderson of the New York Timesreported yesterday.
Last week, the British company rejected what Pfizer had called its final offer. The cash-and-stock bid, which valued AstraZeneca at about $119 billion, would have created the world’s largest drug company.
Pfizer had indicated that it would not pursue a hostile bid, which would have allowed AstraZeneca’s shareholders to vote on the deal without the approval of AstraZeneca’s board, Anderson noted. Under British takeover rules, Pfizer is not permitted to make another offer for AstraZeneca for six months. If AstraZeneca’s board were to agree to talks, the earliest Pfizer could offer a higher price would be in three months.
“The advances by Pfizer, which is based in New York and makes best-selling drugs like Lipitor and Viagra, pitted two of the world’s largest drug makers against each other,” Anderson wrote. “Powerful political forces on both sides of the Atlantic weighed in on corporate taxes, cancer research, and the potential effect on jobs in Britain, where an economic recovery is underway but employment remains shaky.”
[Click here to read a Bloomberg article on how dealmakers are ignoring a proposed bill in the House and Senate that would limit “inversions.”]
Forthcoming: IFRS 15 Revenue from Contracts with Customers
The new joint revenue recognition standard from the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) is expected to be released by both standard-setters on Wednesday.
According to an alert on the IASB website, IFRS 15 Revenue from Contracts with Customers will be published at the same time as FASB Accounting Standards Update, Revenue from Contracts with Customers.
“These documents are substantially the same and represent the culmination of the IASB’s and the FASB’s joint effort to improve the requirements for revenue recognition,” the IASB noted.
[Click here for AccountingWEB’s coverage of the new rules on revenue recognition.]
House GOP to Senate: Act on tax breaks
House Ways and Means Committee Chairman Dave Camp (R-MI) and his allies are pushing to revive and make permanent some of the dozens of incentives that expired at the end of last year, like the credit for business research. But GOP tax writers are hesitant to weigh in on the broader fight over amendments and floor procedure that is stalling the Senate legislation to restore the more than 50 tax breaks commonly known as extenders, Bernie Becker of The Hillreported yesterday.
Becker noted that House Republicans believe that quick action in the Senate opens up the chance for a conference committee before November's election, increasing their odds of permanent extensions.
“I’m not going to get into the specifics about their process,” said Representative Patrick Tiberi (R-OH), the chairman of a Ways and Means subcommittee that deals with taxes, according to the article. “But I would like to see the Senate pass the extenders bill – whatever it might be – so we can go to conference and get the real work done.”
Lawmakers and lobbyists say the Ways and Means Committee is scheduled on Thursday to consider extensions of several charitable provisions and an incentive, called bonus depreciation, that allows businesses to more quickly write off investments, Becker wrote.
IRS bars employers from dumping workers into health exchanges
Many employers had thought they could shift health costs to the government by sending their employees to a health insurance exchange with a tax-free contribution of cash to help pay premiums, but the Obama administration has squelched the idea in a new ruling, Roger Pear of the New York Timeswrote on May 25.
Such arrangements do not satisfy the Affordable Care Act, the administration said, and employers may be subject to a tax penalty of $100 a day – or $36,500 a year – for each employee who goes into the individual marketplace.
The ruling this month by the IRS blocks any wholesale move by employers to dump employees into the exchanges, Pear wrote.
When employers provide coverage, their contributions, averaging more than $5,000 a year per employee, are not counted as taxable income to workers. But the IRS said employers could not meet their obligations under the health care law by simply reimbursing employees for some or all of their premium costs.
Christopher E. Condeluci, a former tax and benefits counsel to the Senate Finance Committee, said the ruling was significant because it made clear that “an employee cannot use tax-free contributions from an employer to purchase an insurance policy sold in the individual health insurance market, inside or outside an exchange,” according to the article.
Credit Suisse offers map to 13 Swiss banks in US tax probe
Thirteen Swiss banks face rising stakes in their own criminal probes after Credit Suisse Group AG set a new standard for punishment in the US crackdown on offshore tax evasion, David Voreacos and Giles Broom of Bloombergwrote on May 26.
Julius Baer Group Ltd., Zuercher Kantonalbank, and the Swiss unit of HSBC Holdings Plc are among those seeking to avoid pleading guilty to helping Americans cheat the IRS – an unprecedented step taken by Credit Suisse on May 19. Their degree of wrongdoing and cooperation with investigators will help decide their fate, Assistant US Attorney General Kathryn Keneally said in an interview with Bloomberg.
“We will look at the facts and circumstances of each investigation to determine an appropriate penalty,” Keneally said, according to the article. “It should be very clear from the Credit Suisse investigation that cooperation, or the lack thereof, is an important factor.”
The guilty plea by Credit Suisse’s main bank subsidiary and $2.6 billion penalty last week marked a watershed in a campaign that has led to charges against more than 100 people since 2009, Voreacos and Broom noted. Another 100 or so Swiss banks and 43,000 US taxpayers applied to the US Justice Department to avoid prosecution by disclosing in detail how the evasion worked. The data, compiled by the IRS, has strengthened the United States’s hand against the 13 banks. With the Credit Suisse case over, the pace of the remaining cases will quicken, the Swiss Finance Minister said last week.
[Click here to read a Wall Street Journal article on the United States broadening its hunt for tax evaders. Also, the Justice Department announced today that Keneally is leaving the agency next week. Her last day is June 5. Click here to read an article from Reuters.]
Why the Credit Suisse deal comes up short
The Chicago Tribune editorial board wrote today that the Credit Suisse deal with the United States last week represents a serious setback in the government's campaign to shut down offshore tax havens, and it “must not become a template for future settlements with other foreign institutions that assist Americans in breaking the law.”
“We understand that Swiss banks are in a bind because the laws in their native land forbid them from disclosing banking secrets. Keeping secrets, even on behalf of criminals, is a cornerstone of Swiss banking tradition,” the editorial stated.
“Any foreign bank doing business in the United States, however, must comply with US law. That includes supporting our government's efforts to collect taxes from its citizens. Credit Suisse has admitted to committing tax fraud on a vast scale over a period of decades. Yet in the wake of its guilty plea, any tax dodgers banking with Credit Suisse presumably will be free to continue thumbing their noses at the IRS.”
Mr. Schumer backs a bad old idea
The editorial board of the New York Timesdoesn’t agree with New York Democratic Senator Charles Schumer’s proposal to outsource the collection of unpaid back taxes to private debt collectors, calling the plan “a budget gimmick aimed at creating jobs at a handful of collection agencies, two in upstate New York.”
The editorial board noted that the last time the government tried to privatize collections, from 2006 to 2009, a handful of firms pocketed $16.5 million. But there was no increase in federal revenue – in fact, after accounting for administrative costs at the IRS, there was a net loss for the government of $4.5 million. A pilot privatization program in 1996-97 also lost money.
“Private tax-debt collection would be wrong even if it raised money,” the editorial stated. “Collecting taxes is an inherent government function. Good governance requires that the power to tax be balanced by taxpayer rights – to privacy, high standards of service, and relief when needed. It’s hard enough to maintain a taxpayer-centered culture at the IRS. It would be infinitely harder at private collection agencies, the most complained-about industry in the financial sector.”
- CPA exam overlords seeking input from new CPAs on how to improve the exam (Going Concern)
- Bank of America resubmits smaller capital plan (Wall Street Journal)
- US investors should beware Chinese IPOs (Financial Times)
- Alibaba coming to US shows strengths and risks of China bets (Bloomberg Businessweek)
- Geithner’s dubious accounting (Bloomberg View)
- North Carolina Republicans move to require tax cuts in cities (Bloomberg)
- Billionaire homeowners spend bundles on property taxes (Los Angeles Times)
- Tax Geek Tuesday: Hot assets and the sale of partnership interests (Forbes)
- At last, the final 3.8% net investment income tax regulations (Forbes)
- Thomas Piketty and our US estate tax (Huffington Post)
- Judge: Man owing $330K threatened IRS agent’s life (ABC News)
- Don’t overlook state tax breaks for military personnel (Don’t Mess With Taxes)