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Bramwell's Lunch Beat: 'Cadillac Tax,' AICPA Can Challenge IRS, More on Materiality

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Nov 3rd 2015
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Battle over ‘Cadillac tax' heats up
Longtime opponents of the Obamacare “Cadillac tax” met with lawmakers last week with a new message: We're willing to compromise, wrote Sarah Ferris of The Hill. In a fly-in visit with key members and committee staff, employer benefits lobbyists went in seeking a more politically viable solution than full repeal. Rather than eliminating the tax entirely, they pitched exempting the contributions that are made to employers' health savings accounts and flexible spending accounts, which could otherwise be subject to the 40 percent excise tax. Unless that happens, those accounts – which allow people to save tax-free – will cease to exist, said Bill Sweetnam, legislative director for the Employers Council on Flexible Compensation. “I think that while there is an overwhelming agreement that something must be done on the Cadillac tax, there is also the political reality that full repeal is going to be very difficult to do,” he added.

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Court switches gears, says AICPA can sue IRS over tax preparer credential
Kelly Phillips Erb of Forbes wrote that an appellate court has overturned a ruling made last year that stopped the American Institute of CPAs (AICPA) from challenging the IRS's new voluntary program to “credential” tax preparers. The appellate court found that the AICPA “has adequately alleged the program will subject its members to an actual or imminent increase in competition” and thus “it therefore has standing to pursue its challenge.” The AICPA had initially called the program “unlawful and improper” and sent a letter of opposition to IRS Commissioner John Koskinen. The AICPA voiced concern that the program “would cause significant legal problems that may ultimately frustrate the IRS's goals, confuse the public, and lead to litigation,” and alleged that the IRS did not have the statutory authority to move ahead with the program. In July 2014, the AICPA officially filed suit to stop the program.

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AICPA, CIMA propose deeper partnership
Building on their existing joint venture, and based on environmental trends and demographic shifts, the AICPA and the Chartered Institute of Management Accountants (CIMA) are proposing to create a new association while preserving their existing membership bodies, according to the Journal of Accountancy. The association would integrate operations, strategy, and management of the two organizations to further advance advocacy and achieve economies of scale, thereby driving enhanced support for and promotion of both public and management accounting. Under the current proposal, AICPA members would remain members of the AICPA and be awarded membership in the new association as part of their regular AICPA dues. CIMA members would similarly remain members of CIMA and be part of the new association. Creation of the proposed association would require an affirmative member ballot for both the AICPA and CIMA.

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Firms, regulators try to sort out what's worth disclosing to investors
Emily Chasan and Samuel Rubenfeld of CFO Journal wrote that finance chiefs are preparing for changes in one of their most fundamental tasks: figuring out what's important enough to tell shareholders. Regulators in the United States and abroad are tinkering with the concept of “materiality,” or how to determine what information is necessary for companies to disclose publicly. For companies, the sorting process is costly and complex, partly because what's considered “material” varies from regulator to regulator. Congress and the Supreme Court also have their own ideas. Some standard-setters want companies to sharpen their focus to avoid overwhelming investors with useless information. Business groups, including the US Chamber of Commerce, say they plan to press the issue this year because of the growing complexity of deciding what information is crucial to keeping shareholders in the loop.

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Quick Links

  • Are accounting firms accruing management debt off-balance sheet? (Going Concern)
  • Learning from Andersen: Opportunities and pitfalls in a long-term audit career with the Big 4 (Going Concern)
  • Valeant: Why Enron-era accounting never really died with Enron (Fortune)
  • Lower tax rates, territorial regime are still priorities, former Ways and Means chair tells AICPA (Journal of Accountancy).
  • Republicans' talk of taxes leaves much unsaid (New York Times)
  • Cruz asks feds to save documents in IRS probe (The Hill)
  • How tax reform affects small business (Roll Call)
  • What places benefit most from the Earned Income Tax Credit? (Tax Foundation)
  • The IRS could improve EITC compliance by regulating tax preparers (TaxVox)
  • Election 2015: Americans vote this Tuesday and it matters (TaxVox)
  • Bipartisan tax reform is possible: Lessons learned from President Bush's reform panel (TaxVox)
  • Pascal Saint-Amans: BEPS cheerleader, architect, or both? (Tax Analysts)
  • Why do we still have unpublished opinions? (Tax Analysts)
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