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THIS WEEK'S TOP NEWS
- Progress at PCAOB; Congress Drops PCAOB Salary Caps
- E&Y 'Vindicated' in $4.5 Billion Law Suit
- Firms Face More Lawsuits Over Tax Shelters
- Sprint CEO Fears Losing Everything in IRS Audit
- SEC Requires Analysts to Certify Reports
- Controversy Over TurboTax 2002
- New Report Says State Tax Systems Need Revamping
- Amnesty Program Leads to Online Sales Tax Collection
- Senate Banking Committee Approves Donaldson For SEC Chair
- New Tax Laws Favorable to Home Office Workers
"To inform, to enrich, to enlighten, to entertain."
One hundred years ago today, February 14, 1903, Congress passed legislation that gave birth to the Department of Commerce and Labor, as well as the Bureau of Corporations. These departments were a visible symbol to the American public that President Teddy Roosevelt was serious about clamping down on business corruption and establishing processes to cleanse corporate America.
On creating these arms of government, Roosevelt wrote, "The legislation was moderate. It was characterized throughout by the idea that we were not attacking corporations, but endeavoring to provide for doing away for any evil in them."
And so, here we are, 100 years later. Enron, WorldCom and a slew of other scandals has again raised the ire of the American public, and Congress has again taken measures to clamp down on business corruption and cleanse corporate America. And, sadly, chances are that 100 years from now the government will be dealing with some new wave of corporate scandals as well. But maybe we can learn from our mistakes this time so history does not have to repeat itself. Again.
Michael Platt, CEO
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THIS WEEK'S TOP NEWS
Charles Niemeier is defending the timetable of scheduled work of the Public Company Accounting Standards Board, indicating that reviews of the Big Four firms will happen "as much ... as possible" in 2003. Meanwhile, Congress has dropped a proposed amendment to cap the salaries of PCAOB Board members, leaving untouched the $452,000 salary level that the Board has voted itself.
Ernst & Young breathed a sigh of relief this week as a judge threw out two out of three of the claims made against it in a negligence case brought against the Big Four firm by Equitable Life. Had it been successful, the suit could have cost the accounting firm $4.5 billion in damages.
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Big Four firms Ernst & Young and KPMG are being sued by clients for selling tax shelters that have been found by the Internal Revenue Service to be illegal tax evasion strategies. Meanwhile shelter participants are relying on law firms to free them from the burden of paying penalties should the shelters be found to be illegal.
William T. Esrey, who recently resigned as CEO of Sprint Corporation, fears for his financial future as he places his fate in the hands of the Internal Revenue Service. Although the former executive expects Sprint to pay him $1 million per year for the next three years, that sum won't go far if he is charged a projected $63 million in taxes as well as interest and penalties.
TAX TIP: Roth IRAs
Confused about whether you can contribute to a Roth IRA? The IRS suggests checking these simple rules.
Stock analysts will now have to certify the truthfulness of their research reports, under a recent unanimous ruling by federal regulators.
The reviews of Intuit's TurboTax 2002 are in and users are giving the perennially popular income tax software two thumbs down. At issue is C-Dilla software, commonly known as spyware, which Intuit installed to stop illegal copying of TurboTax.
"2003 TAX CALENDAR"
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A new report, "The Way We Tax: A 50-State Report," produced by the staff of Governing magazine, points out weaknesses in state tax systems across the country. "The vast majority of state tax systems are inadequate for the task of funding a 21st century government," the authors begin. "Many of those tax systems are also unfair."
Pressure by cash strapped states with increasing state tax collecting authority has resulted in an amnesty program for some major retailers turning a new chapter in the development of the Internet. On February 3, 2003, some online retailers began charging sales tax for online purchases, regardless of the state of residence of the customer.
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This week, The Senate Banking Committee approved the nomination of William H. Donaldson as the next chairman of the Securities and Exchange Commission. The vote now goes to the complete Senate. It is expected that the vote before the complete Senate will take place this week.
In 1997 there were changes made to the tax law regarding the taxation of gains on the sale of a personal residence. Now, the Internal Revenue Service has issued regulations that clarify those 1997 changes. Tax preparers should go back over their clients' records for the past three years to determine if any changes are necessary as a result of these new regulations.
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"To inform, to enrich, to enlighten, to entertain."