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Bramwell’s Lunch Beat: Engelbert to Become First Woman to Lead US Big 4 Firm

Feb 9th 2015
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AICPA urges Senate to promptly approve pending tax treaties
In a Feb. 3 letter to Sen. Bob Corker (R-TN), chairman of the Senate Foreign Relations Committee, and Sen. Robert Menendez (D-NJ), the committee’s ranking member, the American Institute of CPAs (AICPA) urged the Senate to approve pending bilateral income tax treaties and protocols. Noting that the full Senate has not approved any income tax treaty or protocol since 2010, the AICPA wrote that it believes “income tax treaties are vital to US economic growth, as well as US trade and tax policy. Tax treaties assist in harmonizing the tax systems of treaty nations and in providing certainty on permanent establishment rules, a mechanism to relieve double taxation, and other key issues faced by businesses of all sizes that operate internationally.”

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Deloitte’s Engelbert to be first female US CEO of a Big Four firm
Cathy Engelbert, CPA, will become the first female CEO of a Big Four audit, accounting, and consulting firm in the United States, Deloitte LLP announced on Monday, wrote Ken Tysiac of the Journal of Accountancy. Engelbert, 50, has been elected as Deloitte LLP CEO and will begin her role on March 11. She will helm a firm with 65,000 US employees and operations in 90 cities focused on four business lines: consulting, audit, tax, and advisory. “My path has been, I think, a path a lot of women can foresee themselves taking,” Engelbert said. “I ... had some great mentors and really good sponsorship helping me find roles in the firm and get a lot of diverse experiences that really set me up for being elected as our CEO.” Engelbert has served since June as chairman and CEO of Deloitte & Touche LLP, the audit subsidiary of Deloitte LLP. She joined the firm in 1986.

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AICPA statement on election of Cathy Engelbert as Deloitte CEO
The AICPA issued the following statement from President and CEO Barry Melancon on Cathy Engelbert’s election as CEO of Deloitte: “This is a momentous occasion for the CPA profession. Cathy has demonstrated great ability and tremendous leadership during her career with Deloitte. Her partners have responded by making her the first female CEO of a Big Four firm in the profession’s history in the United States. Historically, ours is a profession that has promoted the blending of work and life for advancement along a variety of paths. Cathy will be a role model for future generations of female leaders in our profession.”

US companies may not be fleeing due to high tax rate
A Reuters analysis of the taxes being paid by the six largest US companies known to be doing inversions in late 2014 and early 2015 showed that, even before the deals, all were paying below the statutory US federal corporate rate of 35 percent, wrote Kevin Drawbaugh of Reuters. Most were well below it. The average effective tax rate for the six companies was 20.3 percent for 2011-13, Reuters found, using an estimation method reviewed by tax experts that was based on public data for US profits and US taxes. The analysis suggests that the surge in inversion transactions may not have had much to do with the statutory corporate income tax. Moreover, it shows Washington's current debate over business tax reform may be too focused on the statutory rate, neglecting effective rates and the incentives that companies have to shift profits abroad.

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Paul Ryan finds new, unlikely role as gatekeeper of Obama’s agenda
In an article for the New York Times, Jonathan Weisman wrote that from his new perch as chairman of the House Ways and Means Committee, Rep. Paul Ryan (R-WI) now finds himself in the unlikely position of gatekeeper of President Obama’s budget. Although he has served as a partisan warrior and foil to Obama, Ryan’s committee is at the junction where the White House and Republican agendas overlap – trade, taxes, and possibly health care. If Ryan can strike a deal with the administration and Democrats on “fast track” trade authority, an agreement with a dozen economic partners along the Pacific Rim, an expansion of the Earned Income Tax Credit (EITC), and an overhaul of the tax code, he may be the only one on Capitol Hill who could sell it to his skeptical conservative colleagues.

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Immigration furor may thwart push to expand tax credit
Both Ryan and President Obama want to expand the EITC for the working poor, but any hopes for a bipartisan compromise face a familiar obstacle – immigration reform, wrote Bernie Becker of The Hill. In his latest budget, Obama proposed giving adults without children greater access to the EITC, a benefit that in some cases gives working families refunds from the government. Ryan has sounded open to that idea, as well, noting that conservatives and Republicans have long been fans of the EITC and its work requirements. But as a Senate hearing last week showed, the strident debate over Obama’s move late last year to shield millions of illegal immigrants from deportation could undercut any efforts for EITC expansion.

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Vast majority opposes gas tax hike, poll shows
Nearly 70 percent of Americans are opposed to the idea of raising the 18.4-cents-per-gallon federal gas tax to pay for new transportation projects, according to a poll released on Friday by a group that is working to stop such an increase, wrote Keith Laing of The Hill. The Arlington, Virginia-based Freedom Partners group said that 68 percent of Americans are opposed to the idea of paying more at the pump, even if the money would be used to provide additional funding for infrastructure projects. Twenty-one percent of respondents believe that because the cost of gas is falling, now is the right time to increase the federal gas tax.

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IRS technical guidance roundup (week of Feb. 2)
The IRS issued the following technical guidance last week:

Notice 2015-12 solicits applications for allocations of the remaining available amount of the volume cap for new clean renewable energy bonds under Section 54C(a) of the Internal Revenue Code. The notice also provides guidance on the application requirements and forms for requests for volume cap allocations, and the method that the IRS will use to allocate the remaining volume cap.

Revenue Procedure 2015-17 sets forth procedures for issuing determination letters and rulings on the exempt status of qualified nonprofit health insurance issuers.

Revenue Procedure 2015-19 provides the depreciation deduction limitations for owners of passenger automobiles (including trucks and vans) first placed in service during calendar year 2015 and the amount to be included in income by lessees of passenger automobiles first leased during calendar year 2015. In addition, this revenue procedure revises the tables of depreciation limitations and lessee inclusion amounts for automobiles first placed in service or leased during 2014 and to which the 50 percent bonus depreciation applies as extended by the Tax Increase Prevent Act of 2014. These depreciation deduction limitations and income inclusion amounts are updated annually pursuant to section 280F to reflect the automobile price inflation adjustments.

HSBC hit by fresh details of tax evasion claims
UK banking giant HSBC Holdings PLC got a fresh blast of embarrassing publicity over the weekend, as a mountain of new details on its Swiss bank’s historical services for unsavory characters and tax evaders was dumped on the media, wrote John Letzing of the Wall Street Journal. The fresh details provided by former HSBC employee Hervé Falciani to the International Consortium of Investigative Journalists (ICIJ) and several media outlets illustrate the ways HSBC allegedly sheltered secret accounts for what the ICIJ called “dictators and arms dealers,” as well as rock stars. The report also describes ways the bank allegedly advised clients on ways to avoid paying taxes on their funds in their home countries, and it lists clients who are on US sanctions lists or were ousted in the Arab Spring.

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Swiss banks see progress in talks on US tax-evasion leniency
Swiss banks are making progress in negotiations with the US Justice Department on an agreement that would allow lenders to avoid prosecution in return for disclosing how they helped Americans dodge taxes, the head of an industry group said, wrote Jeffrey Voegeli of Bloomberg. The process almost derailed in September when Swiss banks balked at a number of US demands in a draft agreement that spells out how they can achieve amnesty through a disclosure program. They objected in particular to a demand that banks “cooperate fully” with “any other domestic or foreign law enforcement agency” in any future probes. “The discussions are developing favorably,” said Patrick Odier, president of the Swiss Bankers Association. “There is progress, there is willingness from the banking industry to collaborate.”

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