Bramwell’s Lunch Beat: Good Luck Calling the IRS for Help This Filing Seasonby
Why is New Mexico losing so many accountants?
Over the last decade, the number of CPAs employed in New Mexico has declined, according to data collected by Albuquerque Business First, wrote Sal Christ. Some firms have seen a decrease by as much as 50 percent over the last 10 years. For example, KPMG’s employment number for CPAs was 55 in 2002, but dropped to 40 CPAs in 2014. “The job market for CPAs, in many ways, mirrors the broader corporate economy, so as we see the Albuquerque and New Mexico economies begin to rebound from the economic downturn, I think it is likely that you will see a corresponding growth in the market for CPAs,” said Steve Keene, managing partner at Moss Adams.
Question for the IRS? Hold, please.
Taxpayer Advocate Nina Olson warned last month that IRS customer service would suffer because of the budget cuts hitting the agency. She was right, wrote Jonnelle Marte of the Washington Post. As of Feb. 14, only 43 percent of the people who called the IRS this year were able to reach a human being, Olson testified before Congress on Wednesday. Those who do get through are waiting an average of 28 minutes. “Simply put, the IRS has to do a better job of meeting taxpayer needs,” Olson said during the hearing on IRS oversight. Customer service from the IRS has been deteriorating for years as the agency has been asked to do more with a smaller staff and a tighter budget. At its peak in 2004, the IRS answered 87 percent of calls, and taxpayers had to wait on hold only about two-and-a-half minutes. Even in the middle of the financial crisis in 2009, the IRS answered 70 percent of its calls with average wait times of about nine minutes.
From IRS: ‘Death by delay’
Nearly two years after the IRS was exposed for improperly sidetracking requests for tax exemptions from Tea Party groups, Politico has learned that at least a half-dozen conservative applicants are still waiting for an answer, wrote Rachael Bade. This challenges repeated assertions by IRS Commissioner John Koskinen that his agency has “completed” a set of recommendations to fix the problem and address a backlog of nearly 300 applications, some of which had been pending already for three years. The groups that are still waiting include Karl Rove’s giant Crossroads GPS, which spent $26 million against Democrats in the last election cycle. But most of the half-dozen are mom-and-pop outfits from New Mexico, Ohio, and New Jersey, run by volunteers out of their own houses and operating at a fraction of Crossroads’ budget. Even critics who argue such political groups shouldn’t be tax-exempt say they deserve an answer from the IRS.
House eases limits on 529 college plans in response to Obama
The House voted on Wednesday to loosen restrictions on tax incentives for education savings, expanding a program that President Obama wanted to limit, wrote Richard Rubin of Bloomberg. The measure, which passed on a 401-20 vote, would let people use tax-advantaged education savings accounts to pay for computers and place refunds from colleges back into their accounts without penalty. Bipartisan support in the House and Senate – and lack of opposition from Obama to this narrow bill – means that it stands a good chance of becoming law. Just one Republican and 19 Democrats voted against the bill. House passage of the relatively minor expansions comes a month after Obama proposed repealing the accounts’ main tax benefit. Account owners set aside money after it has been taxed and then don’t have to pay income taxes when they spend it on higher education.
GOP senators blast union ‘carve out’ in Obamacare tax
Two Senate Republican chairmen are calling out the Obama administration for what they say is a special deal for unions in applying an Obamacare tax, wrote Peter Sullivan of The Hill. Senate Finance Committee Chairman Orrin Hatch (R-UT) and Judiciary Committee Chairman Chuck Grassley (R-IA) sent a letter to Treasury Secretary Jack Lew on Wednesday about the special conditions for certain union-heavy occupations in the so-called “Cadillac tax.” The tax falls on generous healthcare plans with the aim of providing an incentive to reduce healthcare spending. If the benefits in a plan are above a certain limit, a 40 percent tax is imposed. There is a higher cap, though, for people with a “high-risk profession,” such as electrical workers, paramedics, and construction workers. The senators note that these are union-heavy professions. “Now is not the time to divide workers against one another, creating different rules to protect favored constituencies from a poorly designed, drafted, and implemented law,” Hatch and Grassley wrote.
GOP senator: Gas tax hike must be offset
Sen. David Vitter (R-LA) said on Wednesday that he would be open to increasing the federal gas tax to help pay for new transportation projects if the hike is tied to a cut somewhere in the nation’s tax code, wrote Keith Laing of The Hill. “The traditional gas tax, increasing that in my opinion, needs to include a tax offset for middle-class families so everyone except the very wealthy don’t pay more federal taxes,” Vitter said during a Senate hearing about the expiration of the current federal transportation funding bill. Vitter said increasing the gas tax is one of three viable options for funding a new transportation bill this year, along with taxing oversees corporate income and expanding US energy production through means like increased drilling. The gas tax has been the traditional source of transportation funding, but it has not been increased since 1993.
HSBC chief leaves lawmakers puzzled by ‘quite strange’ pay setup
Robert Hutton of Bloomberg wrote that CEO Stuart Gulliver opened his testimony on alleged tax dodging at HSBC Holdings PLC’s Swiss private-banking operations to the UK Parliament’s Treasury Committee in the traditional manner – with an apology. When asked what he was apologizing for, Gulliver, clutching his hands together, replied: “I have a collective responsibility. I wasn’t running the private bank at that particular point, but I’ve spent 35 years with HSBC, so there’s a proximity issue.” This set the tone for the rest of the hearing. Gulliver and HSBC Chairman Douglas Flint were sorry for the way that the bank had facilitated tax evasion and money laundering in the past, but they weren’t going to take the fall for it. It was a different era, Gulliver said.
Google investigated in Italy over tax issues: prosecutors
Italian authorities are investigating whether Google violated any tax laws in the country, Milan's prosecutor said on Wednesday, adding that talks were underway with the US company over a possible settlement, wrote Manuela D'Alessandro and Danilo Masoni of Reuters. Officials had started discussions with Google representatives relating to its earnings in Italy in the years from 2008 to 2013, Milan prosecutor Edmondo Bruti Liberati said in a statement. No agreement had been finalized yet. Checks on tax payments had been made as part of the investigation, the statement said. Google was considering whether to provide information over revenues it generates in Italy, it added. It did not say when the investigation or the discussion with Google would conclude.
Proposed FASB disclosures would link bifurcated embedded derivatives to host contracts
A Financial Accounting Standards Board (FASB) proposal issued on Tuesday is designed to provide more useful information to financial statement users about hybrid financial instruments that contain bifurcated embedded derivatives, wrote Ken Tysiac of the Journal of Accountancy. The amendments in the proposal would require an entity to disclose information in the notes to financial statements that links each bifurcated embedded derivative to its related host contract. This information would be helpful to financial statement users because it would reflect the overall economics and cash flows for the entire hybrid financial instrument. Under current US GAAP, an entity is not required to provide information that explicitly links bifurcated embedded derivatives with their related host contracts. As a result, financial statement users often are unable to trace these derivatives to their host contracts.
SEC probes companies’ treatment of whistleblowers
Rachel Louise Ensign of the Wall Street Journal wrote that the US Securities and Exchange Commission (SEC) is probing whether companies are muzzling corporate whistleblowers. In recent weeks, the agency has sent letters to a number of companies asking for years of nondisclosure agreements, employment contracts, and other documents. Some of these types of documents sometimes include clauses that impede employees from telling the government about wrongdoing at the company or other potential securities-law violations. In some cases, the firms require employees to agree to forgo any benefits from government probes, effectively removing the financial incentive for participating in the SEC whistleblower program. As part of the program, tipsters can get between 10 percent and 30 percent of the sum of penalties collected if their information leads to an SEC enforcement action with sanctions of more than $1 million.
Noble posts $240 million loss as accounting comes under fire
Noble Group Ltd. posted its first quarterly loss in more than three years after taking a $438 million write-down, including charges on assets scrutinized by an anonymous group alleging accounting malpractice, wrote Yuriy Humber and Jonathan Burgos of Bloomberg. Asia’s largest commodity and energy trader by revenue swung to a $240 million fourth-quarter loss following tumbling commodity prices that hit revenues at its mining and mineral operations and required more capital for provisions, according to a statement on Thursday. The results come on the heels of two reports critical of the Hong Kong-based company’s accounting practices from a group calling itself Iceberg Research. The initial report a week ago included allegations that Noble was overstating the value of associate companies, including Yancoal Australia Ltd., which sparked a decline of as much as 15 percent in the stock over two days. Noble said on Thursday that Ernst & Young LLP had agreed to sign off on its accounts.