Highway Trust Fund vote said put on hold by Senate panel
Laura Litvan of Bloombergwrote on Thursday morning that a roadwork slowdown reminiscent of the partial closure of the federal government last year is now hanging over the US economy as Congress leaves town without a deal for replenishing the Highway Trust Fund.
A bill from Senate Finance Committee Chairman Ron Wyden (D-OR), funded largely by tax changes, failed to win over Republicans, and the committee chose to leave for a weeklong holiday recess without voting as they pursue a deal all sides might agree to.
“It’s important for the committee to get something done, but also to get it done right,” said Senator Orrin Hatch (R-UT), the top Republican on the committee, according to the article.
With the Highway Trust Fund expected to be depleted as soon as July, about 112,000 construction projects and almost 700,000 jobs await word on new federal funding, Litvan wrote.
To pay for the six-month, $9 billion infusion, Wyden is proposing to change mortgage-interest deduction documentation in a way that he says can raise $2.2 billion over 10 years through better tax compliance. Banks would be required to report more information to the IRS about mortgages, including the unpaid balance and the address of the property.
Litvan noted that even if the Senate committee approves the bill, Republican leaders in the House of Representatives have already said they won’t produce their plan until next month and added they would reject any tax increases, a core part of Wyden’s proposal.
Education tax breaks get $96.5 billion boost from panel
Richard Rubin of Bloombergwrote that a $96.5 billion expansion and simplification of tax breaks for education and a $115 billion increase in the child tax credit were approved by the House Ways and Means Committee on Wednesday.
The resulting US education tax credit would be $2,500, and as much as $1,500 would be refundable. Like the current American Opportunity Tax Credit, it would be available to married couples with annual incomes of less than $180,000, according to the article.
The child tax credit, now $1,000 per child, would increase every year, as would the income thresholds that limit eligibility, removing them from the tax-code thresholds that aren’t pegged to inflation. The proposal also would remove a so-called marriage penalty, starting the credit’s phaseout at $150,000 in annual income for married couples instead of $110,000, Rubin wrote.
Democrats criticized the plan because it lacks offsets to prevent the budget deficit from increasing over the next decade, echoing other legislation approved by the committee earlier this year.
Tax writers hope to stabilize housing industry
Tax breaks supported by the housing industry may soon wind up on the Ways and Means Committee’s docket, according to an article by Alan K. Ota of Roll Call on Wednesday.
Ways and Means Chairman Dave Camp (R-MI) is expected to move several popular tax breaks backed by the industry, including a proposal by Representative Devin Nunes (R-CA) to make permanent a tax break for private mortgage insurance.
Nunes said the proposal was one of several tax break extensions that would send important signals to key business sectors in a time of slow growth. “We’re trying to get something by the end of the year,” Nunes said, according to the article. “If you are not going to do a comprehensive fix, you are left with patchwork.”
Camp earlier this year sent ripples of concern through the housing industry when he proposed, as part of a tax overhaul, to limit the interest deduction to mortgages of less than $500,000, rather than the current limit of $1 million, and end write-offs for property taxes and home equity loans unless they are used for renovation.
In addition to limiting the principal amount, lawmakers have discussed turning the mortgage deduction into a tax credit so that it could be claimed by all families, whether they itemize deductions or not.
Record $8 billion tax fraud gets ex-lawyer 15 years
A former lawyer who was convicted in what US prosecutors called the biggest criminal tax fraud in history was given 15 years behind bars for helping wealthy clients dodge taxes for years, wrote Erik Larson of Bloomberg.
Paul Daugerdas, who worked at the Dallas-based law firm Jenkens & Gilchrist, which closed over the scandal, was sentenced on Wednesday by US District Judge William Pauley in Manhattan. A jury last year found Daugerdas, 63, guilty on seven counts and acquitted him on nine.
“Mr. Daugerdas was a tax-shelter racketeer who tapped into the incredible greed of some of the super wealthy,” Pauley said, according to the article. “Just about everyone he came in contact with, he managed to corrupt.”
Larson noted that the tax shelters at the center of the case were sold from 1994 to 2004 to almost 1,000 people, creating $7 billion in fraudulent tax deductions and more than $1 billion in phony losses for customers, prosecutors said. Daugerdas was found guilty of counts including tax evasion and conspiracy in what Pauley called a “broad tax shelter conspiracy.”
Pauley declined to give Daugerdas the full 20-year term sought by the government, saying the United States didn’t take into account the ex-lawyer’s age and the nine counts the jury had rejected.
Regions Financial to pay $51 million over alleged accounting violations
The Federal Reserve said on Wednesday that Regions Financial Corp. will pay $51 million to settle federal and state allegations it didn't appropriately disclose loans that were souring during the financial crisis, wrote Alan Zibel of the Wall Street Journal.
The Fed and Alabama's state banking regulator fined the Birmingham, Alabama-based lender over how the bank handled accounting for loans that were headed for default in 2009.
The US Securities and Exchange Commission (SEC) charged three former senior managers at the bank with intentionally misclassifying defaulted loans, leading the company to overstate its financial results. Two executives settled the charges, while one intends to contest them, Zibel wrote.
The Fed, in an administrative proceeding, fined the company's former senior commercial credit executive, Thomas Neely, $2.4 million and sought to bar him from the banking industry.
Andrew Ceresney, director of the SEC's enforcement division, credited the bank with helping the agency's investigation “while remediating the misconduct by restructuring its processes and putting new management in place,” according to the article.
US senator warns as Walgreen weighs overseas tax deal
Senator Richard Durbin (D-IL) told Reuters in an interview that he spoke with a Walgreen lobbyist on Tuesday about the Deerfield, Illinois-based drugstore chain potentially moving its tax home base abroad.
“I told him I hope that the rumor's not true,” Durbin said, according to an article by Kevin Drawbaugh.
Durbin, the Senate's second-highest ranking Democrat, said Walgreen Co. would be ill-advised to pursue an “inversion” deal with Switzerland's Alliance Boots Holding Ltd.
“Because of their national reach, they are a uniquely American company, and I think it would really hurt their image if they decided to give up on this country and to head overseas to make a couple extra dollars,” he said, according to the article.
With more than 8,200 drugstores in all 50 states, Walgreen has been under pressure from some of its investors to buy out the stake it does not already own in Alliance Boots and establish a new tax domicile in Switzerland.
Durbin said he will introduce legislation on Thursday meant to keep multinational corporations from fleeing the United States for tax reasons and to reward those that remain US-based, pay a fair wage, and create US jobs.
- SEC steps in to stop sketchy city comptroller from bankrupting city on bad bond deals (Going Concern)
- Moss Adams announces new leadership for Financial Services Group (Moss Adams)
- After a decade, Parmalat lawsuit vs Grant Thornton in US is back (Reuters)
- IRS agents head to Macau as US steps up scrutiny of casinos (Reuters)
- The IRS has been set up (Tax Analysts)
- Lois Lerner sought audit of group invite to GOP senator (Politico)
- Tax cuts are coming to DC – no thanks to Congress (Politico)
- Johnnie M. Walters, ex-IRS chief, dies at 94 (New York Times)
- Puerto Rico: Tax haven for America’s super-rich (Bloomberg Businessweek)
- Tom Coburn: The case for corporate tax reform (Forbes)
- Study: Tax refunds could boost health coverage (The Tennessean)
- Kids, summer camp tax breaks and our personal X Games site (Don’t Mess With Taxes)
- Rauner offers business tax ideas, few specifics (Chicago Tribune)
- California film tax credit bill moves closer to passage (Los Angeles Times)
About Jason Bramwell
Jason Bramwell is a staff writer and editor for AccountingWEB. He has nearly 20 years of experience in print and online media as a journalist and editor.