Bramwell’s Lunch Beat: IRS Civil Forfeiture Practices Focus of House Hearingby
SEC claws back $500G from two Silicon Valley CFOs
The US Securities and Exchange Commission (SEC) revealed on Tuesday that it will claw back nearly $500,000 in bonuses and stock sale profits two former CFOs received while their Silicon Valley software company, Saba Software, was committing accounting fraud, wrote David M. Katz of CFO. Although they weren’t personally charged in connection with the company’s misconduct, William Slater and Peter E. Williams III are still required under the Sarbanes-Oxley Act to reimburse the company for bonuses and stock sale profits they received while the fraud occurred. Saba had overstated its pre-tax earnings and materially misstated its revenue recognition practices while Slater was CFO from December 2008 to October 2011 and while Williams served as finance chief from October 2011 to January 2012.
IRS under a spotlight for freezing assets
House Republicans on Wednesday are preparing to shine a spotlight on the government’s practice of seizing small business civil assets without charging them with a crime, signaling a new oversight focus on an issue gaining more attention, wrote Rachael Bade of Politico. “There is a strong indication that the IRS has been involved in civil forfeiture that has hurt innocent people,” said Rep. Peter Roskam (R-IL), chairman of the House Ways and Means Oversight Subcommittee, who called it an “abuse by the federal government against citizens.” Although the seizure issue crosses several agencies, Roskam’s panel will narrow in on the IRS, bringing in small business owner witnesses who had their money taken without a warning. The IRS, which will send Commissioner John Koskinen to testify before Ways and Means, says it is addressing the problem.
FBI to probe fraudulent tax filings
The FBI has opened a probe to determine whether a computer data breach led to the filing of false tax returns through TurboTax software, wrote Laura Saunders, Liz Moyer, and Devlin Barrett of the Wall Street Journal. The move comes as states try to contain a wave of bogus state tax filings through TurboTax amid signs that the fraud may also involve federal returns, according to some security specialists and taxpayers. FBI investigators are still working to determine exactly how personal information was obtained to file bogus returns in about 19 states and whether that information may have been stolen from TurboTax or somewhere else. A dozen TurboTax users have told the Wall Street Journal that federal tax returns were filed in their names by people other than themselves. Officials at competitors H&R Block Inc. and TaxAct on Tuesday reiterated statements that they haven’t seen unusual levels of fraud activity recently.
Taxwriters seek insight from players in last tax code overhaul
The last group of lawmakers to overhaul the tax code told current members eyeing reform that success only comes from an intensive effort by all major players, as well as a healthy dash of luck, wrote Peter Schroeder of The Hill. The Senate Finance Committee on Tuesday welcomed back a pair of key players from the last time Congress was able to overhaul the tax code in 1986: former Senate Finance Chairman Bob Packwood (R-OR) and Sen. Bill Bradley (D-NJ). Both offered an unflinching take on the heavy lift of redoing the tax code, a project both parties agree is needed but have made minimal progress in actually doing. “The only way it can be done is bipartisan, quickly, and behind closed doors,” said Packwood. Bradley also noted that the executive branch needs to play a key role in any successful effort. He said the Treasury secretary needs to be involved in the matter “constantly,” and the president needs to be able to lay himself on the line to get it done.
House Dem pushes to increase transit tax break
Del. Eleanor Holmes Norton (D-DC) is introducing legislation that would nearly double the amount of money that public transit riders can set aside from their paychecks for a tax break on their commutes each month, wrote Keith Laing of The Hill. Norton said on Tuesday that the transit benefit, which was cut from $245 to $130 last year by Congress, should be made equal to the $250 that US drivers are currently allowed to put aside for pre-tax parking rates. Norton said the disparity between the parking and transit tax breaks is negatively affecting ridership on the Washington, DC Metrorail subway system, as well as other public transportation networks throughout the United States. “Predictably, the unfair disparity between tax benefits for parking and transit has resulted in a big hole in ridership that can be retrieved only by getting riders back on mass transit throughout the nation,” she said. “Our bill is urgently needed to re-establish parity, so as to reduce the need for fare increases or service cuts.”
40 senators push long-term ban on Internet tax
Bipartisan leaders in the Senate are pushing for a long-term ban on state and local taxation of Internet access, wrote Mario Trujillo of The Hill. Senate Commerce Committee Chairman John Thune (R-SD) and the ranking Democrat on the Senate Finance Committee, Sen. Ron Wyden (D-OR), reintroduced the Internet Tax Freedom Forever Act on Tuesday along with 38 co-sponsors: 28 Republicans and 10 Democrats. The bill, which would also bar multiple or discriminatory taxes on e-commerce, has wide support from industry. “Our bill, which would permanently ban Internet taxation, would encourage more American innovators and entrepreneurs to use broadband to develop the next big thing, while keeping the Internet open and accessible to consumers across the country,” Thune said. The ban has been extended nearly half a dozen times since first enacted in 1998. The most recent came last year, when Congress rolled a one-year extension into the omnibus spending bill.
Obama administration won’t release IRS targeting documents
The Obama administration is refusing to publicly release more than 500 documents on the IRS’s targeting of Tea Party groups, wrote Bob Cusack of The Hill. The Hill sought access to government documents – including 2013 emails and other correspondence between the IRS and the Treasury Inspector General for Tax Administration (TIGTA) – through a Freedom of Information Act (FOIA) request that might provide a glimpse of the decision-making. TIGTA opted not to release any of the 512 documents covered by the request, citing various exemptions in the law. The Hill recently appealed the FOIA decision, but TIGTA denied the appeal. In its written response to The Hill, TIGTA cited FOIA exemptions ranging from interagency communication to personal privacy. It also claimed it cannot release relevant documents “when interference with the law enforcement proceedings can be reasonably expected.”
Portman, Boustany introduce Enrolled Agents Credential Act
Sen. Rob Portman (R-OH) and Rep. Charles Boustany (R-LA) on Tuesday introduced the Enrolled Agents Credential Act, a bill to ensure that individuals, families, and businesses across the country are able to identify and access trained specialists to assist them in filing their taxes. Despite being an exclusively federal credential, some states prohibit enrolled agents from using their credential when representing taxpayers or advertising for potential clients. The legislation would clarify that enrolled agents may use and display their credential when advertising their services and representing their clients. “Enrolled agents use their considerable expertise to help taxpayers navigate our overcomplicated tax code, but some states don't recognize their federal certification,” Boustany said. “As Tax Day approaches, this bill is a common-sense reform at no cost to the taxpayer that will give these advocates their rightful recognition while Congress works on full tax reform.”
IASB proposal would clarify how entities classify a liability
The International Accounting Standards Board (IASB) issued a proposal on Tuesday that is intended to clarify how entities classify debt, particularly when it is coming up for renewal, wrote Ken Tysiac of the Journal of Accountancy. The proposal is designed to improve presentation in financial statements by clarifying the criteria for the classification of a liability as either “current” or “non-current.” The proposed amendments are contained in the exposure draftClassification of Liabilities (Proposed Amendments to IAS 1). The IASB is seeking comments, which can be made at the board’s website.
Computer Sciences to restate results from 2010 to 2012
Computer Sciences Corp. (CSC) disclosed on Wednesday that it will restate financial statements as part of a proposed $190 million settlement with the SEC over accounting issues from its 2009 to 2012 fiscal years, wrote Chelsey Dulaney of the Wall Street Journal. CSC said it would restate its 2012 statements and its summary financial results for 2011 and 2010, erasing $130 million in previously recorded operating profit. The SEC’s probe, launched in January 2011, initially focused on accounting errors in its former managed services sector segment, mainly accounting irregularities in the Nordic region. The company’s auditors eventually expanded the investigation to include CSC’s operations in Australia, accounting practices within the company’s Americas outsourcing operation, and those related to the company’s contract with the UK National Health Service.
New site highlights value that CPAs can provide to small business owners
The American Institute of CPAs (AICPA) on Wednesday launched a new site, cpapowered.org, which underscores the value CPAs can provide to the nation’s 28 million small businesses on strategic planning, compliance reporting, and financial management. This is an expansion of the AICPA’s #CPAPOWERED campaign, begun last year to highlight CPAs’ expertise. The centerpiece of this year’s #CPAPOWERED campaign is a series of informative videos, “CPA Secrets to a Better Business,” which offer tips for small business owners on seeking financing, keeping critical data secure, and understanding health insurance, among other topics. Two videos – Acquiring Financing and Preventing Employee Theft – are currently available on cpapowered.org, along with articles, checklists, and tools that drive home the message that CPAs are essential to business success. Other videos and materials will be rolled out over the next few months.