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Bramwell’s Lunch Beat: Week Ahead – FASB to Discuss Possible Revenue Rule Delay

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Mar 30th 2015
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Tax proposals would move US closer to global norm
Lawmakers on both sides of the aisle are finding appeal in an ambitious concept for overhauling the nation’s income tax system: a tax based on consumption, a tool long used around the world, wrote John D. McKinnon of the Wall Street Journal. The Senate Finance Committee is giving new consideration to the consumption tax idea with the hope that its promised boost to economic growth would ease the way to a tax code revamp. Consumption-style taxes hit the money taxpayers spend, rather than the income they receive. One prominent feature of consumption tax systems is that they generally tax savings and investment lightly or not at all. That, in turn, encourages more investment and innovation – and ultimately more growth, many economists contend. Enactment of a broad-based federal consumption tax would align the United States with a global trend.

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FASB set to discuss revenue recognition effective date deferral
Financial statement preparers may learn more this week about a potential deferral of the effective date of the converged revenue recognition standard that was issued by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board last year, wrote Ken Tysiac of the Journal of Accountancy. The FASB will hold further discussion on Wednesday about a possible delay, according to a meeting notice posted on the board’s website. The standard is scheduled to take effect for reporting periods beginning after Dec. 15, 2016, for US public companies. But some financial statement preparers have questioned whether the effective date gave companies enough time to make their transition to the standard. Companies choosing a full retrospective transition would have needed to start capturing data by Jan. 1, 2015, to demonstrate comparability.

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Two ex-Credit Suisse bankers avoid jail time in tax-evasion case
Two former Credit Suisse AG bankers who pleaded guilty to helping wealthy Americans evade taxes received no jail time after cooperating in the US case against the Swiss bank, wrote Joel Schectman of the Wall Street Journal. A federal judge in District Court in Alexandria, Virginia, sentenced Josef Dörig and Andreas Bachmann each to five years of unsupervised probation for their roles in helping US customers hide earnings from American tax authorities through a web of secret Swiss accounts and shell companies. Dörig was fined $125,000; Bachmann was fined $100,000. Bachmann and Dörig are two of eight former Credit Suisse employees who have faced tax-evasion charges since 2011. The US Justice Department considers the others fugitives, an official said. Last May, Credit Suisse agreed to pay $2.6 billion and pleaded guilty to “knowingly and willfully” helping thousands of US clients open accounts and conceal their income from the IRS.

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Michigan film-tax credits show divide over aid to Hollywood
The Republican-led Michigan House of Representatives voted this month to end tax incentives for filmmakers, marking the first time either legislative chamber voted to kill a program that’s been challenged annually, wrote Chris Christoff of Bloomberg. When enacted in 2008, the uncapped rebates were the most generous among all 50 US states. “It’s a horrible investment for the taxpayers of Michigan,” said Rep. Jeff Farrington, a Republican from suburban Detroit. “It’s a fallacy that it’s bringing permanent jobs. If you gave that same money to tool-and-die companies where I live, I bet you they’d have a lot more jobs.” Michigan’s cash credits for filmmakers have lured George Clooney, Ben Affleck, and Drew Barrymore to the state to make movies. Michigan is joined by other states, including Massachusetts and Maryland, that are debating whether the costs of providing tax rebates to Hollywood studios outweigh the benefits of job creation.

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AICPA makes eight recommendations to simplify retirement plans
The American Institute of CPAs (AICPA) on March 26 submitted eight recommendations to the Senate Finance Committee Tax Reform Working Group on Savings and Investment that would simplify employer-sponsored retirement plans and individual retirement accounts. The eight recommendations are: create a uniform employee contributory deferral plan; eliminate certain nondiscrimination tests on employee pretax and Roth deferrals for 401(k) plans and matching contributions; eliminate the top-heavy rules; create a uniform rule regarding the determination of basis in distributions; create a uniform attribution rule; create a uniform definition of owners; change the required minimum distribution rules during life and remove half-year age references; and create uniform rules for early withdrawal penalties.

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IRS technical guidance roundup (week of March 23)
The IRS issued the following technical guidance last week:

Revenue Procedure 2015-25 provides the list of countries for tax year 2014 for which the minimum time requirements of the foreign earned income exclusion are waived.

Revenue Procedure 2015-27 contains modifications to Revenue Procedure 2013-12, 2013-4 I.R.B. 313. The modifications reflected in this revenue procedure include miscellaneous changes made to improve EPCRS, such as reducing VCP compliance fees relating to failures to meet the requirements of § 72(p) with respect to participant loans, and clarifying that for certain overpayments, as defined in sections 5.01(3)(c) and 5.02(4) of Rev. Proc. 2013-12, a plan may use correction methods other than the correction methods set forth in sections 6.06(3) and 6.06(4) of Rev. Proc. 2013-12. This revenue procedure also requests comments on recoupment of overpayments.

Revenue Procedure 2015-29 amplifies Section 3.01 of Revenue Procedure 2015-3 and provides that the Service will no longer issue rulings to taxpayers concerning whether the taxpayer meets the requirements of § 45 or Notice 2010-54, 2010-40 I.R.B. 403 for refined coal.

Announcement 2015-13 explains the effect of HR 2591, which became Public Law No. 113-243. The announcement also explains how taxpayers should report the rollover of “airline payment amounts.”

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