Bramwell’s Lunch Beat: No Surprise – House Votes to Eliminate Estate Taxby
New FASB standards keep focus on simplification
The Financial Accounting Standards Board (FASB) issued separate accounting standards on Wednesday that are designed to simplify reporting of certain employer retirement obligations and assets, as well as provide explicit guidance about how to account for fees paid in a cloud-computing arrangement, wrote Ken Tysiac of the Journal of Accountancy. Both standards are the result of the FASB’s simplification initiative, which has produced several standards advancing its objective of reducing complexity for preparers without sacrificing usefulness of information for financial statement users. Both standards take effect for public business entities in annual periods, including interim periods within those annual periods, beginning after Dec. 15, 2015.
Parties clash over wealth as House votes to kill estate tax
The House on Thursday voted to repeal the 99-year-old US estate tax amid a partisan clash over whether the government should break up concentrated wealth or make it easier to pass along assets to the next generation, wrote Richard Rubin of Bloomberg. The 240-179 vote was mostly along party lines; seven Democrats voted for passage of the bill and three Republicans voted no. The measure would make it possible for the wealthiest Americans to do what the other 99.8 percent already can do – pass their assets to their children without a federal estate tax. The measure would save taxpayers – and cost the US government – $269 billion over a decade. The measure probably won’t advance further, at least not this year. A Senate test vote last month came up six votes short of the 60 needed to overcome a Democratic filibuster. President Obama has threatened to veto the bill, noting that the Republican budget plan adopted by the House in March relies on revenue from the estate tax.
Texas, Florida win as House passes state sales tax break
Richard Rubin of Bloomberg also reported on Thursday that the House voted to let taxpayers deduct state sales taxes on their federal returns, a victory for residents of Texas, Florida, and other states that lack an income tax. The 272-152 vote would reinstate a tax break that expired at the end of 2014 and make it a permanent feature of US tax law. The bill would save taxpayers – and cost the federal government – $42.4 billion over the next decade. “It’s about fairness and it’s about certainty,” said Rep. Dave Reichert (R-WA). Seven states lack an income tax: Texas, Florida, Washington, Alaska, South Dakota, Nevada, and Wyoming. In addition, Tennessee and New Hampshire don’t tax wages yet tax other types of income, such as interest and dividends. Like other Republican attempts to extend lapsed tax breaks, the measure isn’t likely to become law. President Obama has threatened to veto the bill because it lacks offsets to prevent the federal budget deficit from widening.
House quietly passes tax exemption for megadonors
The House on Wednesday with little fanfare passed legislation that would protect major donors like the Koch brothers and Tom Steyer from having to pay gift taxes on huge donations to secret money political groups, wrote Kenneth P. Vogel and Hillary Flynn of Politico. The legislation, which now heads to the Senate, is seen by fundraising operatives as removing one of the few remaining potential obstacles to unfettered big-money spending by nonprofit groups registered under a section of the tax code – 501(c) – that allows them to shield their donors’ identities. Critics decry such groups as corrupting, but they have played an increasingly prominent role in recent elections, and they’re expected to spend huge sums in 2016. The bill that passed on Wednesday would make clear that the gift tax does not apply to groups registered under sections 501(c)4, (c)5, or (c)6.
America’s most-wanted Swiss bankers aren’t hard to find
Jesse Drucker of Bloomberg wrote that in a break from long-standing policy, Switzerland has pledged in recent years to share bank information with tax authorities around the world. But it gets to choose the countries with which it will exchange that data – sort of the financial equivalent of the dating site Tinder, says Andres Knobel, an attorney at the Tax Justice Network. “There is no way to guarantee they will exchange information,” he says. Since 2008, the United States has been waging an uneasy war against Swiss banks that enable tax evasion. Swiss authorities, however, have refused to hand over any bankers – and the United States hasn’t asked for them. At least 21 financial advisors in Switzerland under US indictment remain at large, making them fugitives in the eyes of the American government. Their acts aren’t considered crimes under Swiss law, so the country won’t extradite or prosecute them. Several still work in the Swiss financial industry, offering tax advice and other services. Some still have US clients.
Washington auditor pleads not guilty to federal indictment
Washington state Auditor Troy Kelley has pleaded not guilty to charges that could ultimately force him from office but he is refusing bipartisan calls from the state's political leaders to resign immediately, wrote Derrick Nunnally and Rachel La Corte of the Associated Press. Kelley, the elected official charged with rooting out government fraud and waste, appeared Thursday afternoon for his arraignment in US District Court in Tacoma after a federal grand jury indictment charged him with filing false tax returns, attempted obstruction of a civil lawsuit, and possession of more than $1 million in stolen property related to his former business. A magistrate judge set trial for June 8. “I did not break the law,” Kelley said at a news conference after the hearing. “And I want to be extremely clear here: I never, ever thought I was breaking the law, and I still do not to this day.”
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