WASHINGTON (Reuters) – New accounting rules approved on Monday are likely to show public pension funds are in a weaker financial position than previously thought and intensify disputes over how public retirement systems are funded.
The Governmental Accounting Standards Board, which sets the accounting standards for the public sector, finalized a single system of accounting to replace the menu of financial reporting options public pension funds currently use.
* State, local fiscal burdens drag on economic recovery. Connor Dougherty – The Wall Street Journal. State and local government tax collections have improved from the recession years, they only recently regained their pre-downturn peak. Meantime, local governments, which unlike states rely on property taxes, continue to suffer from the big drop in real estate prices. Given political pressure to reduce the federal budget deficit, cities and states are likely to get less help from Washington. If that happens they would have to make up the gap with tax hikes of their own or else live more frugally—what they’re doing now. Link
* Public pensions to give ‘clearer picture’ of finances. Lisa Lambert – Reuters. Public retirement systems will have to make major changes in how they disclose their pension assets and liabilities, under new rules that the board in charge of accounting standards for U.S. state and local governments is set to approve on Monday. The Governmental Accounting Standards Board will vote on the changes at an afternoon meeting. The reforms were proposed nearly a year ago to give more detail on how pensions affect governments’ finances. Link
June 21 (Reuters) – Pastor Jim Garlow will stand before
congregants at his 2,000-seat Skyline Wesleyan Church in La
Mesa, California, on Sunday, Oct. 7, just weeks before the U.S.
presidential and congressional elections, and urge his flock to
vote for or against particular candidates.
He knows such pulpit pleading could endanger his church’s
tax-exempt status by violating IRS rules for a 501(c)(3)
charitable organization. A charity can take a position on policy
issues but cannot act “on behalf of (or in opposition to) any
candidate for public office.” To cross that line puts the $7
million mega-church’s tax break at risk.
In this video Reuters tax columnist David Cay Johnston interprets some of what we know — and don’t know — about the wealthiest Americans and their taxes.
Tax fairness has been a hot topic this year.
An IRS analysis shows that of the 3,975,288 tax returns reporting income of $200,000 or more for 2009, 35,061 had no U.S. income tax liability at all.
Some important tax and accounting dates in the week ahead:
Monday, June 11
• Senate Finance Committee Chair Max Baucus gives the keynote speech at the Bipartisan Policy Center seminar on tax reform. 10 a.m. at the Bipartisan Policy Center. Washington.
• The American Institute of Certified Public Accountants two-day conference on international tax developments, transfer pricing for lending and leasing, doing business in India and the European Union, and other international business topics. Washington.
Welcome to the top tax and accounting headlines from Reuters and other sources.
* IRS denial of tax exemption to U.S. political group spurs alarms. Jonathan D. Salant – Bloomberg News. An Internal Revenue Service decision revoking the tax-exempt status of a small political nonprofit organization may foreshadow an investigation into groups such as Crossroads GPS and Priorities USA that spend millions on the 2012 U.S. presidential election. Such groups’ nonprofit status lets them collect millions of dollars from individuals and corporations while keeping donors anonymous. Link
* U.S. House votes to kill Obama’s medical device tax. Kim Dixon – Reuters. The Republican-led U.S. House of Representatives voted on Thursday to strike down a 2.3 percent tax on medical devices and other parts of President Barack Obama’s healthcare law, although the effort is likely to hit a wall in the Democratic-led Senate. Link
Kansas Governor Sam Brownback cut his state’s income taxes on May 22, bringing the highest rate down from 6.45 percent to 4.9 percent and doubling the standard deduction to $9,000 for both heads of household and married couples. Overall $800 million of taxes per year are being eliminated beginning in 2014.
The Tax Foundation, a Washington-based research firm that favors lower taxes, highlighted a potentially unintended consequence in its May 29 analysis of the new law: its changes to the way pass-through businesses are taxed, possibly encouraging businesses to adopt this structure.
Wednesday, May 30
• Financial Accounting Standards Board meeting will cover feedback on a proposal regarding real estate investment properties, impairment of indefinite-lived intangible assets and the definition of a nonpublic entity. Norwalk, Connecticut.
Wednesday, May 30 – Friday, June 1
• Government Accounting Standards Board meeting. Norwalk, Connecticut.
(Reuters) – Georgia State Representative Allen Peake owns 20 restaurants and this year he took his frustrations with his tax bills to the state capitol, where he helped push through legislation creating a new state tax court.
“I’ve had several sales tax audits done and disputed them, and never felt I had a fair shake,” said Peake, echoing the views of other business owners.
As we wrote last month, 2012 is set up to be a perfect tax storm: a slew of tax breaks are expiring, mandatory spending cuts are looming, and it’s an election year. So rhetoric will be high, hard won compromise on tricky issues will be low.
Not taking action, however, will be costly. This week the OECD said that could lead to an economic slowdown in the U.S. in 2013.