Tax Break

Essential tax and accounting reading: UK tax probe of eBay sellers, Swiss advisers, public transit subsidy, and more

March 15, 2012
 Welcome to the top tax and accounting headlines from Reuters and other sources.

* Senate backs return of higher transit subsidy. Eric Yoder – The Washington Post. The maximum tax-free subsidy that employers can pay for their workers to use public transit in their commuting would nearly double to $240 a month under a provision in the transportation bill the Senate passed Wednesday. The maximum had been $230 a month in 2009-2011 under a series of temporary laws, but when a further extension wasn’t passed by the end of last year, the amount reverted to its previous level of $125 a month. Meanwhile, a subsidy for parking at commuter lots to take public transportation rose from $230 to $240 a month due to an inflation adjustment. Link

* Two Swiss financial advisers accused of helping U.S. taxpayers hide money. Lynnley Browning – Reuters. Prosecutors in New York on Wednesday indicted two Swiss financial advisers, one a former private banker at financial giant UBS AG, on charges of conspiring to help wealthy Americans hide $267 million in secret bank accounts. In separate indictments, one of them alleging that a child was used to carry cash to a client, charges were brought against Hans Thomann, 61, and Josef Beck, 46. Both live in Switzerland, but they worked separately from each other. Link  

* Tax probe on eBay sellers comes under fire. Vanessa Houlder – The Financial Times. The UK revenue agency’s approach to tackling evasion risks “missing the bigger picture,” advisers said on Wednesday after it launched a targeted campaign aimed at eBay traders. Gary Ashford of the Chartered Institute of Taxation, a professional body, said launching campaigns aimed at specific groups every few weeks was confusing and risked diluting the anti-evasion message. The institute called on Inland Revenue to focus its efforts on a one-off national campaign open to all taxpayers whose affairs were not up to date. Link  

* “Tax” dodge boomerangs on Obama in healthcare case. Donna Smith – Reuters. A key issue in the healthcare implementation Supreme Court ruling is the money that Americans will have to pay starting in 2014 to the Internal Revenue Service if they fail to obtain medical insurance. Is it a “penalty” or a “tax”? The administration is arguing the government can make people buy health insurance and charge them if they don’t through its powers to regulate interstate commerce and to tax. That argument raised some eyebrows and provided a “gotcha” moment for Republican lawmakers when administration lawyers argued in briefs filed before the Supreme Court that the minimum coverage requirement provision operated like a tax. Link  

* Sarkozy defends pledge to squeeze tax exiles. Brian Love – Reuters. French President Nicolas Sarkozy sought to reassure expatriate voters on Wednesday that they would not be hit by his promise of a crackdown on wealthy tax exiles if re-elected on May 6. Beyond scornful reactions from left-wing rivals, tax specialists say the U.S .-inspired proposal Sarkozy announced on Monday is more symbolic than significant for public finances and would be hard, if not impossible, to implement. Sarkozy said he was going after hardcore exiles who quit France solely to avoid tax but that he had no intention of targeting people who went abroad to work or set up a company. Link  

* Limit on tax benefit for higher earners. Kiran Stacey – The Financial Times. The UK Chancellor of the Exchequer George Osborne is under pressure not to hand a tax cut to some of the UK’s highest earners when he unveils a move to lift the income tax threshold in his budget next week. The chancellor is expected to limit how much higher rate taxpayers can earn without paying income tax increases to above 8,105 pounds ($12,700) next April, in an effort to make sure the government does not spend money on a tax break for top earners when those on low and middle incomes are facing a spending squeeze. He is facing calls from both sides of the coalition to make sure those paying 40 percent and above do not benefit at all. Link 

* Dodging a ‘cost basis’ crisis. Karen Blumenthal – The Wall Street Journal opinion. New tax rules are changing how brokers report sales of stocks, exchange-traded funds and mutual funds to the Internal Revenue Service and could deny you the full tax benefit on your investment sales. Starting last year, though, brokerages were required to keep track of what you pay for stocks, and they are now required to report that cost basis when they report your proceeds from selling the stock on your 1099-B tax form. Investors must decide how they want their cost basis to be calculated before the stock sale is settled. If they don’t choose, firms will use a first-in, first-out method to stock sales, applying the sales to the oldest shares first. This year, the rules extend to mutual funds and most ETFs, including dividend reinvestments. Starting next year, cost basis will be reported on bonds and traded options as well. Link 

* Cut corporation tax now. Philip Booth – The Wall Street Journal opinion. In the UK, corporate taxes fall not just on fat-cats in boardrooms, but on real, average people—the 99 percent such as potential pensioners who rely on their investments for a comfortable retirement. But the cost to said pensioner is currently so well hidden in the UK that most people do not realize they are paying. The corporate tax system in the UK is not as punitive as that in the U.S. Corporate tax rates are currently 26 percent in Britain and will fall to 23 percent over the next three years. The UK tax code is one of the longest in the world at more than 11,000 pages, thanks largely to its absurdly complex system of company taxation. Link

($1 = 0.6376 British pounds)

 

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