Essential tax and accounting reading:oil tax breaks challenged, Dow pushes R&D credit, Buffett’s company in tax dispute, and more
Welcome to the top tax and accounting headlines from Reuters and other sources.
* Bill ending oil company tax cuts clears Senate hurdle. Ayesha Rascoe and Richard Cowan – Reuters. Legislation repealing tax breaks for major oil companies passed its first hurdle in the Senate on Monday, but is unlikely to become law, as Republicans and Democrats seek to score political points over rising gasoline prices. The Senate voted 92 to 4 to proceed with consideration on the bill that would eliminate billions of dollars in tax breaks for the “big five” oil companies: Exxon Mobil Corp, BP Plc, ConocoPhillips, Chevron Corp and Royal Dutch Shell Plc. The lopsided vote in favor of moving ahead with consideration of the oil tax cuts bill reflected political maneuvering in the chamber, not actual support for the measure. Link
* Dow court cases pushes limit of R&D tax credit. Patrick Temple-West and Ernest Scheyder – Reuters. Dow Chemical Co is challenging the U.S. Internal Revenue Service in a rare court case over expanding the research and development tax credit to cover the costs of supplies used to improve the ways existing products are made. Oral arguments are set for Thursday at the 2nd U.S. Circuit Court of Appeals in New York in a case that pits Union Carbide, a wholly owned subsidiary of Dow, against the IRS. A win for Dow would widen the scope of the R&D credit – a mainstay of the corporate tax code that costs U.S. taxpayers roughly $7 billion a year – at a time when corporate tax breaks, in general, are under scrutiny in Washington. Link
* New CEO at accounting firm BDO USA aims for growth. Nanette Byrnes – Reuters. The 270 partners of accounting firm BDO USA selected Wayne Berson, 50, as their leader for the next four years, it was announced on Monday. BDO USA, with $572 million in U.S. fee income last year, is the seventh-largest accounting firm in the country, according to International Accounting Bulletin. Link
* Private jets, Buffett and taxes. Andrew Ross Sorkin – The New York Times opinion. Get this: Uncle Sam is suing Warren Buffett’s company over taxes. Yes, taxes. The U.S. government, in a little-followed case in Ohio, filed a lawsuit this month against a unit of Buffett’s Berkshire Hathaway, seeking $366 million in taxes and penalties. The Berkshire division at the center of the suit is NetJets, the private-aircraft company that caters to the nation’s wealthiest — the people Buffett says should pay more in taxes. It is an odd twist that a company controlled by Mr. Buffett — perhaps the most outspoken businessman in the country in support of raising taxes on the “mega-rich” — is now in a dispute with the government over his company’s paying too little in taxes. Link
* Paul Ryan and his critics. The Wall Street Journal editorial. The Paul Ryan budget outline by design does not provide many tax specifics, aside from an instruction to the Ways and Means Committee to propose a reform plan that would swap lower rates for fewer loopholes and special exclusions. This overhaul is not even a net tax cut — the instructions are to design a reform that is revenue neutral. It would hold tax receipts to their post-World War II average of between 18 percent to 19 percent as a share of the economy. The liberal claim that this means a tax cut for the wealthy is based entirely on the fact that marginal tax rates would decline, even though the loopholes primarily benefit higher-income taxpayers. Link