Tax Break

Essential reading: Ernst & Young no longer lobbying for companies it had audited, and more

May 4, 2012

Welcome to the top tax and accounting headlines from Reuters and other sources.

* Ernst, audit clients cut lobbying ties-records. David Ingram and Dena Aubin – Reuters. Ernst & Young’s lobbying unit is no longer listed as a lobbyist for three major U.S. companies, all of whom were 2011 audit clients of the accounting giant. The deregistration follows questions raised by two U.S. senators in March about whether the dual relationships crossed auditor independence boundaries. Documents filed last month with Congress showed that Washington Council Ernst & Young, the E&Y unit, was no longer registered as doing lobbying work for Amgen Inc, CVS Caremark Corp and Verizon Communications Inc. Link

* House Democrats plan to pounce again on GOP budget. Ed O’Keefe – The Washington Post. House Democrats plan to attack the spending plan next week as the GOP-controlled House votes on a budget reconciliation package that includes cuts to replace automatic, across-the-board reductions set to begin in January as part of the Budget Control Act. The BCA raised the debt ceiling, cut $1 trillion in federal spending and authorized another $1.2 trillion in cuts over the next decade, with roughly half of the money coming from defense spending. Link

* U.S. auditor watchdog in China talks: spokeswoman. Dena Aubin – Reuters. The head of the main watchdog group for U.S. auditors is in Beijing participating in annual talks between the United States and China, a spokeswoman said on Thursday. Public Company Accounting Oversight Board Chairman Jim Doty, whose group oversees U.S. auditors, is participating in U.S. Treasury meetings, PCAOB spokeswoman Colleen Brennan said. Link

* GSA: Tax troubles, too? John McKinnon – The Wall Street Journal. On Thursday, congressional investigators said they’ve learned that the much-maligned General Services Administration last year demanded a share of the federal energy-efficiency tax breaks it was offering to contractors, in order to spend the money on other projects. Representative Charles Boustany Jr., chairman of a Ways and Means oversight subcommittee, said in a statement on Thursday that “requiring a cash payment in exchange for a tax deduction is a kickback, pure and simple.”  He fired off a letter to a number of Obama administration officials, demanding more information. Link

* India mulls review of Mauritius tax treaty. Mukesh Jagota – The Wall Street Journal. The Indian government is considering a review of its tax avoidance treaty with Mauritius as it looks to boost revenue, junior Finance Minister S.S. Palanimanickam said Friday. An India-Mauritius joint working panel was set up in 2006 to put in place adequate safeguards for preventing the misuse of the double taxation avoidance agreement between the two countries. Seven rounds of discussions have taken place so far, Palanimanickam said in a reply to queries from lawmakers in the lower house of parliament. Link

* Indonesia tax on metals risks China shipments. Michael Taylor and Polly Yam – Reuters. New Indonesian taxes on metals and curbs on raw mineral shipments are likely to hit exports of nickel and bauxite to China, an industry source said on Friday, highlighting concerns over the impact of the policy changes by Southeast Asia’s biggest economy. Jakarta aims to boost investment in domestic ore processing to lift exports of higher-value finished metals by the G20 economy through the new rules which come into force on Sunday. Link

* Brazil government wins appeal in tax dispute with Vale. Peter Murphy – Reuters. Brazil’s highest court overturned an injunction that had suspended collection of disputed tax claims from Vale SA, the world’s largest iron-ore producer, the company said on Thursday, adding it would appeal the ruling. The miner is fighting four tax bills issued by the federal tax authority, totaling 30.5 billion reals ($15.83 billion) on its earnings abroad. Vale said this is tantamount to double taxation as it paid taxes to foreign governments. Link

* Judge: No tax break for drilling equipment. Tom Fowler – The Wall Street Journal. A Texas judge in Austin reversed an earlier decision to exempt some oil and gas drilling equipment from sales tax, which Texas officials had warned could deprive the state of as much as $4.4 billion of revenue through 2017. Travis County District Judge John Dietz said in early April that he would side with Southwest Royalties Inc. in its dispute with the Texas comptroller over whether metal pipes and other equipment used in oil and gas wells should be exempt from the state’s sales tax. Link

* How to get business to pay its share. Alex Marshall – The New York Times opinion. James Madison never played with an iPhone, but he might have had something to say about the news last weekend about Apple. A National Companies Act would create a common corporate architecture for all American companies doing business across state lines and internationally. It would establish not only uniform tax policies but also national standards for the structure of corporate boards, the power of chief executives, the relations of management with workers and shareholders and the interaction of American companies with other nations. Link

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