Tax Break

Essential reading: IRS denies exemption to political group, and more

June 8, 2012

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

* China limits access to company filings after short-selling bids. Bloomberg News. China has begun limiting access to corporate filings after short-sellers used them to highlight accounting discrepancies that led to stock plunges and regulatory investigations over domestic companies listed abroad. Link

* Mexico accounting regulator says no fraud at Pemex. Reuters. The Mexican comptroller’s office said on Wednesday that state oil monopoly Pemex had not hidden losses of $30 billion, quashing accusations from opposition lawmakers in the run up to a presidential election in which overhauling the firm is set to be a key issue. The comptroller said it supported statements from Pemex that its accounting had followed rules accepted in Mexico and the United States. Link

* Weeding out ‘fake farmers’. Jill P. Capuzzo – The New York Times. Last month a State Senate panel approved legislation that would raise the bar for farm operators who sought to qualify for a farmland tax exemption. The new standards come in response to persistent public assertions that the state’s Farmland Assessment Program, which began in 1964, has become more of a tax shelter for wealthy individuals and corporations than a means to preserve farmland. Link

* Canadians crowd U.S. airports. Why? Taxes. Jack Nicas – The Wall Street Journal. Rising flight taxes and a strengthening Canadian dollar are pushing Canadians to begin their U.S.-bound trips on U.S. soil. Now airlines are rushing to meet the demand, adding service at small outposts along the border. Link

* She waited 40 years to marry, then when her wife died, the tax bill came. Jim Dwyer – The New York Times. Edith Windsor and Thea Spyer were married in Canada in 2007, but when Thea died the estate tax bill from the U.S. federal government was $363,053. New York State took an additional $200,000. This week, a federal judge in Manhattan ruled in her case that the law that invoked those taxes, the Defense of Marriage Act, was unconstitutional. Link

* Bill Clinton: “Very sorry” about tax comments. Peter Nicholas – The Wall Street Journal Washington Wire. Former President Bill Clinton apologized on Thursday for comments earlier in the week that undermined President Barack Obama’s efforts to raise taxes on upper-income Americans at the end of the year. In an interview with CNN, Mr. Clinton sought to align his position with that of the White House, saying he agrees with the president’s call for letting the Bush-era tax cuts expire for families earning more than $250,000 at year’s end. Link

* Accounting backfired at MF Global. Floyd Norris – The New York Times. It would be wrong to say bad accounting caused MF Global to fail. But it did both encourage and obscure risk-taking that ended in collapse and scandal. Link

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