Tax Break

Essential reading: BDO to pay $50 million in tax shelter case, and more

June 14, 2012

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

* BDO to pay $50 million in tax shelter case. Dena Aubin – Reuters. Accounting firm BDO USA has agreed to pay $50 million to settle charges of selling tax shelters that generated $6.5 billion in phony tax losses for wealthy clients, U.S. prosecutors said on Wednesday. The penalty is part of a wide-ranging, nearly decade-old government case against illegal tax shelters. Big Four accounting firm KPMG narrowly avoided an indictment in 2005 over its sale of tax shelters and was fined $456 million. Link

* Republicans see advantages in go-slow approach to bills. Janet Hook – The Wall Street Journal. Republicans in Congress, buoyed by optimism about Mitt Romney’s chance of winning the White House, are finding new incentives to put off striking deals on major legislative issues. Legislative progress on tax cuts, deficit reduction and even less controversial matters, such as highway funding, has ground to a near-halt on Capitol Hill. But conservatives are beginning to see a silver lining in gridlock. Some Democrats say they would rather let taxes go up and spending cuts kick in than accept a lame-duck budget deal that lacks what they would view as sufficient concessions by Republicans. Link

* UK taxman criticized for Goldman tax deal. Tom Bergin – Reuters. The UK’s public spending watchdog has criticized the tax authorities for a series of settlements that may have allowed companies including investment bank Goldman Sachs and mobile phone operator Vodafone to avoid paying millions of pounds in taxes. A National Audit Office (NAO) report released on Thursday highlighted procedural errors in five large tax settlements, echoing earlier criticism of the deal from a parliamentary committee which accused tax authority HMRC of being “too cozy” with large companies. Link

* Accounting boards agree to compromise over leases. Emily Chasan – The Wall Street Journal. U.S. and international accounting rulemakers removed a major stumbling block from their planned overhaul of lease accounting on Wednesday, reluctantly agreeing to a compromise that would let companies use two methods to account for lease costs. The agreement, reached at a joint meeting of the U.S. Financial Accounting Standards Board and the London-based International Accounting Standards Board, paves the way for the two boards to complete their revised proposal for lease accounting and possibly issue a new rule next year. The rulemakers have been working since 2006 on the project that would bring $2 trillion in lease obligations onto balance sheets. Link

* A profit vestige of Cold War precaution. Sam Roberts and Noah Rosenberg – The New York Times. Besides being a historical curiosity, the New York City designation of a nuclear fallout shelter carries a tangible benefit — a tax break that has saved the Lagos family thousands of dollars over the years. They are one of the few remaining beneficiaries of a bill passed by the state’s Legislature in 1961 that provides exemptions for shelters designed “in accordance with plans, regulations and orders of the State Civil Defense Commission.” The Lagos still save $127 on their annual property tax bill. Link

* Hungary courts lenders with offer to lift tax. Marton Eder – The Wall Street Journal. Hungarian Prime Minister Viktor Orban this week announced a possible immediate end to a crisis tax on banks in a move seen as courting international lenders and potentially speeding up talks on a precautionary financing deal. The Hungarian government introduced a temporary tax on financial companies in 2010, a measure that cut deeply into the banks’ profitability in an economy already under significant pressure as the financial sector decreases financial gearing. The government had originally planned to halve the bank tax as of 2013 and phase it out in 2014. Link

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