Tax Break

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

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

Essential reading: China minister calls for tax changes to boost spending, and more

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

* China minister calls for tax changes to boost spending. Liyan Qi – The Wall Street Journal. China needs to improve its tax system to stimulate spending, Finance Minister Xie Xuren said Thursday. The central government will study measures to expand a value-added tax trial, and improve China’s consumption tax to “guide reasonable consumption” more effectively, Mr. Xie said in a statement on the ministry’s website. Link

* Obama stands firm against extending tax cuts for rich. Caren Bohan and Thomas Ferraro – Reuters. President Barack Obama’s Democrats traded shots with Republicans on Wednesday about how best to avoid a year-end “fiscal cliff,” as the administration insisted on the need to let tax cuts for wealthier Americans expire as scheduled on January 1. The prospect of higher taxes and automatic spending cuts that kick in next year have spurred calls for Obama to temporarily extend all of the Bush-era tax breaks to coax Republicans into a sweeping debt deal, but the White House stood firm. Link

* Bill Clinton becomes Romney’s favorite surrogate for Obama. Sam Youngman – Reuters. In the space of five days, Bill Clinton went off message on two important issues – tax cuts and Romney’s time as a private equity executive – raising questions about the former president’s motives. This week, Clinton said he favored a temporary extension of George W. Bush-era tax cuts for all Americans, not just the middle class, as Obama prefers. Link

Essential reading: IRS under strain, Clinton’s tax proposal, and more

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

* Overseer: IRS could face ‘serious problems.’ Siobhan Hughes – The Wall Street Journal. The Internal Revenue Service is under strain as it faces a flood of new demands at a time of budget cutbacks, its government overseer said in a report on Tuesday, posing a risk that the tax collector will experience “serious problems in the future.” Link

* Bill Clinton: Extend all Bush-era tax cuts for a year. Reuters. Former President Bill Clinton on Tuesday jumped into the debate over how to handle the looming expiration of historically low tax rates, putting him somewhat at odds with fellow Democrat President Barack Obama. Clinton, on cable television’s CNBC, said Congress may have to temporarily extend all the low tax rates that expire at year-end to give lawmakers more time to come up with a plan to cut deficits. Link

* Unchanged tax, health policies to explode U.S. debt-CBO. David Lawder – Reuters. U.S. public debt would balloon to twice the size of the nation’s economy in 25 years if current tax and spending policies are extended, Congress’ budget referee said on Tuesday, delivering fresh fodder for a year-end budget brawl. The Congressional Budget Office said in a report that if tax cuts enacted under George W. Bush are allowed to expire as scheduled on Dec. 31, along with some other tax and spending policies, U.S. public debt would shrink significantly, falling to 53 percent of gross domestic product by 2037 from 73 percent this year. Link

IRS’s Maruca: Tell a broader story during transfer pricing tax audits

Calling all English majors: Corporate tax departments may soon need your skills to  explain their international networks to tax authorities.

The U.S. Internal Revenue Service is investigating how companies buy assets from and sell assets to their subsidiaries, which may be scattered all over the world. These inter-company transactions can have big tax consequences for companies, and the IRS is looking to crack down on abuses.

Sam Maruca, the head of the IRS transfer pricing operation, told attendees at a transfer pricing conference in Washington on Monday that companies need to tell a story when explaining their transfer pricing work.

Essential reading: New trial ordered in huge New York tax shelter case, and more

The federal courthouse at 500 Pearl Street in New York. REUTERS/Chip East

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

* NY judge orders new trial in huge tax shelter case. Larry Neumeister – The Associated Press. A federal judge on Monday ordered a new trial for three of four people convicted in the largest tax fraud prosecution in U.S. history, saying a “pathological liar” who served as a juror had corrupted the trial. U.S. District Judge William H. Pauley III said the juror had spoiled a three-month trial that included 41 witnesses and 1,300 exhibits. Link

* Senate panel chief to detail tax code vision. Kim Dixon – Reuters. The chairman of the Senate tax-writing committee promised to spell out ideas for revamping the tax code next Monday, providing a glimpse of his plan for major fiscal decisions looming at the end of the year. Senator Max Baucus, the Finance Committee chairman, will deliver “a vision for tax reform” on June 11 at the Bipartisan Policy Center, his office said. Link

* U.S. aims at five EU tax evasion deals this month. Patrick Temple-West – Reuters. The U.S. Treasury Department aims to complete agreements with five EU countries by the end of June to crack down on American tax evasion, and cooperation with more countries should be announced soon, a senior Treasury official said on Monday. The Treasury also hopes by the end of June to complete a second model that will enlist the help of other countries. Link

Essential reading: States tinker with new road taxes, and more

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

* States explore new ways to tax motorists for road repair. Larry Copeland and Paul Overberg – USA Today. States are looking for new ways of taxing motorists as they seek to pay for highway and bridge repairs and improvements without relying on the per-gallon gasoline tax widely viewed as all but obsolete. Among the leading ideas: Taxing drivers for how many miles they travel rather than how much gasoline they buy. Minnesota and Oregon already are testing technology to keep track of mileage. Other states, including Washington and Nevada, are preparing similar projects. Link

* Plan to tax soda gets a mixed reception. Patricia Leigh Brown – The New York Times. The city of Richmond, California, proposal for a one-cent-per-ounce tax on sugar-sweetened beverages, which is to appear on the November ballot, meets up against the hard realities of residents’ lives. It is the most visible West Coast municipal challenge yet to Big Soda, as advocates are fond of calling it. Link

* In California, furious fight over raising cigarette tax. Adam Nagourney – The New York Times. California has some of the toughest anti smoking laws in the country — it is illegal, in some places, to smoke in your own apartment — and boasts the second-lowest per capita smoking rate in the 50 states. But for all the disdain toward smoking here, it has been 14 years since California raised its cigarette tax, a tribute to the power of the tobacco industry here and the waning of this state’s anti tobacco dominance. That may be about to change. Link

U.S. tax prosecutor Downing resigns, joins Miller & Chevalier

The logo of Swiss bank UBS at the company's Zurich office. Kevin Downing, the former U.S. Department of Justice Tax Division Attorney, had investigated UBS. REUTERS/Arnd Wiegmann

The U.S. prosecutor most responsible for piercing the veil of Swiss bank secrecy has joined the law firm of Miller & Chevalier, where he will focus on defending banks and other institutions involved in tax-related matters and controversies.

Kevin Downing, who resigned last week from the U.S. Department of Justice, said he expects to advise companies rather than individuals. Miller & Chevalier, based in Washington, D.C., has an extensive concentration in tax and international litigation.

Essential reading: Boehner sticks to no tax-hike pledge, and more

Speaker of the House John Boehner on Capitol Hill in Washington. REUTERS/Larry Downing

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

* Boehner holds firm on no tax-hike pledge. David Lawder – Reuters. U.S. House of Representatives Speaker John Boehner on Thursday dismissed suggestions that Republicans were warming to raising revenue as part of a plan to cut the deficit, adding that tax hikes on millionaires would cost jobs. The top Republican in Congress blasted a proposal from House Democratic leader Nancy Pelosi to raise taxes only on those earning more than $1 million, saying it would hurt too many small business owners, who hire the most U.S. workers. Link

* US House panel backs medical device tax repeal. Patrick Temple-West – Reuters. A Republican-controlled congressional panel voted on Thursday to repeal a tax on medical devices, a key revenue provision in President Barack Obama’s 2010 healthcare reform law, but the measure was not expected to become law. Approval in the House, which is dominated by Republicans, was viewed as probable, possibly as soon as next week. But the measure faced an uphill climb in the Democrat-controlled Senate, where parallel legislation lacks bipartisan sponsors. Link

Calendar

Some important tax and accounting dates in the week ahead:

Monday, June 4
•    Jim Doty, chairman of the Public Company Accounting Oversight Board, gives the opening keynote address at Compliance Week 2012, a three-day conference on new accounting standards, reporting requirements from the Securities & Exchange Commission, and other topics. Washington.

•    The Organization for Economic Co-operation and Development,  its Business and Industry Advisory Committee and the United States Council for International Business co-host a two-day conference on its new international taxation initiatives. Topics include transfer pricing and international tax cooperation, among others. Speakers include officials from the U.S. Treasury, the Internal Revenue Service, and private industry. Washington.

Tuesday, June 5
•    The American Law Institute and American Bar Association webcast on the Supreme Court’s decision in United States v. Home Concrete, the scope of the Treasury Department’s power to issue tax regulations, and how the court must those regulations.