Tax Break

Essential reading: Amazon, forced to collect a tax, is adding roots, and more

September 12, 2012

A worker collects products at the Amazon.com warehouse facility in New Castle, Delaware. REUTERS/Tim Shaffer

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

* Amazon, forced to collect a tax, is adding roots. David Streitfeld – The New York Times. Amazon’s multibillion-dollar building frenzy comes as the company is about to lose perhaps its biggest competitive edge — that the vast majority of its customers do not pay sales tax. After negotiations with lawmakers, the company is beginning to collect taxes in California, Texas, Pennsylvania and other states. But Amazon hopes new warehouses will allow it to provide better service, giving it the ability to up-end the retailing industry in an entirely new way. Link  

* Top managers avoid pension tax caps. Alison Smith – The Financial Times. More than two-fifths of the executives with defined-benefit (DB) pensions at the UK’s 100 largest quoted companies by market value are escaping new rules aimed at capping the tax-free amounts paid into their retirement packages. But executives with DB pensions from the next band of big companies – ranked in the FTSE 250 – are far more likely to have contributions inside the tax net, with only one in 20 protected from the new regime limiting tax relief. Link  

* Whistleblower in UBS tax case gets record $104 mln. Patrick Temple-West and Lynnley Browning – Reuters. The whistleblower in a breakthrough tax fraud case against Swiss bank UBS AG has won a record-setting $104 million reward from the U.S. Internal Revenue Service, a handsome payout that could entice more informants to come forward. Bradley Birkenfeld, who once confessed to smuggling diamonds in a toothpaste tube, was not present at the news conference on Tuesday where his award was announced by his lawyers. Link

* Moody’s cautions of possible U.S. downgrade in 2013. Damian Paletta – The Wall Street Journal. Moody’s Investors Service, in the latest reminder of the tense fiscal negotiations looming for Congress and the White House, said it could downgrade the U.S. government’s credit rating next year if steps aren’t taken to tackle the rising debt. The government has run a $1 trillion deficit for four consecutive years, meaning it has spent much more than it has brought in through revenue. Link  

* The Pirate Bay co-founder faces new allegations. Sven Grundberg – The Wall Street Journal. Swedish prosecutors now suspect Gottfrid Svartholm Warg, one of the founders of file-sharing website The Pirate Bay, of having been involved with illegally obtaining personal information from Sweden’s tax authority earlier this year, in addition to a crime for which he has already been convicted. The fresh allegations were published on the prosecutor’s website Tuesday and a spokesman confirmed the validity of the material. Svartholm, 27 years old, was taken into custody Tuesday by Swedish authorities after he returned to the country from Cambodia. Link

* Mr. Romney eludes specifics on his tax plan. The Washington Post editorial. Republican presidential nominee Mitt Romney is specific about how much he will cut income tax rates for every American: by one-fifth. But he is vague about how he’ll pay for this, though he insists he can cut rates without losing revenue. The danger is a repeat of 2001 and 2003, when President Bush and Congress enacted tax cuts that plunged the nation into debt. Link  

* Mitt Romney, carried interest and capital gains. Bruce Bartlett – The New York Times opinion. The issue of Mitt Romney’s taxes continues to be a political liability for him. An NBC News/Wall Street Journal poll last month found that 36 percent of registered voters have a more negative opinion of him because of the issue, up from 27 percent in January, compared with 6 percent who have a more positive view. Link

* For top executives, richer retirement plans. Fran Hawthorne – The New York Times opinion. With traditional pensions disappearing, tax rates and the future of Social Security in flux and even well-known businesses facing financial trouble, many workers are worried that their company retirement plans will not provide enough income. But for the upper tier of executives, these trends could actually lead to richer corporate perks as management moves to compensate for the uncertainties. Link

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