Tax Break

When a group of 86 large U.S. companies came out in late October in favor of fixing the debt it was seen as a rare example of corporate unity, and a wake up call on just how urgent an issue the growing federal deficit has become for business.

In a new report, the Institute for Policy Studies (IPS),  a liberal Washington think tank,  argues that the group, called “Fix the Debt” is basically a larger version of an earlier Washington corporate lobbying group called “Win America”, and shares its focus on getting corporate money now being held overseas back into the United States with little or no taxes taken out.

Win America was pushing mainly for a lower tax rate on the repatriation of foreign earnings, but Fix the Debt is instead pushing for a shift by the United States to a territorial tax model.  Under this kind of system, the companies would paylittle or no taxes on foreign earnings when those profits are brought into the to US.  It’s especially beneficial to companies that earn a significant amount of profit in offshore tax havens.

Such a change would result in a $134 billion windfall for the 63 publicly traded companies in the Fix the Debt coalition, IPS calculates. 

Requests for comment sent to Fix the Debt were not replied to.

In a slide presentation on the group’s website on a slide entitled “What can we do?”  a “simplified tax system that is territorial and collects more revenue” is listed as one of the “budget basics that need to be addressed.”

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

 * Starbucks, Amazon and Google to face UK lawmakers over tax. Tom Bergin – Reuters. UK lawmakers will quiz executives of Starbucks, Google and Amazon on Monday about how they have managed to pay only small amounts of tax in Britain while racking up billions of dollars worth of sales. Link  

* Weekend interview: Mitch McConnell: ‘We have a voter mandate not to raise taxes. The Wall Street Journal. “I am not willing to raise taxes to turn off the sequester. Period,” Republican Senate Minority Leader Mitch McConnell said. Link  

* The tax breaks likely to come under fire. Laura Saunders – The Wall Street Journal. It’s too soon to predict exactly what will happen to the tax breaks that are set to expire at the end of the year. In general, experts say, the biggest tax breaks are likely to be the ones that will attract the most scrutiny. Link  

Some important tax and accounting events in the week ahead:

Sunday, Nov. 11 – Friday, Nov. 16 * New York University Institute on Federal Taxation. San Diego.

 Monday, Nov. 12 * Leaders from the Public Company Accounting Oversight Board, Financial Accounting Standards Board, International Accounting Standards Board, and Securities and Exchange Commission as well as former Olympus Corp CEO Michael Woodford speak at the Financial Executives International’s conference on financial reporting issues. Marriott Marquis Times Square. New York.

Tuesday, Nov. 13 – Wednesday, Nov. 14 * Thomas A. Barthold, chief of staff of the U.S. Congress Joint Committee on Taxation, and William Wilkins, chief counsel for the Internal Revenue Service, and others speak at the Bloomberg BNA Tax Policy & Practices Summit. Ritz-Carlton Hotel. Washington.

Speaker John Boehner (R-OH) on Capitol Hill, June 28, 2012. REUTERS/Yuri Gripas

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

* Raising tax rates ‘unacceptable’ Speaker Boehner. John Parkinson – ABC News. Raising tax rates is “unacceptable” to House Speaker John Boehner as he prepares to open negotiations on the looming “fiscal cliff” with the president and congressional Democrats, he told “World News” anchor Diane Sawyer today in an exclusive interview. Link

* GOP’s rejection of higher tax rates an obstacle to debt deal. Paul Kane and David Fahrenthold – The Washington Post. The new conciliatory tone among House Republican leaders this week will soon have to confront an old Washington reality: the GOP’s deep opposition to higher tax rates. As they begin bipartisan talks on a broad debt deal, White House and congressional leaders face a group of skeptical rank-and-file Republicans in the House who don’t view Tuesday’s Democratic victories as a reason to retreat on taxes. Link 

* Tax twist: At some firms, cutting corporate rates may cost billions. Michael Rapoport – The Wall Street Journal. President Barack Obama has said, most recently during last month’s presidential debates, that the 35% U.S. corporate tax rate should be cut. That would mean lower tax bills for many companies. But it also could prompt large write-downs by Citigroup, AIG, Ford and other companies that hold piles of “deferred tax assets,” or DTAs. Link

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

 * CEOs vow to work with Obama team. John McKinnon and Colleen Nelson – The Wall Street Journal. Business leaders pledged cooperation with President Barack Obama on Wednesday, hoping to reset their relationship after a campaign season marked by White House criticism of corporations and the wealthy. As an overture to the re-elected president, some business leaders said their Republican allies in Congress will have to temper their expectations on some major issues that have divided the two parties. Link  

* Product questions and threats of higher tax hit Apple shares. Nick Wingfield – The New York Times. On Wednesday, Apple’s shares slid 3.8 percent. They outpaced a broader decline in the stock market set off by investors’ uncertainty about how the outcome of the presidential election will affect taxes. Link  

* U.S. workers may give up time off as storm aid. Catherine Rampell – The New York Times. The Internal Revenue Service said Tuesday that American employees could donate, through payroll deductions, their vacation, sick and personal leave days to organizations helping with Hurricane Sandy relief efforts. The IRS allowed such donations after the Sept. 11 attacks and after Hurricane Katrina. Link  

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

 * Question for the victor: How far do you push? Peter Baker – The New York Times. What faces President Barack Obama in this next stage of his journey are not overinflated expectations of partisan, racial and global healing, but granular negotiations over spending cuts and tax increases plus a looming showdown with Iran. Link

* Obama’s re-election and a path to a tax code revamp. Kim Dixon – Reuters. It will be President Barack Obama’s choice, those in both political parties agree, to make a bold proposal and use his bully pulpit to push through fundamental tax reform. Link  

* What Obama’s win may mean for personal tax planning. Nanette Brynes – Reuters. Uncertainty about who will occupy the White House is over now that U.S. President Barack Obama has been re-elected, but uncertainty about taxes is still with us. There is no need to feel paralyzed though. Tax advisers say it is possible now to suggest tax planning moves that could be a smart way for individuals to play a second Obama presidency, though a lot of variables remain. Link  

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

 * State tax votes could pose risks to close-end funds. Daisy Maxey – The Wall Street Journal. Investors in several closed-end funds that focus on individual states’ municipal securities have something riding on the ballot Tuesday. If approved, ballot measures to restrain taxes in Arizona, Florida and Michigan could cause funds to decline in price or become riskier investments. Link

* Roth IRA conversions popular ahead of tax rise. Arden Dale – The Wall Street Journal. With looming increases in federal income tax rates next year, some investors are stepping up efforts to convert their traditional individual retirement accounts to Roth IRAs. The wealthy see a chance to save on taxes – their own and heirs’ – by moving money from traditional IRAs to Roth accounts in 2012. Link  

* MF Global customers sue PricewaterhouseCoopers in amended lawsuit. Nate Raymond – Reuters. Former customers of MF Global Holdings Ltd’s broker-dealer have added accounting firm PricewaterhouseCoopers LLP as a defendant in a lawsuit stemming from the collapse of the brokerage. In an amended complaint filed in U.S. District Court in Manhattan on Monday, the customers of MF Global Inc accused PwC of failing to adequately audit MF Global’s internal controls over customer funds. Link

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

 * HMRC to face MPs over multinationals’ tax. Vanessa Houlder – The Financial Times. Top UK Revenue officials who will appear before MPs on Monday are likely to come under renewed pressure over the tax affairs of some of the highest profile multinationals operating in Britain. Starbucks, Google, Amazon, Facebook and eBay have been the focus of intense scrutiny after it emerged that they paid corporate tax of a few million pounds. Link  

* Some taxes are sure to go up. John McKinnon – The Wall Street Journal. Taxes on investment income are going up no matter who wins Tuesday’s elections, at least for higher-income households. The tax breaks for capital gains, dividends and other types of investment income are an appealing place to look for revenue. Link 

 * Middle class faces quick impact from fiscal cliff in form of alternative minimum tax. Lori Montgomery – The Washington Post. The best hope for a deal to avoid the “fiscal cliff” may lie with the alternative minimum tax, an obscure provision of the tax code that is about to become alarmingly relevant to millions of middle-class taxpayers. Link

Some important tax and accounting events in the week ahead:

Monday, Nov. 5

U.S. Government Accounting Standards Board Chairman Robert H. Attmore addresses the New York State Society of CPAs Public Schools Committee Annual Conference. Albany Marriott. Albany, New York.

Monday, Nov. 5 – Tuesday, Nov. 6

American Institute of Certified Public Accountants real estate conference. Bellagio Hotel. Las Vegas.

Tuesday, Nov. 6

Election Day in the United States.

Tuesday, Nov. 6 – Thursday, Nov.8

U.S. Internal Revenue Service and Treasury Department officials speak at the Practicing Law Institute’s seminar on tax strategies for corporate acquisitions, reorganizations and other structural changes. Sofitel Chicago Water Tower. Chicago.

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

 * Tax reform tops agenda – and helps explain campaign spending explosion. Tom Hamburger – The Washington Post. It is no accident that much of the record spending in this year’s election, now funding an avalanche of last-minute ads across the country, comes from groups with a strong interest in shaping federal tax rules. Tax reform is likely to be at the top of the agenda for the next Congress. Link

* For business, vote holds high stakes. Damian Paletta and Brody Mullins – The Wall Street Journal. The outcome of Tuesday’s presidential election carries enormous weight for executives of American businesses, big and small, influencing everything from the taxes they are required to pay to the attitudes of regulators who scrutinize them. Taxes are high on the business worry list. Link  

* Private equity firms try to repair image. Brody Mullins – The Wall Street Journal. The private-equity industry, bruised by relentless Democratic attacks on Mitt Romney and his stewardship of Bain Capital, has mounted a campaign to repair its reputation. Private-equity managers pay a tax rate of 15 percent on much of their income because it comes as “carried interest,” a form of capital gains, rather than salaried income, which at the highest rate would be taxed at 35 percent. Link