Tax Break

Essential reading: Tax haven clampdown yields cash but secrecy still thrives, and more

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

* Tax haven clampdown yields cash but secrecy still thrives. Chris Vellacott and Sinead Cruise – Reuters.
A global campaign to tax trillions of dollars hidden in offshore tax havens has made revolutionary progress, an official leading the drive said, rejecting suggestions that the super rich are running rings around Western authorities. Leaders of the G20 group of leading Western and developing nations launched the campaign three years ago, aiming to claw back billions in lost tax revenue at a time when many governments are trying to cut huge budget deficits. Link

* Senate passes middle-class tax cut bill in symbolic move. Richard Cowan and Kim Dixon – Reuters. President Barack Obama’s fellow Democrats in the Senate on Wednesday won passage of a bill to renew tax cuts for tens of millions of Americans, while letting some rates rise for the wealthiest, in a largely symbolic vote. The legislation, certain to be rejected by the Republican-controlled House of Representatives, lets Democrats claim in advance of the November 6 elections that they passed tax cuts for most Americans, only to be stymied by Republicans. Link

* Pricewaterhouse had brief window into Peregrine’s books. Sarah Lynch – Reuters. PricewaterhouseCoopers, one of the world’s largest accounting firms, reviewed the accounts of failed futures brokerage Peregrine Financial Group while the alleged fraud at the brokerage was occurring, a top regulator told lawmakers on Wednesday. Gary Gensler, chairman of the Commodity Futures Trading Commission, revealed that PwC was retained in 2000 after Peregrine settled an enforcement action from the CFTC. Link

* About 50 political groups win tax-exempt status-IRS. Patrick Temple-West – Reuters. A senior Internal Revenue Service official on Wednesday put a number for the first time on how many political groups, including some “Tea Party” organizations, have gained IRS tax-exempt status in recent years. Link

* Small business audits often find no more taxes due-IRS watchdog. Reuters. The U.S. Internal Revenue Service’s watchdog criticized the agency for doing a high number of small business, “S-corporation” audits without finding additional taxes owed. Link

Essential reading: Democrats aren’t all on same page on Bush-era tax cuts, and more

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

* Democrats aren’t all on same page before vote on Bush-era tax cuts. Jonathan Weisman – The New York Times. On the eve of the first showdown vote on expiring Bush-era tax cuts, it’s the Democrats who appear to be splintering. The Senate will vote Wednesday on whether to proceed to a tax bill that would extend current tax rates and other tax breaks for the middle class and working poor, while allowing income tax, capital gains and dividend rates to rise on earnings over $250,000. The measure will almost certainly fall to a Republican filibuster. Democratic leaders are hoping to get the support of 50 of the 53 Democrats and Democratic-leaning independents in the Senate. Link

* White House tries to prod Congress with new tax report. Jared Favole – The Wall Street Journal. The White House is trying to ratchet up pressure on congressional Republicans, saying a new report shows middle-class families would see their tax bills increase by an average of $1,600 if Congress doesn’t extend tax cuts set to expire at year’s end. “Congress faces a choice,” says a new report released by the White House National Economic Council, which details the costs and benefits of different proposals from President Barack Obama and congressional Republicans over how to handle the Bush-era tax cuts that will expire at the end of the year. Link

* Obama attacks Romney on tax cuts for wealthier Americans. Amy Gardner – The Washington Post. At appearances in Portland Tuesday and in Oakland, Calif., late the night before, Obama issued blistering attacks against Republican Mitt Romney’s plan to cut taxes for the wealthiest Americans. The message has become a cornerstone of the president’s strategy. Link

* U.S. Treasury to release foreign tax pact rules within days. Reuters.
The U.S. Treasury Department will release before the end of July new compliance rules for foreign governments eager to cooperate with looming U.S. tax laws and spare their domestic banks from U.S. fines, a Treasury official said on Tuesday. The expected rules are part of Treasury’s implementation of the Foreign Account Tax Compliance Act, or FATCA, a 2010 anti-tax evasion law. Link

* Little headway in U.S. Congress for online sales tax. Reuters.
U.S. lawmakers debated, but found little agreement on Tuesday on a proposal to impose a national standard for letting state governments impose sales tax on online retail sales. Legislation along these lines has languished for years in the Senate and the House of Representatives, for reasons that were clearly on display at a House committee hearing. Link

Essential reading: Firms pass up tax breaks, loopholes impact U.S. deficit, and more

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

* Firms pass up tax breaks, citing hassles, complexity. John McKinnon – The Wall Street Journal. Many companies are saying “no, thanks” to tax breaks and are likely paying more taxes than legally required. Corporate breaks that Washington hopes will boost the economy often prove ineffective. Firms are leaving tens of billions of dollars on the table every year. Out of 1.78 million corporate tax returns in the United States, only about 20,000 claimed any of the three dozen main business tax credits in the code, according to Internal Revenue Service estimates. Link 

* Tax loopholes block effort to close gaping U.S. deficit. Jonathan Weisman – The New York Times. Senator Mike Crapo made sure that a $3 billion loophole — protecting “black liquor,” an alcoholic sludge used as fuel in timber mills and factories — remained open in the negotiations over the highway bill that President Obama signed this month. Many budget experts criticize the loophole as a tax dodge because it allows the sludge to qualify for an energy subsidy created to wean the country off imported oil for vehicles, which black liquor does not do. Link

* Cost difference: GOP and Democrats tax plans not so far apart. John McKinnon – The Wall Street Journal. Democrats sought to highlight the lower cost of their bill to extend Bush-era tax cuts, compared to the GOP version, in an analysis they released Friday night. Senate Democrats touted their $250 billion plan as $155 billion cheaper than a competing Republican version that costs about $405 billion. The real difference between the competing plans, of course, is the GOP extension of tax breaks for families making more than $250,000 next year. That costs about $49 billion, according to the latest estimate from congressional experts. Link

Calendar

Some important tax and accounting events in the week ahead:

Monday, July 23 – Wednesday, July 25  * American Institute of Certified Public Accountants conference on gift and estate taxation, the generation-skipping transfer tax, income tax considerations related to trusts, estates, and large IRAs, and more. Las Vegas.

Monday, July 23 – Tuesday, July 24  * Practicing Law Institute seminar on foreign tax credits, tax treaties, international tax reform, the Foreign Account Tax Compliance Act, and passive foreign investment companies. New York and webcast.

Tuesday, July 24  * U.S. House of Representatives Judiciary Committee hearing on the Marketplace Fairness Act, which would permit states to require online retailers to charge sales tax. 10:00 a.m. EDT, Rayburn House Office Building. Washington.

Essential reading: Ann Romney says no more tax returns, and more

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

* Ann Romney: No more tax returns. John McKinnon – The Wall Street Journal. Mitt Romney’s wife, Ann, said the Romney campaign won’t be releasing older tax returns in order to block further attacks from President Barack Obama. But Democrats – and some Republicans – are still calling for Romney to release more than two years of tax returns. Link

* Non-partisan report sees no harm in U.S. tax hikes for wealthy. Kim Dixon – Reuters. Letting tax rates for the wealthy rise will not put a short-term damper on the economic recovery, according to a report by the non-partisan research arm of the U.S. Congress. The study by the Congressional Research Service is likely to be used by Democrats in the looming battle over whether to extend tax cuts originally enacted during the administration of President George W. Bush when they expire at the end of the year. Link

* How the division on taxes adds up. Jonathan Weisman – The New York Times. Congress has reached a bitter stalemate over $28 billion. That is the difference in cost between extending all the Bush-era tax cuts set to expire on Jan. 1 for one year and allowing the tax cuts to expire on earnings over $250,000, which the Democrats want, according to a new analysis by Congress’s bipartisan Joint Committee on Taxation. It amounts to about 3 percent of the expected trillion-dollar budget deficit this year. Link

Essential reading: Boxed in on taxes, Romney says Obama dislikes success, and more

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

* Boxed in on taxes, Romney says Obama dislikes success. Sam Youngman and Steve Holland – Reuters. Mitt Romney accused President Barack Obama on Wednesday of demonizing business success, as the Republican tried to ignore questions about his personal finances that threaten to damage his presidential bid. Some senior Republicans worry that Romney is becoming boxed in by the Obama team, just at the time in the race when many Americans begin to tune in and form clearer opinions about candidates before the November 6 election. Link

* Defense firms open to higher taxes to avert cuts. Damian Paletta – The Wall Street Journal. Two top defense contractors told a House committee Wednesday that Congress should consider including increasing taxes as part of a package of changes to reduce the deficit, a sign that industry fear over the impact of spending cuts next year could challenge party orthodoxy. Top executives from Lockheed Martin, Pratt & Whitney, EADS North America, and Williams-Pyro told the House Armed Services Committee that the $50 billion in projected military spending cuts set to begin in January already has had a chilling impact on military planning, delaying projects and raised the possibility of layoffs before the end of 2012. Link

* U.S. utilities fear approach of fiscal cliff. James Politi – The Financial Times. The largest US utilities blitzed Capitol Hill this week to lobby for a deal to avert the effects of the “fiscal cliff” on their industry, warning that increases in tax rates on dividends could damage their normally steady shares and delay investments in the country’s electrical grid. The threat of tax increases on dividends has alarmed companies with steady cash flows that pay a lot out to shareholders. Link

Essential reading: Pressure on Romney ramps up from both sides, and more

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

* With or without tax return release, pressure on Romney ramps up from both sides. Felicia Sonmez and Philip Rucker – The Washington Post. The political pressure on Mitt Romney to release more of his personal income tax returns is causing some divisions inside the GOP presidential candidate’s camp, according to a Republican strategist close to the campaign. Although some advisers are arguing privately that Romney needs to release additional filings to curb the political fallout, others are resisting that suggestion, reflecting the candidate’s longtime reluctance to publicly disclose information about his personal finances. Link

* Romney explains Cayman Island investments. John McKinnon – The Wall Street Journal. Mitt Romney, in an interview with the National Review, improved greatly on his campaign’s halting explanation of why he has held investments in the Cayman Islands, a Caribbean tax haven. Romney suggested that his Cayman Islands investments are basically standard-issue private equity partnerships, not tax shelters. Cayman Islands is a favorite destination for private equity managers to locate new partnerships, mostly because foreign investors can participate while avoiding some U.S. tax entanglements. The same often goes for U.S. tax-exempt entities such as pension funds. Link

* Romney’s secrecy becomes focus of Obama’s attack strategy. Jeff Mason – Reuters. Mitt Romney has secrets. Lots of them, perhaps. That provocative claim is at the core of President Barack Obama’s latest attacks on his Republican rival, a strategy that is dominating the narrative of the presidential campaign and leading anxious Republicans to question Romney’s tactics. Unlike most politicians seeking national office, Romney initially declined to release any of his tax returns. In January, under pressure from his opponents in the Republican primaries, he released his 2010 return and an estimate for 2011. Link

Essential reading: President’s populist pitch divides suburban voters, and more

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

* President’s populist pitch divides suburban voters. Colleen McCain Nelson – The Wall Street Journal. Barack Obama and Republican challenger Mitt Romney are battling over suburban, upper middle-class voters, a constituency important to both men. The president drew strong support from suburban voters four years ago. The question in the 2012 contest is whether these voters agree with Obama’s more populist economic message —or whether the tax-the-rich rhetoric is pushing them away. The president last week renewed his effort to extend Bush-era tax cuts for families with an adjusted gross income of less than $250,000 and raise marginal tax rates for wealthier Americans. Link

* Senator Murray says Democrats will let tax cuts expire. Jonathan Weisman – The New York Times. Senator Patty Murray of Washington, a member of the Democratic leadership, said on Monday that her party is prepared to allow all of the Bush-era tax cuts to expire and for automatic spending cuts to kick in unless Republicans give up their opposition to tax increases on the wealthy. Murray’s tough line, in a speech at the Brookings Institution, signaled a stiffening of Democratic resolve a week after President Obama reiterated his demand for a one-year extension in the Bush-era tax cuts only for people earning less than $250,000. Link

* Romney rejects calls on tax returns. Patrick O’Connor and Daniel Lippman – The Wall Street Journal.

Mitt Romney on Monday rejected calls from Democrats and some in his own party to release more than his 2010 and 2011 tax returns. Romney defended his decision, saying he was following a precedent set by the GOP nominee four years ago, Arizona Sen. John McCain. Later in the day, senior Romney adviser Eric Fehrnstrom told reporters at a fundraiser in Baton Rouge, La., that the candidate has no plans to release additional returns. “Two years is what John McCain put out,” he said. “We think it’s sufficient.” Link

Essential reading: Tax break nears end for online shoppers, and more

A rally outside the Amazon.com shareholders meeting in Seattle, Washington, May 24, 2012. REUTERS/Marcus DonnerWelcome to the top tax and accounting headlines from Reuters and other sources.

* Tax break nears end for online shoppers. Monica Langley – The Wall Street Journal. Republican governors, eager for new revenue to ease budget strains, are dropping their longtime opposition to imposing sales taxes on online purchases, a significant political shift that could soon bring an end to tax-free sales on the Internet. The newfound support among Republicans is a dramatic change from just a few months ago, and Republicans in Congress are seizing on the state level shift to push ahead federal legislation. Link

* Democrats threaten to go over ‘fiscal cliff’ if GOP fails to raise taxes. Lori Montgomery – The Washington Post. Democrats are making increasingly explicit threats about their willingness to let nearly $600 billion worth of tax hikes and spending cuts take effect in January unless Republicans drop their opposition to higher taxes for the nation’s wealthiest households. Emboldened by signs that GOP resistance to new taxes may be weakening, senior Democrats say they are prepared to weather a fiscal event that could plunge the nation back into recession if the new year arrives without an acceptable compromise. Link

Calendar

Some important tax and accounting events in the week ahead:

Monday, July 16 • New York University two-week conference begins on corporate income tax, international taxation, wealth-planning and other topics. New York City.

Tuesday, July 17 and Thursday, July 19 • IRS conferences in Buffalo, New York, on July 17 and in Erie, Pennsylvania, on July 19 on the benefits and responsibilities of tax-exempt status, and what must be done to maintain it.

Wednesday, July 18 • Paul Oosterhuis of Skadden, Arps and Lee Sheppard of Tax Analysts debate transfer pricing issues and solutions at a luncheon sponsored by the International Tax Institute. 12:15 p.m. EDT, Grand Hyatt Hotel. New York City.