Tax Break

Essential reading: Democrats seek to reassure vulnerable senators on tax cuts, and more

Good morning and welcome to the top tax and accounting headlines from Reuters and other sources.

* Democrats seek to reassure vulnerable senators on tax cuts. Kim Dixon – Reuters. The top U.S. Senate Democrat said on Thursday that politically vulnerable lawmakers will be “just fine” if they back President Barack Obama’s plan to extend tax cuts only for households making $250,000 or less, a vote that could be perilous for some facing re-election in November. Democratic Senate Majority Leader Harry Reid’s remarks to reporters came as he tried to steer Obama’s initiative – a centerpiece of the president’s re-election campaign – to Senate passage by the end of this month. Link

* Republicans block small-business tax break on procedural vote. Lisa Mascaro – The Los Angeles Times. One of the top items on President Obama’s to do list – a 10 percent tax break for small businesses that make new hires – got tangled in an election-year tax debate as Republicans led a filibuster to block the measure. The legislation would have provided the tax credit to companies that hire new employees or otherwise expand their payrolls this year, a typically popular approach among the GOP. Republicans in the Senate did not necessarily object to the measure, but they protested on Thursday after Democrats refused to allow votes on other amendments. Link

* Mitt Romney faces new round of calls to release tax returns. Philip Rucker – The Washington Post. Six months after Mitt Romney’s reluctance to release his tax returns tripped him up in the South Carolina Republican presidential primary, the now-presumptive nominee is once again grappling with whether to disclose more information about his personal finances amid mounting pressure from his opponents. For days, Democrats have been demanding that Romney make public additional tax returns that could shed light on his fortune, which is estimated at $190 million to $250 million. President Obama’s reelection campaign and its allies are hinting at nefarious activity, suggesting that Romney has been hiding information pertaining to his Swiss bank account and investments in the Cayman Islands. Link

* My word! U.S. accountants suggest brevity a virtue. Dena Aubin – Reuters. The Financial Accounting Standards Board is seeking comment through Nov. 16 on ways to make financial reports more relevant and useful. Cutting the volume of verbiage is not the main goal but will probably be a result, the Financial Accounting Standards Board said. Link

Essential reading: Obama, Democrats put tax cuts at center of 2012 agenda, and more

Democrats Nancy Pelosi, the minority leader in the U.S. House of Representatives, President Barack Obama, and Senate Majority Leader Harry Reid at the White House in 2010. REUTERS/Larry Downing

 

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

* Obama, Democrats put tax cuts at center of 2012 agenda. Richard Cowan – Reuters. Congressional Democrats and President Barack Obama on Wednesday plotted their legislative priorities for the months leading up to November’s elections, showcasing an extension of middle-class tax cuts as well as  measures to keep government agencies functioning beyond Sept. 30. Later this month, the Democratic-led Senate is expected to stage a vote on continuing tax cuts for families earning up to $250,000 – an election-year initiative that the Republican-controlled House of Representatives will not go along with. Link  

* Clients of Swiss bank raided in tax probe. David Crawford and Laura Saunders – The Wall Street Journal. German tax inspectors in recent weeks have been raiding the homes of Credit Suisse Group AG clients suspected of evading taxes, according to bank and German government officials. The investigation is centering on about 5,000 clients who between 2005 and 2009 allegedly bought insurance policies at a Bermuda-based subsidiary of the Swiss bank. Link  

Essential reading: Attacks on Romney for offshore assets, taxes heat up, and more

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

* Attacks on Romney for offshore assets, taxes heat up. Jeff Mason and Steve Holland – Reuters. President Barack Obama’s re-election team stepped up attacks on Mitt Romney for holding offshore assets and urged him to release more tax returns, pushing hard on an issue that could be a weak point for the Republican presidential candidate. The Obama campaign and top Democrats took to the Internet and airwaves on Tuesday with accusations that Romney is being secretive about his wealth as they sought to cement an image of the Republican candidate as a multi-millionaire who is out of touch with ordinary Americans. Link 

* Romney tax plan would eat into popular breaks: study. Kim Dixon – Reuters. Republican presidential candidate Mitt Romney’s pitch to slash taxes by 20 percent across-the-board would require cuts of about $320 billion in popular tax breaks to avoid adding to the deficit, a nonpartisan analysis said on Tuesday. The report by the Tax Policy Center found that to pare tax rates to the level promised by Romney, a third of the $1.1 trillion in so-called federal tax expenditures would have to be axed to prevent the federal budget deficit from growing. Link

* Little-known U.S. board stokes hot pension debate. Nanette Byrnes – Reuters. The feedback was swift and often scathing when a little-known public board signaled its intent to toughen the accounting rules governing state and local pension funds of millions of U.S. public employees, intensifying worries over a shortfall of billions of dollars. The plan by the Governmental Accounting Standards Board (GASB) – which was approved on June 25 – drew praise from the American Institute of Certified Public Accountants and from investors looking for transparency in the $3.7 trillion municipal bond markets. Link

Republicans seek drama on Obamacare future

House Republicans sought to dramatize the Supreme Court’s ruling upholding President Barack Obama’s health law on Tuesday, when they warned that Congress could slap taxes on those failing to eat their vegetables and jail those who fail to comply.

At a packed room of the Republican-controlled House Ways and Means committee, witnesses called by the majority warned that the court’s opinion could bloat government power to a dangerous new level.

“We must again consider whether the federal government can require people to purchase broccoli,” said Carrie Severino, a lawyer at the Judicial Crisis Network, echoing two other Republican witnesses. “Allowing unrestricted taxes on inactivity will open the door to taxes the likes of which this country has never seen.”

Essential reading: Obama challenges Republicans to keep tax cuts for middle class, and more

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

* Obama challenges Republicans to keep tax cuts for middle class. Jeff Mason and Alister Bull – Reuters. President Barack Obama called on Monday for a one-year extension of Bush-era tax cuts for families earning less than $250,000 a year, seeking to steer the election-year debate away from high unemployment and portray himself as a champion of ordinary Americans. The tax proposal is unlikely to sway Obama’s Republican opponents in Congress, who argue that the cuts should be maintained for everyone, including higher earners. Link

* Tax bill aims to encourage small business hiring. Corey Boles – The Wall Street Journal. Senate Democrats will try this week to pass a targeted tax relief package aimed primarily at encouraging small businesses to hire new workers. The $28 billion bill, the latest in a series of election-year tax maneuvers by the political parties, would provide a tax credit to all firms that hire new workers or increase pay for existing staff. Companies could earn a maximum credit of $500,000 against their 2012 income tax liability under the bill. Link

* Maine Governor LePage apologizes for “Gestapo” comment. Reuters. Maine Governor Paul LePage apologized on Monday for calling the U.S. Internal Revenue Service the “Gestapo” during criticism of President Barack Obama’s healthcare law. The Republican governor compared the tax agency to Nazi secret police during a weekend radio address on healthcare. Link

Study: Companies of Republican CEOs pay more tax than Democrats’

Boeing CEO James McNerney (L) introduces U.S. Republican Presidential candidate Mitt Romney to speak to company leaders at a gathering sponsored by the Business Roundtable. Washington, June 13, 2012. REUTERS/Jason Reed

Despite Democratic attempts to paint the Republicans as the party of the tax dodger, companies run by CEOs with Republican political leanings typically pay more in taxes than those run by Democrats, according to a new study.

Republican-led firms paid 2 percent more than their more liberal counterparts, the study’s authors will report to the annual meeting of the American Accounting Association next month.

Essential reading: Obama to seek one-year extension for some of Bush tax cuts, and more

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

* Obama to seek one-year extension for some of Bush tax cuts. Alister Bull – Reuters. President Barack Obama will call on Monday for a one-year extension of Bush-era tax cuts for families earning less than $250,000 a year, according to a White House official, seeking to spare the economy the impact of taxes going up on Jan. 1. Obama, a Democrat, will make the request in a statement at the White House, said the official, who spoke on condition of anonymity. Republicans in Congress, however, are unlikely to be swayed, as they have consistently argued that the Bush tax cuts should be extended for everyone. Link  

* Democrats put pressure on Romney’s taxes. Stephanie Kirchgaessner – The Financial Times. Supporters of President Barack Obama raised the temperature surrounding Mitt Romney’s finances on Sunday, reiterating claims that the presumptive Republican nominee used shell corporations in offshore havens to avoid paying U.S. taxes. Robert Gibbs, the president’s former press secretary, went so far as to suggest that Romney may have skirted the law. Kevin Madden, a senior Romney adviser, said Mr Romney “hasn’t paid a penny less in taxes” even though some of his funds were domiciled in Switzerland and Bermuda. Link  

* Can IRS police both taxes and healthcare law? The Associated Press. Can the Internal Revenue Service police President Barack Obama’s healthcare mandate while simultaneously collecting all the taxes for running the federal government? The question is being renewed in the wake of the Supreme Court’s decision upholding most of the 2010 Affordable Care Act as a tax issue rather than one of interstate commerce. Nearly 2 1/2 years before taxpayers will have to start providing proof on their tax returns that they have health insurance, key Republicans suspect the agency already is diverting resources from collecting taxes to gear up for becoming the government’s healthcare cop. Link  

ABA members argue legality of audit firm rotation proposal

The watchdog for U.S. auditors has been debating some of the toughest reforms in many auditors’ memories this year. Now some legal experts are questioning whether it has the authority to impose its most controversial idea – making companies switch, or rotate, audit firms after a set number of years.

In a letter to the Public Company Accounting Oversight Board, members of the American Bar Association joined a long line of critics of rotation. The lawyers cited the 2002 Sarbanes-Oxley act, which created the PCAOB, and questioned where it gave the board any authority to mandate rotation.

The letter was signed by the chairs of ABA’s federal regulation of securities committee and its law and accounting committee.

Calendar

Some important tax and accounting events in the week ahead:

Monday, July 9
•    U.S. Internal Revenue Service hearing on proposed regulations for government retirement plans. 10 a.m. EDT, IRS auditorium. Washington.

Monday, July 9 – Thursday, July 12
•    Steven Miller, IRS deputy commissioner of services and enforcement, is among the speakers at the National Association of Tax Professionals conference. Baltimore.

Tuesday, July 10
•    U.S. House Ways and Means Committee hearing on the implication of the Supreme Court ruling on the individual mandate and Congress’s authority to lay and collect new taxes. 10:30 a.m. EDT Longworth House Office Building. Washington.
•    U.S. Senate Finance Committee hearing on tax reform. 2 p.m. EDT, Dirksen Senate Office Building. Washington.
•    Beverly Katz, special counsel to the IRS Office of Associate Chief Counsel, speaks at the D.C. Bar Taxation Section Pass-Throughs and Real Estate Committee luncheon program. 12 noon EDT. Washington.

Essential reading: Romney campaign’s missteps have some Republicans grumbling, and more

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

* Romney campaign’s missteps have some Republicans grumbling. Steve Holland – Reuters. Conservatives were particularly disappointed in Mitt Romney’s policy dance this week over whether requiring Americans to buy health insurance under Obama’s healthcare plan should be considered a tax, as the Supreme Court ruled last week, or a penalty. His position put the presumed party nominee squarely in opposition to the view held by Republican leaders of Congress and many Republican voters. Some Republicans said that by continuing to discuss the healthcare ruling, Romney’s team was reminding voters of his role in creating the Massachusetts plan – and diverting the campaign from its focus on jobs and the economy, which most Republicans see as Obama’s biggest weakness. Link

* In defending his healthcare plan, Romney often called its mandate a tax. Michael Shear and Ashley Parker – The New York Times. Four months before Mitt Romney signed his healthcare plan into law in Massachusetts in 2006, he told a conservative group that the state’s tax code would be the hammer that would make the plan work. As the Massachusetts governor and then as a presidential candidate, Romney spent the next six years describing in a variety of different ways the possible punishments for ignoring the Massachusetts mandate: as “free-rider surcharges,” “tax penalties,” “tax incentives” and sometimes just as “penalties.” Link

* Tax vote splits snarled Atlanta. Cameron McWhirther – The Wall Street Journal. Voters here will decide this month whether to increase their sales taxes by a penny to raise billions of dollars for improved roads and mass transit in a city notorious for its grinding congestion and dysfunctional train and bus service. Political and business leaders conceived the referendum— for a tax of one cent on the dollar, in addition to any other taxes in a given county — several years ago and got the proposal through the state legislature in 2010. They estimate that the tax would raise $8.5 billion within the next decade for projects they say are desperately needed to help Atlanta heal its battered economy and improve its quality of life. Link