Tax Break

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

* Greece warns of going broke as tax proceeds dry up. Liz Alderman – The New York Times. As European leaders grapple with how to preserve their monetary union, Greece is rapidly running out of money. Greek leaders said that despite their latest bailout of 130 billion euros, or $161.7 billion, they face a shortfall of 1.7 billion euros because tax revenue and other sources of potential income are drying up. Link

* Tribunal faces rise in number of tax disputes. Vanessa Houlder – The Financial Times. More than 20,000 tax disputes are queuing to be heard by the recently established tribunal system as the government struggles to crack down on avoidance. The backlog of unheard cases rose by a third over a year to stand at 22,100 in the fourth quarter of 2011, according to the UK Ministry of Justice figures. The number actually heard by the tribunal also rose sharply, from 9,100 in 2010 to 11,000 in 2011. Link

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.

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

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

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.

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

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.

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

* Medical device tax repeal gains some ground. N.C. Aizenman – The Washington Post. Makers of medical devices are gaining some momentum in a vigorous campaign to persuade Congress to scrap a tax imposed on their industry by the 2010 healthcare law. A bill to void the tax sponsored by Rep. Erik Paulsen will be marked up in the House Ways and Means Committee on Thursday. Republican House leaders say a floor vote could be scheduled as soon as next week. Link

* Swiss parliament oks German, UK, Austria tax deals. Andrew Thompson and Catherine Bosley – Reuters. Switzerland’s parliament gave the green light for tax pacts with Germany, Britain and Austria aimed at preventing tax cheats from stashing money in secret accounts, a decision that could pour billions of extra euros into strained state coffers. Lawmakers in parliament’s lower house on Wednesday voted 108 to 81 in favor of the agreement with Germany, which will levy a retroactive tax of up to 41 percent. The deal, set to take effect in early 2013, has already been approved by the upper house. Link

* At core of Greek chaos, a reviled tax. Charles Forelle – The Wall Street Journal. When the Greek government surprised homeowners in September by imposing a new national property tax, the mayor of this down-at-the-heels suburb on the western fringe of Athens sprung into action and mobilized against it. For many in the euro zone, Greece’s sluggish tax receipts are a perennial frustration. For many in Greece, however, the new taxes — which fall particularly hard on those lower on the income scale — are only compounding the country’s woes and stifling its economy. Link

Kansas Governor Sam Brownback REUTERS/Dave Kaup

Kansas Governor Sam Brownback cut his state’s income taxes on May 22, bringing the highest rate down from 6.45 percent to 4.9 percent and doubling the standard deduction to $9,000 for both heads of household and married couples. Overall $800 million of taxes per year are being eliminated beginning in 2014.

The Tax Foundation, a Washington-based research firm that favors lower taxes, highlighted a potentially unintended consequence in its May 29 analysis of the new law: its changes to the way pass-through businesses are taxed, possibly encouraging businesses to adopt this structure.

Owners of pass-throughs declare profits from a business as income under the personal tax code, rather than filing as a corporation. Popular forms include LLCs, S corps, partnerships, farms and sole proprietorships.

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

* As governor, Romney picked winners and losers of his own. Andy Sullivan – Reuters. Massachusetts Gov. Mitt Romney’s June 2006 announcement that drugmaker Bristol-Myers Squibb was moving into his state served as a signature accomplishment. The new facility came with a price tag: Romney and other state officials agreed to $67 million in tax breaks and other inducements to ensure the New York-based company picked Massachusetts over rival states like North Carolina. Romney backed tax breaks for film makers and biotech and medical-device manufacturers. His administration promoted venture capital-style funds that extended loans to start-up companies, some of which subsequently went out of business. Link

* Christine Lagarde, scourge of tax evaders, pays no tax. Kim Willsher – The Guardian. Christine Lagarde, the IMF boss who caused international outrage after she suggested in an interview with the Guardian on Friday that beleaguered Greeks might do well to pay their taxes, pays no taxes, it has emerged. As she is an official of an international institution, her salary of $467,940 (£298,675) a year plus $83,760 additional allowance a year is not subject to any taxes. Link

* Anti-tax crusader assails report on Republican shift. Patrick Temple-West – Reuters. Anti-tax crusader Grover Norquist, scourge of any and all tax increases, said on Tuesday that a news report questioning the vitality of his “no new taxes” pledge – a vow taken by many Republican politicians – is overblown. Republicans who have not signed the pledge may be in congressional races they are unlikely to win anyway, while other candidates have rules against signing pledges, he said. Link