Tax Break

Essential reading: Another tycoon moves to low-tax Singapore, and more

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

* Another tycoon moves to Singapore. Sam Holmes – The Wall Street Journal. Australian coal magnate Nathan Tinkler, the resource-rich country’s wealthiest person under the age of 40, will relocate to Singapore, joining a notable list of other foreign tycoons moving to the affluent city-state. Tinkler’s spokesman would not comment on whether his client was attracted to Singapore’s more-favorable tax environment. The city-state, which boasts the highest percentage of millionaire households in the world, has a marginal individual tax rate of 20 percent for the highest income bracket, which compares with 45 percent for the top income bracket in Australia. Link

* US Senate tax chief warns of dangerous fiscal path. Kim Dixon and Kevin Drawbaugh – Reuters. The United States is on a “dangerous path” that could lead to a European-style fiscal crisis, the Senate’s top tax legislator warned on Monday, while calling for more tax revenue and ending corporate incentives to shift profits and jobs overseas. Democrat Max Baucus urged fellow lawmakers to resolve by the end of 2012 a host of “crucial spending and tax decisions” that will arise immediately after the Nov. 6 presidential and congressional elections. Link

* Revenues recover but states still tight-fisted. Lisa Lambert – Reuters. U.S. states are remaining tight-fisted over spending even as their revenues are expected to top the levels seen before the height of the recession, unnerved by the clouds over the U.S. and global economies. For the upcoming 2013 fiscal year, total U.S. state revenues will increase by $27.4 billion, or 4.1 percent, to reach $690.3 billion. General fund spending, however, will rise by only $14.6 billion, or 2.2 percent, according to a survey of governors’ budgets released on Tuesday. Link

* IMF: Japan must raise sales tax to show fiscal commitment. Stanley White and Tetsushi Kajimoto – Reuters. The International Monetary Fund urged the Japanese government on Tuesday to raise the country’s sales tax and reform its welfare system to demonstrate a commitment to fiscal reform. Prime Minister Yoshihiko Noda has staked his political life on the plan’s fate, aiming to pass the tax and social security bills during the current session that ends on June 21. Link

* Oregon to report on erroneous $2.1 million tax refund. Patrick Temple-West – Reuters. The Oregon Department of Revenue said it expects to issue a report on Tuesday, seeking to explain how the state authorized a $2.1 million tax refund to a woman who was arrested last week and charged with filing a fraudulent state tax return. Link

Essential reading: Push for a fiscal pact picks up speed on Capitol Hill, and more

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

* Push for a fiscal pact picks up speed, and power. Jonathan Weisman – The New York Times. The hunt for a way to avert a crisis appears to be quickening — and, significantly. It now includes the people who might be able to make it happen. This includes Senate Finance chairman Max Baucus. On Monday, Baucus delivers a speech to the Bipartisan Policy Center in Washington on the path toward a simpler tax code that could generate more revenue. Later in the week, the Senate Finance Committee will meet on a host of tax issues. Link

* Flush state ponders a tax cut’s cost. Mark Peters – The Wall Street Journal. An energy boom has flooded North Dakota’s coffers at a time when almost every other state is struggling to make ends meet. But when its fiscally conservative residents get the chance Tuesday to vote themselves a big tax cut, they are expected to say “no.” At issue is a referendum for a proposed constitutional amendment to eliminate local property taxes, requiring the newly flush state government to make up the difference. Link

* Vodafone paid zero UK corporation tax last year. Katherine Rushton – The Telegraph. The company saw its global corporation tax bill go up by 300 million pounds ($462.53 million) to 2.3 billion pounds, but none of that money went to the exchequer in the UK, where Vodafone takes several hundred millions of pounds from more than 19 million customers each year. Although Vodafone has acted within the law, its minimal bill in Britain is likely to reignite anger over the group’s dealings with the taxman. Link 

Calendar

Some important tax and accounting dates in the week ahead:

Monday, June 11

•    Senate Finance Committee Chair Max Baucus gives the keynote speech at the Bipartisan Policy Center seminar on tax reform. 10 a.m. at the Bipartisan Policy Center. Washington.

•    The American Institute of Certified Public Accountants two-day conference on international tax developments, transfer pricing for lending and leasing, doing business in India and the European Union, and other international business topics. Washington.

Tuesday, June 12

•    Senate Finance Committee hearing on energy and tax reform. 10 a.m. at the Dirksen Senate Office Building. Washington.

Essential reading: IRS denies exemption to political group, and more

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

* IRS denial of tax exemption to U.S. political group spurs alarms. Jonathan D. Salant – Bloomberg News. An Internal Revenue Service decision revoking the tax-exempt status of a small political nonprofit organization may foreshadow an investigation into groups such as Crossroads GPS and Priorities USA that spend millions on the 2012 U.S. presidential election. Such groups’ nonprofit status lets them collect millions of dollars from individuals and corporations while keeping donors anonymous. Link

* U.S. House votes to kill Obama’s medical device tax. Kim Dixon – Reuters. The Republican-led U.S. House of Representatives voted on Thursday to strike down a 2.3 percent tax on medical devices and other parts of President Barack Obama’s healthcare law, although the effort is likely to hit a wall in the Democratic-led Senate. Link

* China limits access to company filings after short-selling bids. Bloomberg News. China has begun limiting access to corporate filings after short-sellers used them to highlight accounting discrepancies that led to stock plunges and regulatory investigations over domestic companies listed abroad. Link

Essential reading: China minister calls for tax changes to boost spending, and more

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

* China minister calls for tax changes to boost spending. Liyan Qi – The Wall Street Journal. China needs to improve its tax system to stimulate spending, Finance Minister Xie Xuren said Thursday. The central government will study measures to expand a value-added tax trial, and improve China’s consumption tax to “guide reasonable consumption” more effectively, Mr. Xie said in a statement on the ministry’s website. Link

* Obama stands firm against extending tax cuts for rich. Caren Bohan and Thomas Ferraro – Reuters. President Barack Obama’s Democrats traded shots with Republicans on Wednesday about how best to avoid a year-end “fiscal cliff,” as the administration insisted on the need to let tax cuts for wealthier Americans expire as scheduled on January 1. The prospect of higher taxes and automatic spending cuts that kick in next year have spurred calls for Obama to temporarily extend all of the Bush-era tax breaks to coax Republicans into a sweeping debt deal, but the White House stood firm. Link

* Bill Clinton becomes Romney’s favorite surrogate for Obama. Sam Youngman – Reuters. In the space of five days, Bill Clinton went off message on two important issues – tax cuts and Romney’s time as a private equity executive – raising questions about the former president’s motives. This week, Clinton said he favored a temporary extension of George W. Bush-era tax cuts for all Americans, not just the middle class, as Obama prefers. Link

Essential reading: IRS under strain, Clinton’s tax proposal, and more

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

IRS’s Maruca: Tell a broader story during transfer pricing tax audits

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.

Essential reading: New trial ordered in huge New York tax shelter case, and more

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

Essential reading: States tinker with new road taxes, and more

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

U.S. tax prosecutor Downing resigns, joins Miller & Chevalier

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.