Tax Break

Hans Hoogervorst, head of the International Accounting Standards Board REUTERS/Gil Cohen Magen Welcome to the top tax and accounting headlines from Reuters and other sources.

* Tax treatment of private equity: questions over quirk. Daniel Shafer – The Financial Times. Governments in the U.S. and Germany are examining proposals to take away the preferential treatment that has helped to turn swaths of private equity managers worldwide into millionaires and a few dozens into billionaires. The prospect of lower profits as well as higher taxes not only risks denting private equity’s ability to attract talent. It also brings back to the fore accusations that buyout bosses have amassed riches by paying low taxes and taking dividends from indebted companies in their portfolio – a debate that started before the crisis but became sidelined as public anger turned towards banks. Such indictments do not come from trade unions or leftwing anti-globalization groups alone. Calpers, the California pension fund that is among the most influential investors in buyout funds, recently called the U.S. tax break on private equity managers’ profit rewards “indefensible.” Link

* IASB eyes selective reforms after frantic change. Huw Jones – Reuters. Tackling company “disclosure overload” will be among cherry-picked projects for accounting standards reform after industry calls to ease the pace of change, a top accounting rule-setter said on Wednesday. “Now we have most of the world on board, even a small change to a standard can be like dropping a pebble into still water,” International Accounting Standards Board Chairman (IASB) Hans Hoogervorst said in a speech in Mexico. Over 100 countries have introduced IASB rules for use in listed company reporting over the past decade, during which the board also worked with its U.S. peer to align each others’ standards. The aim was to persuade the world’s biggest economy to adopt IASB rules, too. But America has delayed its decision, recently prompting Singapore to put back full adoption of IASB rules. Meanwhile, the IASB is finalizing work for its next phase. Link

* New breaks for struggling taxpayers. Laura Saunders – The Wall Street Journal. The Internal Revenue Service on Wednesday announced new additions to its “Fresh Start” program for struggling taxpayers. The new features include penalty relief for the unemployed and expanded installment-payment options. The agency began the Fresh Start program in 2008. The penalty relief for unemployed taxpayers is for “failure to pay” levies, which the IRS says are one of the biggest expenses that financially distressed taxpayers face on a tax bill. The relief grants a six-month grace period to pay taxes to those who have been unemployed for at least 30 consecutive days during 2011 or in 2012 up to this year’s April 17 filing deadline. Link

* Obama urges shift to fuel-efficient vehicles. Jared Favole – The Wall Street Journal. President Barack Obama on Wednesday proposed expanding tax credits to make alternative-energy cars and trucks more appealing to buyers. The president said rising gasoline prices show the U.S. needs to wean itself off oil. He told a crowd of several hundred people at a truck-manufacturing plant that you “know how quickly the price of gas is going up.” The president repeated his call for Congress to vote on ending tax breaks for oil and gas companies. Republicans have said ending those tax breaks will further drive up gas prices. Link

In Brazil a new tax on loan sales aims to dampen inflation as prices of food and other consumer staples rise. REUTERS/Nacho Doce

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

* Parsing Santorum’s proposals. Floyd Norris – The New York Times opinion. Election-year tax rhetoric has never been notable for its frankness. A promise to raise someone’s taxes does not seem particularly likely to win that person’s vote, and no one wants to follow in the footsteps of Walter Mondale, the last major-party nominee to propose a general tax increase. But this year has been worse than any campaign I can remember. The most amazing proposal came from Rick Santorum. He would reduce almost everyone’s taxes. He would slash tax rates for all, his campaign Web site promises, while preserving “deductions for charitable giving, home mortgage interest, health care, retirement savings and children.” Link

* NYSE wins dispute over Grasso pay. Jacob Bunge – The Wall Street Journal. The Internal Revenue Service has backed down from efforts to claw back $161 million in tax deductions taken by the New York Stock Exchange linked to the pay of former Chief Executive Richard Grasso. The IRS in late 2009 sought to disallow deductions taken by the Big Board from 2001 to 2003 for compensation paid to Grasso, and two years ago the exchange’s parent NYSE Euronext challenged the U.S. government on the matter. Grasso led the NYSE for eight years and his $187 million pay package sparked outcry when he departed the exchange in 2003. In October 2011 the IRS determined, following an appeal process, that “there was no deficiency in the tax returns filed by NYSE for the years 2001, 2002 and 2003, thereby resolving the matter in favor of the NYSE,” according to documents filed by the exchange group late Wednesday. Link

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

* US payroll tax talk mired in election-year politics. Richard Cowan and Donna Smith – Reuters.

Republican and Democratic leaders accused each other of bad faith negotiations on Tuesday as both parties played hardball in talks to extend a tax cut for 160 million U.S. workers. Both sides agree the payroll tax cut should be renewed for a full year before it expires on Feb. 29, and its extension has been seen as a foregone conclusion. But the parties are far apart over how to pay for it and the rancor of election-year politics complicates lawmakers’ work. They argued over whether to continue a pay freeze on federal workers for another year, saving around $26 billion, and whether to squeeze $31 billion out of the Medicare healthcare program for the elderly. Link.

* Romney’s returns revive scrutiny of lawful offshore tax shelters. Jonathan Weisman – The New York Times.

There’s been a lot of talk about tax loopholes in recent months. Now there’s a bill to go with it.

On Tuesday, two Democratic U.S. senators — Carl Levin and Kent Conrad — piled a laundry list of long-standing proposals into their “Cut Unjustified Tax Loopholes Act.”

The bill would add $155 billion to the country’s coffers over the next 10 years, according to estimates put together by the Joint Committee on Taxation and the Office of Management & Budget on earlier versions of these proposals. That’s more than enough to pay for a whole year of a payroll tax break.