Annual review time one of the most critical activities at Deloitte..
— Life at Deloitte (@lifeatdeloitte) May 7, 2013
This is a perfect opportunity to reflect on the year that was at the Green Dot. Whether it was the five brisket sandwiches you put away in an hour at DU, the audit clients you are no longer serving or how much you miss the free time you had as an independent foreclosure review consultant, it's important that you go into these meetings prepared.
This little yellow guy is Dexter. I don't know why or how he got into an accounting class, but I can't blame him for nodding off, especially if it was Cost Accounting. That class was the worst.
The frightening moment at the end when Dexter is disoriented and almost accidentally commits adorable duckling suicide is too much. Luckily, his handler was there to catch him. We all would have been rendered useless for the rest of the day if the worst had happened.
Accounting News Roundup: E&Y: Come Clean on Taxes or It's Curtains; Prepare to Hate Airfare a Little More; Scott London: Watershed for Auditors? | 05.07.13
Senate Passes Wal-Mart Backed Bill for Taxes on Web Sales [Bloomberg]
The U.S. Senate voted to let states collect taxes on out-of-state Internet and catalog sales, sending the proposal to the House, where the issue is dividing Republicans. The measure, passed yesterday on a 69-27 bipartisan vote, would end the era of tax-free Internet shopping. It is backed by Wal-Mart Stores Inc. (WMT) and other retailers that say it’s unfair that out-of-state sellers don’t have to collect sales taxes on purchases. “It’s a rare opportunity for us to have Republicans and Democrats together on the floor to support a bill that has the endorsement of business and labor and local officials all across the United States,” said Senator Richard Durbin of Illinois, the chamber’s second-ranking Democrat and a co-sponsor of the proposal.
Ernst & Young: Come clean on corporate tax or face the consequences [The Times]
Big companies have been urged to be more open about their tax affairs if they are to head off legislation that would force them to. John Dixon, Ernst & Young’s head of tax in Britain, said that companies must respond to demands for greater transparency amid growing public concern over tax avoidance and secrecy. “Doing nothing is not an option. Companies need to do something and they need to do it now.”
Another Vote Ahead For Pot In Colorado: This Time, On Taxes [NPR]
No one knows how many of Colorado's 108,000 medical marijuana patients will hold on to their medical license for the cheaper pot it offers. And that's made dispensaries cautious about moving to recreational sales. Norton Arbelaez is a co-owner of RiverRock Wellness in Denver, where customers browse dozens of jars packed with bright green marijuana buds. Medical shops like this one get first crack at becoming recreational, possibly as soon as January. Arbelaez says his business will cater to both types of buyers, kind of like a chain drugstore. "And so, if anything ... think about a Walgreens, where part of the Walgreens is over-the-counter and part is a controlled substance," Arbelaez says. "That is more or less what, conceptually ... it's going to look like."
KPMG's Insider Trading Scandal: A Watershed for the Auditing Profession? [YouTube]
Tax Proposals Open a Debate on Airline Industry’s Troubles [NYT]
A $300 domestic airline ticket now includes about $60 in taxes — or 20 percent of the total fare — which pays for things like air traffic controllers, airport improvements, customs and immigration inspections and checkpoint screening. President Obama, in his 2014 budget request, has proposed increases in many of those taxes, a move that the airline industry opposes, arguing that passengers are already overtaxed. The recipients of these taxes counter that many of these fees have not increased in years, contributing to outdated systems, flight delays and long lines. This is not the first time similar tax increases have been proposed — and usually rejected. But given the current fiscal climate, and the recent sequestration-imposed furloughs of air traffic controllers, some aviation experts say it is time for a broader overhaul of air travel financing and oversight. The debate largely centers on two questions lawmakers and industry representatives will have to wrestle with in the coming months: who should pay for the essential functions of the aviation system — travelers or all taxpayers? And could tax increases be avoided if the money collected were spent more efficiently?
Leniency for Offshore Cheats [WSJ]
U.S. courts are doling out more lenient punishment to tax evaders hiding money offshore than to other tax cheats. Despite a high-profile government crackdown on secret offshore financial accounts since 2009, the average sentence in those cases has been about half as long as in some other types of tax cases, according to a comparison of Internal Revenue Service statistics and data compiled by former U.S. Justice Department lawyer Jack Townsend. In many cases, judges are also opting for shorter sentences than recommended under federal guidelines.
Cris Carter Q&A: If not for football ... maybe accounting? [MST]
CFOs most crave these 2 nonaccounting skills [JofA]
Baking and glassblowing.
A new study says politicians don’t favor the rich. That’s debatable. [WaPo]
Oh, there's a study.
When that first huge chunk of money hits your bank account, you may just get stars in your eyes. The accountant in you is screaming, be smart, but this ability to finally afford those expensive meals out, your brand-new apartment, and new corporate duds is oh so appealing and finally within reach.But think back to the, no doubt, countless conversations you have had with your company about spending smart. They rely on you to translate the numbers and tell a story so that they can make sound business decisions – when to hire, when to take on new clients, when to invest in capital. It’s crazy how money can be spent unwisely if companies didn’t have people like you on their side, right? Your personal finances are no different. To avoid the same fate that would plague a company without an accountant, take this quick crash course in how to divide up your earnings like a boss—ahem, CFO? For starters, let’s discuss some general guidelines, which make up what we like to call the 50/20/30 Rule: 50% Should Go Toward … Essentials At LearnVest Planning, we define essentials as the stuff you need to live, so cocktails with coworkers don’t count. This category includes housing (e.g. rent on your swank digs or mortgage payments), transportation (gas, public transportation, car insurance), utilities (electric, gas, water) and groceries (anything that comes from the grocery store). So you should aim to spend no more than half of your take-home paycheck—that’s after taxes—on these things. In other words, if your rent is equal to 45% of your take-home pay, then you should probably downgrade.
20% Should Go Toward … Financial Priorities Is your dream to someday quit accounting and open a farm-to-table restaurant? Or maybe you’re hoping to take an amazing trip around the world . . . when you finally retire. These all fall into the financial priorities category—along with those crippling student loan payments. Bottom line: At least 20% of your take-home pay should be set aside to reach your major financial goals. 30% Should Go Toward … Lifestyle Choices Now for what you’ve really been waiting for … After you’ve paid for the essentials, and set aside money for financial priorities, you should aim to use no more than 30% on whatever else your heart desires. This includes—but is not limited to—happy hours, work clothing, travel, takeout, HBO and the gym membership that you’ll probably never have time to use. What’s That? This Isn’t At All Realistic? Yeah, we hear you. Especially those of you who are laboring under large student loan payments that make up 20% of your paycheck alone. Here’s what you need to keep in mind: The 50/20/30 Rule is a broad guideline, so you might have to tweak it to line up with your individual situation. Notice how we said at least 20% on financial priorities, and no more than 50% on essentials. So if you have big loan payments, you may have to get a roommate or live without cable for a bit to make it work. And note that even if your debt repayment is bordering on 20%, you also need to be saving for emergencies and retirement! Why It May Be Time to Call in a Pro … Since you’re an accountant, you feel like you can and should tackle this on your own without consulting a financial planner. Of course you wouldn’t because so many money advisors work on a percentage model. Translation: “You give me assets, and I’ll charge you 1% of your assets to give you financial advice.” But there is something to be said for the accountability and support only another person can provide. To get you on the right track—i.e. paying down that student loan debt in a manageable way, while also saving for a condo or a house—you need advice on budgeting and building out a 5-year plan and the accountability to stick with it. Lucky for you, LearnVest Planning offers fee-based financial services for a fraction of the average monthly gym membership* that you’re not using. Intrigued? Start with a free financial consultation by filling out this quick profile. The opinions expressed in this article are that of LearnVest Planning Services, a registered investment adviser. The advice provided may not be suitable for your individual situation and you should discuss your situation with a financial professional. LVPS is not responsible for any third party advertisements or opinions on this site. * Source: http://www.statisticbrain.com/gym-membership-statistics/
Footnotes: Lauryn Hill's Ooh La La La; GT's new South African acquisition; MACPA Innovation Summit | 05.06.13
Mexico aims to overhaul tax system, raise revenue [Reuters]
Grant Thornton has acquired PKF in South Africa. [BDLive]
CPA Trendlines suggests this was the worst tax season ever. Do you agree? [CPA Trendlines]
Opinion: KPMG Insider Trading Scandal Damages the Reputation of the Accounting Profession blah blah blah blah blah [Business Ethics]
Lauryn Hill gets 3 months for failing to pay taxes Ooh la la la... it's the way that we rock, we be doin' our thing [USA Today]
Your boring tax wonk post of the day [Forbes]
DealBook's "Good Luck With That" story of the day [NYT]
Shameless self-promotion: I'll be at the Maryland Association of CPAs' Innovation Summit next Thursday, anyone else? [MACPA]
Lastly, it's my exotic DC street cat Buck's 2nd birthday. Let's give my baby a whoop whoop. [Twitpic]
Naturally, my esteemed colleague Colin sent me this Forbes article to write up, presumably because I am the resident crazy cat lady around here. I'll take it. Fortunately Taxgirl took it before I did:
Birds in Germany are dying by the millions and Peter Berthold of the Max Planck Institute for Ornithology in Radolfzell, Germany, says that cats are to blame. By his calculation, cats kill approximately 50 million birds each year in Germany alone. The solution, he says, to this travesty, is a cat tax.
"Sometimes they kill a wonderful red-coloured bullfinch, or a wryneck, which could be the last in the district," he said. An "ecological compensation tax" could be the answer, he suggested.
Now, as a person who dabbles in cat rescue when I'm not busy correcting Colin's typos here on Going Concern, let me stop this guy right there. How exactly do you collect a tax on the truly wild cats that are just doing what they need to do to stay alive? Cats may passive-aggressively vomit on your pillow at 4am but it doesn't take Jackson Galaxy to tell you they don't kill birds just for fun.
Berthold referred to a study published earlier this year in Nature Communications which found that free-ranging domestic cats kill 1.4–3.7 billion birds (as well as 6.9–20.7 billion mammals) annually: that works out to 40 birds killed per cat every year. Many of those birds represented the end of their species: as many as 33 species of birds are thought to have been eradicated by cats. However, it’s worth noting that stray cats, as opposed to pets, cause most of the damage.
You might assume that only Berthold is passionate about this cause – but the notion is actually spreading in the bird community. Markus Erlwein of the National League for Bird Protection in Bavaria (LBV), has also expressed support for the idea, claiming that the tax wouldn’t be intended as a deterrent to keep cats but rather that the revenue generated from such a tax could be used to protect birds. Protection could extend to new tree plantings or the creation of new habitats where birds could form communities.
Unfortunately, the "science" behind the referred-to study is horribly flawed, so basing any kind of "tax" on its faux conclusions would be reckless to say the least. Plus, who are you going to tax? Feral colony caretakers who spend every penny they have to trap, neuter, return and feed the feral cats they look out for? If that isn't an asshole move, I don't know what is. Those who care for feral colonies - or, as us cat people call it, TNR folks - do often consider their beloved ferals "part of the family" in some respect but these are not licensed domesticated animals a municipality can track and tax, they are still wild animals who just got a break in a human to keep them from over-breeding and toss out some kibble.
The existing dog tax in Germany, or Hundesteuer (literally “dog tax”), is like a license. It’s called a tax, however, because the amount payable is dependent on where the owners live and the breed of the dog; dogs deemed as “dangerous” – like Dobermans and Rottweilers – are taxed at a higher rate (exemptions and exceptions apply). In some cities, like Berlin, a second dog is taxed at a much higher rate so as to discourage taxpayers from owning too many dogs.
The fact that a dog tax already exists – and has for hundreds of years in Germany – may make the idea of the cat tax a little easier to sell. However, while the cat tax idea has garnered a lot of attention, there’s no indication that it has a great deal of support. Germany is one of the top ten cat-owning countries in the world (the United States is tops, besting even China) – and since cat owners tend to have more animals than dog owners on average, the numbers aren’t on Berthold’s side. That won’t keep him from trying, however, from trying to preserve die “attraktivsten Lebewesen, die wir kennen” (the “most attractive creatures that we know”).
That's all well and good except no one owns a feral cat. Maybe someone did once upon a time and it found itself on the edge of a managed colony where there is shelter and a reliable food source but more likely it was born in the wild and not caught young enough to be domesticated. Either way, proposing a tax on these types of cats would be about as effective as taxing kangaroos or giraffes. There is no one to tax!
"Free-ranging cats" covers both ferals and domesticated cats allowed to roam outdoors but if someone is going to toss their cat outside for half the day, what makes you think they're going to pay a tax on that cat when it kills birds? Wake up, bro.
Bryan Shaw, the man who provided ex-KPMG partner Scott London with Springsteen tickets, discount Rolexes, and black paper bags filled with cash in broad daylight, pleaded guilty to one count of conspiracy to commit securities fraud today. It's so easy when people are cooperative, isn't it? Oh, and speaking of cooperating:
In exchange for cooperating with the investigation and pleading guilty, Shaw might get a lighter punishment. Under his plea agreement, the government said that as long as prosecutors are satisfied with Shaw's cooperation, they will recommend a two-level reduction in the offense level that dictates sentencing guidelines. A spokesman for the U.S. Attorney's Office said the maximum sentence for a conspiracy count was five years. He declined to speculate on how much of a sentence reduction Shaw could get.
Scott London will get his turn on May 17th. His lawyer has said he plans to plead guilty.
According to Institutional Shareholder Services, TFly is only member of JPMorgan's risk policy committee who is meeting expectations:An influential shareholder advisory firm has recommended that investors withhold their support for three JPMorgan Chase directors, citing “material failures of stewardship and risk oversight” in the wake of a big trading loss last year. The firm, Institutional Shareholder Services, or I.S.S., urged shareholders not to vote for three directors who serve on the board’s risk policy committee — David M. Cote, James S. Crown and Ellen V. Futter. The results of the vote will be announced at the bank’s annual meeting later this month. [...] The only member of the risk policy committee who is being backed is Timothy Flynn, a former KPMG executive who was appointed in August 2012 as part of the board and bank’s efforts to improve oversight and controls in the wake of the London trading loss. [DealBook]
Juggling all the aspects of income tax reform is quite a task. Here's a mind dump of a few of the elements involved:
- Tax-exempt income
- The treatment of pass-throughs
- How much marginal rates should be cut
- If more revenue should be raised
- How carried interest is treated
- The capital gains rate
- Transfer pricing
- Deferred income
Don't worry, I've forgotten quite a bit.
All of these are affected by special interests and they span the rules for both individuals and businesses.Yet, in ambitious desire to actual make some progress, there is some serious talk going around that would make the whole process even more political, and therefore more complicated: [M]omentum is building to tie a rewrite of the Tax Code to hiking the debt cap, which will need to be raised by the fall because the limit will technically be hit this month. Top lawmakers and aides on the House Ways and Means Committee have quietly begun mulling over and crafting mechanisms that would attempt to “commit Washington” to tax reform over the next five months, several sources involved with the planning say. In other words, the idea is to manufacture attention -- that's the "commit Washington" part -- for a complicated and political issue (i.e. tax reform) by tying it to another complicated and even more political issue (i.e. the debt ceiling). Don't you want to know how this ingenius idea will work? Of course you do: The idea is in its infancy, according to sources involved in planning, but here’s how it would work: Legislation would authorize something like a three-month bump in the debt limit while simultaneously giving the same amount of time for the House to act on its tax-reform plan. When the House passes something, the debt limit would bet increased again, and when the Senate moves its own tax-reform product, Congress would authorize another bump in the debt ceiling. A larger increase in the borrowing limit could come if President Barack Obama signs the legislation, according to a source familiar with the thinking of the Ways and Means Committee. The plan would most likely be accompanied by a road map that lays out certain guidelines for Tax Code rewrite. All this tying passing to increasing to more passing and more increasing and roadmapping is a loser of an idea, says Jeremy Scott: Obama has said he won’t negotiate over the debt ceiling. Democrats have consistently scored points on the issue. The business community has even criticized Republican attempts to use the threat of default to wring spending cuts out of the White House. The debt ceiling battle has smelled like a GOP loss for months – and it smacks of desperation whenever lawmakers promise to “win the next round.” And tying tax reform to the debt ceiling discussions will likely reduce the chances of reform happening in the short term, not increase them. For anyone out there that thought this was about solving a problem, sorry to disappoint you. It's just about gamesmanship. House GOP may link debt cap, tax reform [Politico] Plan to Tie Tax Reform to Debt Ceiling Will Likely Fail [Tax Analysts]
ANR: Roland Berger Fighting Off Big 4 with a Stick; Is There Such a Thing as Fast-track Tax Reform?; IRS May Have Lowballed Quiet Disclosures | 05.06.13
Deloitte, PwC, Ernst & Young mull buying Roland Berger -sources [Reuters]
Financial consultancies Deloitte, PricewaterhouseCoopers and Ernst & Young are interested in buying peer Roland Berger, two people with knowledge of the matter told Reuters on Sunday. The 250 senior managers of Roland Berger, called "partners", agreed at their semiannual meeting in Frankfurt on Saturday to continue talks with the three potential buyers, said the sources, who declined to be identified. A decision will take at least eight weeks, they said.
Martin Sullivan: "A fast-tracked tax reform would almost certainly fail. Putting tax reform on a fast track does not make it easier, it makes it harder . . . and tax reform is already hard enough."
HP Ignored Autonomy Accounting Warnings, Shareholders Say [Bloomberg]
Hewlett-Packard Co. (HPQ) ignored warnings about accounting irregularities at Autonomy Corp. and failed to properly vet its finances before acquiring the British software maker, shareholders said in a lawsuit. Hewlett-Packard board members performed “no technical due diligence” and the company’s executives and advisers “misrepresented facts to conceal their own failings,” Joseph Cotchett, an attorney for investors, said in a complaint filed yesterday in federal court in San Francisco. Autonomy engaged in “round trip transactions” in which it bought goods from its customers, and engaged in other forms of aggressive revenue recognition to inflate its financial health, according to the complaint.
This accounting tweak by Fannie Mae and Freddie Mac will mean $60 billion for the U.S. government [WaPo]
As the housing crisis deepened, losses at Fan and Fred continued to mount. In the world of corporate accounting, however, such losses actually have some potential value: If the companies were ever to return to financial health, they could be used to offset future profits in calculating the companies’ taxes. To auditors, however, the prospect of future profits seemed pretty remote, so they insisted that the companies write down the value of these “deferred tax assets” to zero. That $90 billion write-down showed up as a one-time hit on their annual financial results in 2008. Over the past year, however, Fan and Fred have enjoyed a remarkable turnaround, thanks to an improving housing market and the fact they are now financing and refinancing virtually every mortgage in the country, with a higher profit margin on each loan than at any time in their history. As a result, the two companies last year had a combined profit of $28 billion, their highest ever. Business is so good, in fact, that the companies and their auditors have decided that those deferred tax assets might not be worthless after all. When the companies announce their first quarter results next week, Wonkblog has learned that the companies are likely to unwind some of those earlier write-downs of “deferred tax assets,” resulting in a one-time boost to earnings of as much as $60 billion. Under the law governing the takeover of Fan and Fred, the entire amount must be paid forthwith in a special dividend to the Treasury. Even by the standards of the federal budget, $60 billion is serious money.
Senate to vote on proposed Internet sales tax law [CNN]
The U.S. Senate is expected to vote on a long-debated Internet sales tax law Monday, paving the way for millions of consumers to start paying sales tax on online purchases. The legislation would allow the 45 states (and the District of Columbia) that currently charge sales taxes to require large online retailers to collect tax on purchases made by their residents. The law would only apply to online sellers that have sales of at least $1 million in states where they don't have physical operations, like a store or a warehouse. The bill has a good chance of becoming law. It already received broad support in the Senate during earlier procedural votes, and now must pass Senate muster a final time. After that, however, it will need to be approved by the Republican-controlled House. Proponents argue that the proposal would not create a new tax, but rather enforce the collection of taxes already charged at brick-and-mortar retailers. Some House Republicans may view that as a tax increase. If the bill is enacted, academic studies estimate that more than $12 billion in additional sales taxes will be collected from online purchases each year.
Horse owner and horse racing groups ask IRS to change the way taxes are withheld from winning bets [DMWT]
People with money trying to force a change in laws that isn't advantageous for them?! GO ON.
GAO: “Quiet disclosures” of foreign accounts potentially much higher than IRS detected [JofA]
More than 10,000 taxpayers showed signs of having avoided offshore penalties by making “quiet disclosures” of foreign bank accounts for tax years 2003 through 2008, the U.S. Government Accountability Office (GAO) reported, a period for which the IRS has detected several hundred quiet disclosures. Filing data also suggest many more taxpayers may have begun reporting previously reportable foreign accounts on a recent current-year return without entering the government’s offshore voluntary disclosure program (OVDP) or making a quiet disclosure for prior open years, the GAO said. While these taxpayers may have come into voluntary compliance going forward, they also thereby may have avoided all penalties and past due taxes and interest on the accounts and income generated by them.
DUI Arrestee Was Celebrating Getting License Back After Earlier DUI [Gawker]
Illinois resident Erin James was caught speeding early Friday morning after she spent a night out celebrating getting her driver's licence back after a DUI arrest. She was drunk this time, too. The 58-year-old told Riverside police officers that she had been out celebrating her restored license. She then blew a .155 alcohol content, nearly double the legal limit of .08.
One of the highest-paid U.S. corporate bosses lost his job Friday, as investors at Occidental Petroleum Corp. OXY +3.03% made Chairman Ray Irani the latest victim of a rising wave of shareholder activism. Mr. Irani, who spent three decades at Occidental, will leave his post at the helm of the board, the oil-and-gas company said in a statement released after its shareholder meeting Friday. The 78-year-old, who was forced to step aside as CEO two years ago over his outsized pay, recently angered shareholders by trying to oust the current chief executive. [WSJ]House will take up bill to rein in the SEC’s regulatory power [The Hill] The Corporate Tax Game [NYT] Taxes Influence Investment Strategy, and Not Always for the Better [NYT] PwC received £50m in fees from ENRC [FT] Many states miss targets for withheld taxes in April [Reuters] Pritzker Family Baggage: Tax Saving Offshore Trusts [Forbes] IRS Oversight Board Fields Tax Season Complaints at Hearing [AT] A New Way to Address the International Tax Mess [TaxVox] Prostitute Hired by 14-Year-Old Steals His Piggy Bank [Gawker]
NASBA hasn't tweeted about it yet but everyone else is.
Happy Friday! Except to the losers, no happy Friday for you, losers.
[A] report issued by the Pew Charitable Trusts – an independent nonprofit organization and the sole beneficiary of several trusts established by heirs of Sun Oil Company founder Joseph N. Pew – determined that the percentage of tax filers deducting mortgage interest ranged from nearly 37 percent in Maryland to only 15 percent in West Virginia and North Dakota. The disparity between some of the metropolitan areas within states was even greater. For instance, in Texas the deduction rate for the Austin area was approximately four times the going rate for the Odessa area. The size of the deduction also varies significantly across the individual states. In 2010, the average deduction ranged from $4,580 per filer in Maryland to $1,192 per filer in North Dakota. The study pinpointed the national average at $2,713. [AWEB, Pew]
I nearly had a heart attack when I received an email from Prometric with the subject line: "IMPORTANT MESSAGE FROM PROMETRIC REGARDING YOUR SCHEDULED EXAM AT SITE ****"...
The email went on to say
This is an urgent message concerning your upcoming test with Prometric. Unfortunately, due to unforeseen circumstances, the test center where you have an exam scheduled at site **** has relocated.
Please do not be alarmed, you still have the same appointment date and time but not the same location. Please report to the following location:
PROMETRIC TESTING CENTRE
While we do our very best to avoid any disruption to the appointments, from time to time change is unavoidable. We apologize for any inconvenience that this may cause you and wish to make the scheduling process as easy as possible.
Thank you for your business and good luck on your exam!
"Please do not be alarmed"?!? Then don't send me an email with THE SUBJECT IN ALL CAPS! Sheesh.
Full disclosure: though we scrubbed the specific testing center locations, this candidate is near Boston and therefore may be justifiably on edge. Perhaps Prometric can adjust their canned emails to candidates accordingly.
Accounting News Roundup: 'Stupid is as stupid does'; Takin' It Easy with New Revenue Recognition; PCOAB's Hanson Looking for Perfect Auditors | 05.03.13
U.S. Economy Adds 165,000 to Payrolls [WSJ]
U.S. job growth picked up in April and the unemployment rate ticked down again, suggesting steady but still-measured economic growth. Employers added 165,000 jobs last month, the Labor Department said Friday. The unemployment rate, obtained by a separate survey of U.S. households, fell one-tenth of a percentage point to 7.5% as more people found work. That was the lowest rate unemployment rate since December 2008.
Op/ed: KPMG scandal damages reputation of the accounting profession [PCBT]
"[Stupid is as stupid does] fits Scott London's actions perfectly."
Healthcare law opponents sue Obama officials over IRS rules [Reuters]
A group of individuals and businesses filed a lawsuit against the Obama administration's healthcare overhaul on Thursday, hoping to stop the law in states that have not set up new insurance exchanges. The complaint filed in the Washington federal court challenges federal rules issued in 2012 for implementing the president's 2010 healthcare law which goes into full force in January 2014. The 12 challengers, ranging from a hospital chain to a restaurant franchise, argue that Internal Revenue Service rules issued last year should be invalidated because they contradict what Congress originally intended. A court win for the challengers could cast doubt over the IRS's ability to enforce the healthcare law's new tax penalties.
FASB to Ease in New Revenue Recognition Standards [AT]
The Securities and Exchange Commission is encouraging the Financial Accounting Standards Board to give accountants a long transition period to adjust to the upcoming revenue recognition standards. Paul Beswick, chief accountant in the SEC’s Office of the Chief Accountant, said at Baruch College’s Financial Reporting Conference in New York on Thursday that an implementation group and long transition period are needed for the new standards. FASB chair Leslie Seidman, who spoke alongside Beswick, said they plan to hold one more joint meeting this month with the International Accounting Standards Board to finalize the long-awaited converged standard for revenue recognition and would probably issue it this summer.
SEC case against China firms advances [CAB]
I don’t think anyone is in a hurry to resolve this. All hopes seem focused on the U.S. China Security and Economic Dialogue in Washington in early July. That is probably the best, and perhaps last, chance for the U.S. and China to resolve the issue before it spins out of control.
Goal for PCAOB’s Hanson: Best practices list for auditors [JofA]
PCAOB member Jay Hanson wants to talk to auditors who produce audits with no deficiencies. He’s pushing to develop a “best practices” list that will help and inform the entire profession. “I know that this view isn’t shared universally among the board members of the PCAOB as to whether we should do this,” Hanson said Thursday during an interview after his presentation at the 12th annual Baruch College financial reporting conference. “I view it as a challenge. Let’s as a board understand these attributes of the most successful audits, so it informs us and our thinking and our policymaking.”
America's Cup taps Kilroy, PWC for sponsorships [SFBT]
The closet thing to being on a boat that an accounting firm will get.
21 Unusual Gifts For Your Unusual Mom [HP]
I'm sure all your moms are normal, though.
Footnotes: What if Herbalife Can't Find a New Auditor?; About That IRS Budget; Old Guy Joins Twitter | 05.02.13
IRS Grabs Man's Tax Refund to Recoup Social Security's Alleged $895 Overpayment to Mother 42 Years Ago [TaxProf]Herbalife Ltd. is trying hard to find a new auditor — but what if it can’t? That would be highly unusual, but accounting observers say it could happen. All of Herbalife’s potential new auditors might either be unsuitable or have conflicts of interest that could preclude them from taking on the job. If that were to happen, it could force the company to seek a solution from the Securities and Exchange Commission — in the form of a potential exemption from rules intended to make sure an auditor doesn’t get too close to its client. [MB/WSJ] PCAOB Announces Standing Advisory Group Meeting on May 15-16, 2013 [PCAOB] Apple’s Shuffle Keeps Profit Out of Reach of Taxes [NYT]
British Activists Press Tax Case Involving Goldman Sachs [DealBook] Man Faces DUI Charge After Speeding to Waffle House [Patch] Here's a U.S. map of inheritance and estate tax rates. [Tax Foundation] Deciphering the 10-K Share it with a non-accountant friend. [The Financialist] Yes, let’s talk about the IRS budget. [Tax Update] "Warren is in the house." [Twitter]
Are you irritable? Sleeping less? Impatient with your friends? Putting on weight? Thinking about divorce? Yes? Sorry to hear, you must be going through a stressful time.
Oh, wait, are you an American? Yes?! Whew, you're behaving normally then. If you were to read this AICPA press release, you might be inclined to believe that your take home pay being 2% lower than last year would have been the cause of all those things:Money stress brought on by lighter paychecks this year is affecting more than Americans’ wallets — it’s taking a toll on their waistlines, friendships and sleep, according to results of a new survey fielded for the American Institute of CPAs by Harris Interactive in recognition of National Financial Capability Month. The telephone survey, conducted between March 14 and March 17, asked 1,011 U.S. adults to name all the ways financial stress is affecting their lives. Of those who rate their financial stress “very” or “somewhat high,” almost half, 47 percent, said they are sleeping less; 43 percent said they have less patience with friends or are seeing them less often; 31 percent are eating more junk food or gaining weight; and a fifth, 21 percent, are arguing more with their spouse or significant other. One in six, or 17 percent, are getting sick more often, according to the survey results. An increase in payroll taxes that took effect in January intensified financial concerns for many Americans, effectively cutting the take home pay for most workers by 2 percent and prompting more than two thirds of those employed, 68 percent, to cut spending, reduce savings or make other sacrifices. Indeed, 44 percent of U.S. adults currently register a high level of financial stress – with women almost twice as likely as men to say it is “very high.” Those membership dues are going to good use, aren't they? [AICPA via DMWT]
Since FASB Statement No. 13 was issued in the mid-70s, businesses have managed to develop a lot of creative ways for classifying some of their future obligations as operating leases, thus keeping those debts off their balance sheets. That's handy for all kinds of reasons, but some people think that it's a very bad thing. Solution? Reform of course!
"Significant reform for lease accounting is crucial for the credibility of all financial reporting and for those who regulate it, use it, audit it and implement it," said Paul Miller, a University of Colorado accounting professor. Without recognizing leases, he said, "the balance sheet is not complete, and if it's not complete, then it's not useful."
In the nearly forty years since lease accounting got a touch-up, the internal revenue code has been reformed. That makes things a little stale. And I suppose it'd be nice if financial reporting reflected a tiny bit of reality and were useful.
Our friends at the FASB can safely be counted in the quality financial reporting camp and they've been trying to improve lease accounting for a while. Plus, it serves as an opportunity to play nice with the IASB, and prove that accounting rule convergence is more than just a bedtime story accounting nerds read to their kids.
But as is typical in any world that involves making rules for businesses to follow, reality and common sense often takes a back seat to inconvenience. And HOLY MOSES is reforming lease accounting inconvienent. So inconvient, in fact, that despite leases passing the liability duck test with flying colors, opponents of the Boards' current reform proposal, like the U.S. Chamber of Commerce, would like everyone to take a step back and really think about what we're doing here:
"There should be a cost-benefit analysis that attaches here if we're going to go through this," said Tom Quaadman, a vice president at the U.S. Chamber of Commerce, a Washington, D.C.-based business lobbying group opposed to the new standard.
Unfortunately for the accounting purists out there, it's far easier to argue that changing lease accounting rules will cost businesses eleventeen quadzillion dollars in lost capital and earnings, not to mention the "unnecessary burden on job creators" that this would cause. Arguing in favor of more "credibility" and "usefulness" and "comparability" is a hard sell because it's pretty difficult to quantify those things.
And even if the FASB that a leases are a financial obligation that will have to be satisfied at some point in the future and it does belong on the balance sheet, try explaining that to the members of Congress who pull sternly worded letters out of their holsters at the drop of Tom Quaadman's hat. And don't think they won't threaten the FASB with its very existence. Because they will.
Other than that, this should be a breeze.
I suppose if public accounting firms were looking to brand their employees, offering them a 15%-no-questions-asked raise would be the way to do it:If your company offered you a pay raise to tattoo its logo on your body, would you do it? A New York City real estate company made the offer and dozens of employees are getting inked. As CBS 2′s Emily Smith reported Tuesday, a tattoo can be a way to show off your personality. For Rapid Realty employees, it is the fast track to a 15 percent pay raise if you get inked with the company logo. Hopefully the team at Grant Thornton goes back to the drawing board before making anyone an offer. We want any public accounting tatts for cash initiatives to be a success. In any case, the performance evaluation process would still be more straight forward than it is now. [CBS via DB]
ANR: IRS Digging Up Viacom Chairman's Past; Bob Evans' Accounting Error; Paul Ryan Likes the 'Concept' of an Online Sales Tax | 05.02.13
Billionaire Redstone Challenges IRS on Tax for 1972 Gift [Bloomberg]
The IRS told [Viacom Chairman Sumner] Redstone earlier this year that he owes $1.1 million in taxes and penalties, plus interest, because of the gift. The case involves stock in the family’s National Amusements Inc. received by Redstone’s son, Brent, and his daughter, Shari, after the settlement of an intrafamily lawsuit. “This is unheard of,” said Richard Behrendt, a former IRS estate and gift tax auditor who is now director of estate planning at Robert W. Baird & Co. Inc. in Milwaukee. “I can’t remember ever hearing of anybody going back 41 years to raise an issue. It’s really unprecedented in my experience.”
Oil and soda taxes advance in California Legislature [LAT]
Two controversial tax measures advanced Wednesday in the California Legislature — a penny-per-ounce levy on soda and a charge on oil pumped from the ground in the state. The Senate Health Committee members approved a bill by state Sen. Bill Monning (D-Carmel) that would charge the tax on sweetened beverages, including sodas, in hopes of reducing obesity among young people. The $1.7 billion that would be raised would go to a Children’s Health Promotion Fund to support a statewide program to prevent obesity in children. Monning said the tax in SB 622 would also reduce consumption of high-calorie drinks by children. [...] The 9.5% oil extraction tax would raise $2 billion annually for public education and state parks and was approved by the Democrats on the Senate Governance and Finance Committee, which sent it to the Appropriations Committee.
FASB proposal would guard private companies’ proprietary information [JofA]
Stakeholders have expressed concerns to FASB that certain disclosure requirements for nonpublic employee benefit plans would reveal sensitive proprietary information of private companies. FASB is addressing that concern by proposing an indefinite deferral of the effective date for certain disclosures about investments held by a nonpublic employee benefit plan in the plan sponsor’s own equity securities.
RIP Mac Daddy. Giant Rubber Duck Sails Into Hong Kong [WSJ]