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Accounting News Roundup: Buffett Up for GOP Tax Challenge; American Apparel’s Accounting Appears to Be A-Ok; Mortgage Interest Deduction > Lower Tax Rates | 01.12.11

Warren Buffett Ready to Take Republicans’ Tax Challenge [Time]
Buffett has pledged to match 1 for 1 all such voluntary contributions made by Republican members of Congress. “And I’ll even go 3 for 1 for McConnell,” he says. That could be quite a bill if McConnell takes the challenge; after all, the Senator is worth at least $10 million. As Buffett put it to me, “I’m not worried.” 

Watchdog: Growing IRS workload causing problems [AP]
The Internal Revenue Service can't keep up with surging tax cheating and isn't sufficiently collecting revenue or helping confused taxpayers because Congress isn't giving it enough money to do its job, a government watchdog said Wednesday. To cope with its growing and increasingly complex tasks, the agency is relying more on computer software designed to weed out fraud, Nina E. Olson, the national taxpayer advocate, said in her annual report to lawmakers. But errors are abundant, creating even more work for the agency when taxpayers dispute its findings, the report said. In addition, it said the agency is increasingly relying on computer systems to evaluate tax returns that sometimes end up eroding taxpayers' rights, and people are having a harder time getting through to the IRS by telephone or letter, she said.

Audit watchdog aims for China deal by late 2012 [Reuters]
"I'm confident of only one thing… it is in [the Chinese's] interest to get to joint inspections. We will not be in a position to go forward and do what we should without some agreement," Doty said. "If we are not inspecting in the fall in China, I am not optimistic about it."
 
American Apparel Says SEC Ends Investigation Without Enforcement Actions [Bloomberg]
American Apparel Inc. (APP), the young- adult clothing retailer, said an investigation by the U.S. Securities and Exchange Commission into its accounting practices ended without enforcement. The investigation was completed and the SEC doesn’t recommend any action, the Los Angeles-based company said today in a regulatory filing. The SEC requested documents from the chain in 2010 after Deloitte & Touche LLP quit as its accounting firm and was replaced by Marcum LLP. Before ending the relationship, Deloitte notified the retailer that its 2009 financial statements may not be reliable.
 

Accountant finds he keeps ending up in court [FT]
“I found my few months in forensic more interesting than my three years training in audit and accounts,” [Gavin Pearson] says. “It made me realise that I wanted to specialise, and had it not been for my secondment, I would never have known about this area of accounting.”

The Next Home for International Financial Scandal? If You Can Find It — It's Malta [Re:Balance]
Known prognosticator Jim Peterson has a prediction for you.

Survey: Mortgage interest deduction wins out over lower tax rates [The Hill]
Two-thirds of voters — 66 percent to 28 percent — favori [sic] the idea of lowering federal income tax rates for individuals but they quickly reconsider the idea when it may mean reducing or eliminating tax deductions, including the mortgage interest write-off, according to a poll released Wednesday by the National Association of Home Builders. A majority — 52 percent to 40 percent — oppose lowering federal income tax rates for individuals if it means that deductions, including the home mortgage interest deduction, would be reduced or eliminated. Broken down by party line — 61 percent of Democrats oppose, and 48 percent of Republicans and independents are against the idea of changing that tax break. 

I Will Ask Again, Why Are We Taxing Corporate Income? [David Brunori]
[A]ny corporation with a breathing accountant can avoid all or most state corporate income taxes. It's not the fault of corporations. They generally act responsibly with respect to their tax avoidance activities. I sure would not like to be a shareholder in a company that did not take advantage of the laws designed to legally lower its tax burden. It's not the fault of departments of revenue. Their staffs do Herculean work against well financed adversaries. But no amount of enforcement dollars will change the fact that the state corporate tax laws do not work. And truth be told, they never will.

 

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