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December 3, 2022

ANR: Brits Bring the Heat on Big 4 Over Tax Avoidance; The Fraudster You Know; SeaWorld CEO: ‘We won’t be a taxpayer for several years’ | 04.26.13

'Big four' accountants 'use knowledge of Treasury to help rich avoid tax' [Guardian]
The so-called "big four" accountancy firms are using knowledge gained from staff seconded to the Treasury to help wealthy clients avoid paying UK taxes, a report by the influential Commons public accounts committee says. Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers have provided the government with expert accountants to draw up tax laws. But the firms went on to advise multinationals and individuals on how to exploit loopholes around legislation they had helped to write, the public accounts committee (PAC) found. Margaret Hodge, the PAC's chair, said the actions of the accountancy firms were tantamount to a scam and represented a "ridiculous conflict of interest" which must be stopped. "The large accountancy firms are in a powerful position in the tax world and have an unhealthily cosy relationship with government," she said, calling for the Treasury to stop accepting their staff to draw up new tax laws.

Big Four accountants wield ‘undue influence’ over UK tax system [FT]
MPs have accused the Big Four accountants of wielding “undue influence” on the tax system in a report on Friday, calling for a code of conduct on acceptable tax planning that would decide their eligibility for public sector work. Margaret Hodge, chair of the Public Accounts Committee, said there was “a ridiculous conflict of interest” in seconding accountants to the Treasury to advise on formulating tax legislation. She also voiced scepticism about the firms’ “protestations of innocence” in declaring their focus was now on acceptable tax planning, not aggressive tax avoidance.

Client Drops KPMG, but Not Over Insider-Trading Scandal [MB/WSJ]
Plymouth Opportunity REIT Inc., a Boston-based real estate investment trust, said in a regulatory filing Thursday that it had dismissed KPMG and selected another firm, Braver PC, as its new auditor. A study of filings over the past few weeks shows no other company has switched from KPMG since the London scandal.

Corporate Donations and the S.E.C. [NYT]
The Supreme Court’s Citizens United decision that triggered an avalanche of corporate political spending also contained a proposal for greater public disclosure from corporations that would prefer to write their checks in the shadows. Transparency, the court advised, would let voters decide for themselves “whether elected officials are ‘in the pocket’ of so-called moneyed interests.” Since that 2010 decision, corporate and Republican opposition has snuffed out Congressional attempts to require donor transparency and accountability. All the more compelling then that the Securities and Exchange Commission, following an impressive petition campaign, is considering a regulation mandating that publicly traded corporations disclose all their political donations to their shareholders.

Senate advances Internet sales tax bill, but final vote delayed until after weeklong vacation [AP]
The Senate voted 63-30 Thursday to advance a bill that would impose state and local sales taxes on purchases made over the Internet. An agreement among senators delayed the Senate’s final vote on passage until May 6, when senators return from a weeklong vacation.

Psychology of the Fraudster, as Told From the Front Lines [CW]
Compliance Week editor Matt Kelly tells a fascinating story of a fraudster who was just busted in the last month and is someone that MK has been acquainted with for several years. Needless to say, he had no idea. "I don't know him well, but we've met several times over the years through a mutual acquaintance, and I've always presumed he was a decent fellow and his company solid. I was wrong. Behind Jack's pleasant smile and underneath his hair-gelled head, he was committing fraud."

IRS Tells Congress Tax Season Ran Smoothly after a Bumpy Start [AT]
“The 2013 filing season started with difficult challenges for the IRS,” [Acting Commissioner Steven] Miller said in testimony before the House Ways and Means Oversight Subcommittee. “As the subcommittee is aware, substantial tax law changes were enacted on January 2 of this year, just before the IRS would normally begin accepting e-filed returns. IRS staff worked nonstop, around the clock, to make changes to systems and forms necessary to open the tax filing season. Opponents hope senators hear from angry constituents over the next week, but they acknowledged they have a steep hill to climb to defeat the bill in the Senate.

States Push to Get the Most Out of Marijuana Taxes [NYT]
 If marijuana is legalized and properly regulated, its proponents have long said, it could generate millions of dollars in state tax revenue. But how the drug should be taxed has proved to be a thorny question. In Colorado, where voters approved a measure in November legalizing small amounts of marijuana for recreational use, officials have been grappling with this issue for months as the state works to forge a cohesive regulatory code. This week, legislators here will consider excise and sales taxes on marijuana of up to 30 percent combined. The proposal emerged from a task force of health officials, representatives of the state’s rapidly developing marijuana industry and others that was commissioned last year to help develop rules for marijuana. The goal, task force members and lawmakers say, is to set taxes high enough to finance the administration of new laws, but not so high that customers are driven back to the black market.

SeaWorld won't pay income taxes for years [OSS]
"We won't be a taxpayer for several years to come," SeaWorld President and Chief Executive Officer Jim Atchison told prospective investors shortly before the company went public. "That's a great advantage for us." SeaWorld is avoiding income taxes even as business is booming. The company's pre-tax profits more than tripled in 2012 to $117 million. Total sales across its 11 parks climbed 7 percent to more than $1.4 billion. Tax-reform advocates say SeaWorld symbolizes a broken U.S. tax system. The federal government gave away as much money in corporate tax breaks in 2011 — $181 billion — as it raised in corporate-tax revenue, according to a new report by the Government Accountability Office in Washington. The losses drain state treasuries, too. Florida and other states lean heavily on the federal tax code when calculating their own corporate-income taxes. SeaWorld says it is acting within "both the letter and spirit" of all tax laws.

Awesome Grover Norquist juxtaposition of the day [Twitter]

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