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November 29, 2022

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

Plus, some good accounting luck for Fannie and Freddie, and celebrating the return of your driver’s license after a DUI with a new DUI is saddest thing ever.

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.

Tax Rewrite in Play in Capitol [WSJ]
[B]ig gaps remain between Republicans and Democrats, particularly on the question of whether a tax rewrite should include provisions to raise revenue. Democrats generally say it should. Most Republicans say that it shouldn't, that any new revenue should come only from the resulting economic growth. The parties also are divided on the process. House Republicans are discussing whether to seek a tax rewrite as part of an agreement to raise the government's debt ceiling later this year. Such an agreement likely would create fast-track procedures and time lines for a tax overhaul, to speed passage, and could include cuts to future spending. But the White House says it won't negotiate the terms of a debt-ceiling increase.
 
Fast Track to Nowhere [Tax Analysts]

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.

S.F. tax attorney accused of evading his own taxes [SFE]

James P. Kleier of San Francisco, who has lectured at universities and was the chairman of local and national bar associations for his tax expertise, faces up to a year in prison and a $100,000 fine for failing to pay his taxes from 2008 to 2010, according to Northern California-based U.S. Attorney Melinda Haag. In 2008, prosecutors said, Kleier failed to pay taxes on $624,923 of gross income he received that year. The following year, he allegedly neglected to report $476,088, and in 2010 the amount was $200,734. The sums included self-employment income, Haag said.

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.

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