Author: Caleb Newquist

Founding editor, Going Concern.

Accounting News Roundup: Obama Sticking to His Guns on Tax Cuts; Backdating Scandals Made Little Noise; Area Tax Con to Be Contestant on TV | 11.12.10

Obama says he’s not caving on tax cuts [CNN]
President Barack Obama declared Friday that his “number one priority” is preserving tax cuts for the middle class, and sharply denied that comments by his senior adviser David Axelrod suggest that his administration is about to cave in to Republicans who also want to extend the Bush tax cuts for the wealthy.

“That is the wrong interpretation because I haven’t had a conversation with Democratic and Republican leaders,” Obama said of a Huffington Post article suggesting that in advance of negotiations with lawmakers next week, the White House has calculated that giving in on tax cuts for the rich is the only way to get the middle too.

Companies Would See Big Tax Shifts [WSJ]
Tax-reform plans proposed by President Obama’s deficit-cutting commission would radically change corporate tax policy and, business groups say, could improve U.S. competitiveness in global trade. But they also could create winners and losers among U.S. companies.

Business groups and economists have long sought fundamental changes to the tax code, which hasn’t been overhauled since 1986.

Pwning the social debate [AccMan]
Proceed with caution. Sayeth Dennis Howlett, “If the title of this post bamboozled you, the rest will make your head explode.”

House Dem leaders’ reactions to fiscal panel report differ sharply [The Hill]
Speaker Nancy Pelosi (D-Calif.) came out swinging, calling the proposals “simply unacceptable,” while the two men battling to be her deputy, Majority Leader Steny Hoyer (Md.) and whip James Clyburn (S.C.), released muted responses. Neither Hoyer nor Clyburn criticized the commission, avoiding a politically explosive set of ideas as they wrestle for support from their Democratic colleagues for the post of minority whip.

Backdating Scandal Ends With a Whimper [DealBook]
“These prosecutions went out with a whimper rather than a bang,” said Christopher J. Clark, a criminal defense lawyer at Dewey LeBoeuf who has done work on backdating cases. “With few convictions and no substantial sentences, juries and the courts simply did not agree with the government’s position that stock option backdating represented a serious financial crime.”


Richard Hatch still surviving life’s rocky road [Providence Journal]
Survivor champ, convicted tax dodger and “l’m living on borrowed 15-minutes-of-fame time” Richard Hatch is now going to be on the Celebrity Apprentice.

A QuickBooks Alternative for the Accounting-Phobic Owner [You’re the Boss/NYT]
Spooked by QuickBooks? WorkingPoint may be the solution for the debit-credit disinclined.

Newsweek, Daily Beast Set Merger [WSJ]
Under the proposed agreement, expected to be disclosed Friday, the two news organizations will be combined in a 50-50 joint venture called the Newsweek Daily Beast Co. The deal comes three weeks after the two sides abandoned talks of a merger over a disagreement about control.

To Keep People From Nodding Off, Stephen Schwarzman Reminded Everyone How Much He Hates Mark-to-Market Accounting

The Blackstone Group co-founder, chairman and CEO is in Seoul hobnobbing with various other titans of industry, finance and politics for the G-20 Business Summit and as you might expect, things can get a little drab.

Dark suits, heavy lunches, important people trying to one-up each other’s stories and so on and so forth can really get tiresome so in order to “keep people awake,” SS brought up a topic near and dear to his heart:

[I]n the United States, we eliminated mark-to-market accounting in 1937, and why did we do that? We completely bankrupted our system before, and for some reason, somebody who liked something called transparency decided to have mark-to-market accounting come back, around the turn of the last century. So it in no way surprises me that we had a catastrophic collapse as a result of implementing mark-to-market accounting.

Not exactly sure who “somebody” is but one guy has retired and another is on his way out, so this could be Schwarzman’s reminder to the outgoing MTM cheerleaders that he hasn’t changed his stance that the whole thing just sucks.

A/P Clerk Would Like to Know How to Best Use $30k to Get a Job with a Big 4 Firm

From the mailbag:

I have been working as a Accounts Payable for 3 years. I don’t want to waste your time of explaining my disadvantages. One of my advantages is money. I have a large savings. I would like to give $30,000 to anyone who get me a job in Big 4. I am not talking about [a] bribe. I wish to know how to use advantages [sic].

Just don’t sit there, give the man some suggestions. All options are on the table. Bonus points for creativity.

Tax Experts Weigh in on the Fiscal Commission Report

Plenty is being said about Bowles and Simpson’s Fiscal Commission report but we prefer to go with experts on the matter. Some musings from around the tax blogosphere

Joe Kristan loves the zero option, harkening back to the Reagan days:

If no “tax expenditures” were added back, the plan would reduce individual rates to 8, 14 and 23%, with a flat 26% corporate rate. There would be no reduced rate for capital gains, greatly simplifying tax lives for most of us.

This is an excellent idea. I would only apply more of the savings to reducing rates and add a dividends paid deduction to integrate the individual and corporate systems — a huge simplification. Nancy Pelosi isn’t crazfriends didn’t like the first zero option either.

From the aforementioned Tax Policy Center:

[T]his proposal is so provocative it almost seems as if Bowles and Simpson realize they have no chance of building consensus on their own commission. As a result, they may have decided to take their best shot now rather than watch their plan get nibbled to death. If so, it may not have been a bad idea. The fiscal panel may fade away in shame, but I have a feeling this plan may live on.

Tax Foundation’s Tax Policy Blog notes there’s plenty of displeasure to go around:

On the spending side, hawks will wince at the defense cuts while defenders of entitlement spending will dislike the higher retirement age and lower cost-of-living adjustments. One line item calls for all earmarks to be eliminated. Federal employee unions will not like the idea of a 3-year federal pay freeze and a reduction in non-defense employment by 10 percent through attrition.

On the tax side, there are certainly tax hikes for tax-haters to hate: gas taxes, dividend and capital gains taxes, and payroll taxes on high earners. Also, the revenue cap that the chairmen suggest, 21% of GDP, is higher than revenue has been in two generations.

Robert Flach is pleasantly surprised by the report but warns:

By just saying “add back in any desired tax expenditures, and pay for them by increasing one or all of the rates from their zero expenditure low” without limitations or restrictions we all know that the supporters of every single existing “tax expenditure”, as well as proposed new ones, will fund a lobby to throw money at Congress to keep or add their particular benefit. And individual Congresscritters will negotiate back and forth – “I’ll support your tax break if you support mine”. Before you know it we will end up with the same mucking fess we have now!

Meanwhile Dan Meyers needs oxygen:

[T]he report was nothing if not breathtakingly audacious by Washington standards.

Kay Bell notes the contention that has already begun over Social Security:

The debate over what typically is an inviolable government benefits program (remember Dubya’s failed attempt to privatize Social Security?) is going to rage for a bit…Perhaps most of the other members are as upset with the Social Security and tax suggestions as a lot of other people are right now. When the points of view of those 16 other commission members are taken into account, some of the recommendations might change … or disappear.

As Joe mentioned above, Nancy Pelosi hates the report, quoted by The Hill as, “simply unacceptable,” plus we gave you Dick Durbin’s thoughts yesterday.

Personally, we’re fans of the report because if nothing else, it forces politicians to entertain real solutions rather than hide behind the bullshit rhetoric we hear about “tax reform” and “cut spending.” And finally, as Gerald Seib writes at the Journal, there aren’t any more excuses:

By making their ideas public, they made it harder for other commission members to run and hide. The commission now can’t simply bury controversial or unpopular ideas. It has to say to the world that it has rejected them and take responsibility for having done so.

It’s about time.

Accounting News Roundup: Fiscal Commission Report Reactions; Pivot Table Won’t Add Up, You Say?; The IRS Needs Volunteers, Connecticut! | 11.11.10

Veterans Day – November 11 [DVA]
Remember those who served.

Deficit Panel Pushes Cuts [WSJ]
A White House c sweeping proposal to cut the federal budget deficit by hundreds of billions a year by targeting sacrosanct areas of U.S. tax and spending policy, such as Social Security benefits, middle-class tax breaks and defense spending.

The preliminary plan in its current form would end or cap a wide range of breaks relied on by the middle class—including the deduction for home-mortgage interest. It would tax capital gains and dividends at the higher rates now levied on wage income. To compensate, one version of the plan would dramatically lower and simplify individual rates, to 9%, 15% and 24%.

Deficit Panel Co-Chair Plan Is Tough, Creative, and Credible, But What Next? [TaxVox]
The Fiscal Commission gets a thumbs-up from The Tax Policy Center, “The co-chairs of President Obama’s much-maligned bipartisan fiscal commission have proposed a remarkable plan for both reducing the federal deficit and reforming the tax code. It is remarkable because it’s tough, specific, credible, and even creative. On the spending side, it carefully spreads the pain throughout government. And on the tax side, it makes a strong case for reform and presents no less than three ways to get there.”

Incorrigible: Fannie Mae and Freddie Mac Must Go [Forbes]
Francine McKenna’s latest at Forbes takes on the GSEs.

2010 Tax Filing Season Statistics [TaxProf Blog]
70% of 141.5 million tax returns were e-filed; average refund of $3,189.

Scaled back mortgage-interest deduction raises concerns [On the Money/The Hill]
Michael Berman, chairman of the Mortgage Bankers Association voiced concern over the plan to limit mortgage deduction to exclude second residences, home equity loans and mortgages over $500,000.

“Given the fragile state of the nation’s housing market, now is not the time to be scaling back incentives for homeownership,” he said today in a statement. “The mortgage interest deduction is one of the pillars of our national housing policy, and limiting its use will have negative repercussions for consumers and home values up and down the housing chain.”


Spreadsheets: Why Pivot Tables Won’t Sum [CFO]
Your dilemma – solved!

The Daily Docket: Ambac, IRS Strike Deal [Bankruptcy Beat/WSJ]
“Ambac Financial Group Inc. struck a deal with the Internal Revenue Service Tuesday that requires the IRS to notify the bond insurer before taking any actions involving hundreds of millions of dollars in tax refunds.”

A Strategic Plan for Internal Audit [Marks on Governance/IIA]
News you can use.

IRS looking for help [Bristol Press]
Calling all Connecticut residents who are feeling charitable – VITA/TCE volunteers are needed.

CFOs: We’ll Adopt IFRS Just as Soon as You Finish Your Little Convergence Exercise

Actually it’s about half of CFOs with that attitude, according to Grant Thornton’s latest survey. They’re ballparking it around 5-7 years while nearly a quarter of the responders think we need to get on this ASAP.

Stephen Chipman, is keeping the faith even though, people aren’t as enthusiastic as he:

“While there is movement toward greater acceptance of International Financial Reporting Standards based on our previous surveys, it is clear that there is still much work to be done in educating the U.S. financial community on the benefits of IFRS,” said Grant Thornton LLP CEO Stephen Chipman.

“We have been, and continue to be, staunch supporters of the ongoing movement toward one set of high-quality, globally accepted accounting standards. As dynamic businesses continue to expand their international footprint, it is increasingly sub-optimal to be using different reporting standards, which sometimes increase costs while decreasing comparability. Just as international business has benefited over the last 30-odd years from the increased shared use of English, so too will global companies reap the benefits of one financial reporting language.”