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On June 2, 2014

Supreme Court to hear Maryland v. Wynne tax case

Wednesday, 28th May 2014

TAX

The Supreme Court announced yesterday it will hear Maryland v. Wynne, a case that reportedly could result in the revision of tax laws across the country. The case is based on the extent to which a state may tax income earned by a resident in another state; at present Maryland allows residents to deduct this, but it doesn’t apply to the “piggyback tax” collected by the state on behalf of counties and municipalities. In the original case, the Maryland Court of Appeals ruled in favor of Brian and Karen Wynne, who were prevented from deducting $84,000 they had paid in income taxes to other states from the income used to calculate their county tax bill.
Wall Street Journal Washington Post Huffington Post

Top tax official steps down after Credit Suisse victory
Just days after securing a $2.6bn settlement and guilty plea from Credit Suisse on charges that it helped wealthy Americans avoid taxes, Kathryn Keneally has announced she will be leaving the Justice Department next week. The Assistant Attorney General for the Tax Division since 2012, Ms Keneally leaves with a 95% record of decisions in the department’s favour. In a statement, she said simply that she is looking forward to returning to her home in New York.
Reuters Law 360 Main Justice

Senate challenged on tax debt measure
The National Conference of CPA Practitioners (NCCPAP) has challenged a Senate proposal to revive a discontinued program allowing private contractors to collect unpaid tax debts on behalf of the IRS. In common with the IRS Oversight Board, National Taxpayer Advocate Nina Olson and IRS Commissioner John Koskinen, the NCCPAP opposes the section of the EXPIRE Act that allows collection agencies; its Tax Policy Committee chair Steven Mankowski said that only “screened and vetted” agents should be able to represent the federal government in tax issues. Tax attorney Terence E. Smolev adds that the Taxpayer Advocate Service, which helps taxpayers in emergency situations, would not have oversight of private collection agencies.
Accounting Today Newsday

Businessman cops $1m penalty, faces jail time
Viktor Kordash, a Russian businessman who become a U.S. citizen, has pleaded guilty to charges he failed to reveal a $1.5m offshore tax account at Swiss bank Wegelin & Co to the IRS. The account, active for almost two decades, was closed in 2010, but he failed to file mandatory Foreign Bank and Financial Accounts reports with the IRS. He has agreed to pay penalties of over $1m, and faces a five-year jail sentence. In other news Martin Lack, a former UBS banker who pleaded guilty to aiding tax evasion in February, has escaped prison and sentenced to five years of probation.
USA Today Reuters

Pro-Israel group wins right to challenge IRS
U.S. District Judge Ketanji Brown has rejected White House efforts to halt a legal challenge against the IRS from a pro-Israel group. Z Street alleges that the agency violated its First Amendment rights when it subjected its application for 501(c)(3) tax-exempt status to extra scrutiny.
Star-Telegram

INDUSTRY

FAF to look at municipal securities market
The Financial Accounting Federation plans to address the concerns raised by one of the Big Four, thought to be PwC, regarding whether entities raising capital in the municipal securities market use standards developed by the FASB or the GASB. W. Daniel Ebersole, co-chair of the FAF’s standard-setting process oversight committee said: “A primary concern was that an entity’s ownership determines whether FASB or GASB standards apply–a public versus a private college for example”. Public, non-profit and government firms are all held to different standards of transparency, making it difficult for stakeholders to compare financial statements.
Bloomberg BNA

IRS to allow suspended preparers to renew PTINs
As a result of the recent decision in IRS v. Loving that prevents the service from regulating unenrolled tax return preparers, the IRS has announced that those preparers who were sanctioned by having their PTINs blocked between August 2nd 2011 and February 11th 2014 can apply to have them reinstated.
Journal of Accountancy

FASB, IASB to issue new revenue recognition standard
The FASB and IASB are set to hold a joint conference call today at 8.00 am eastern time to announce the publication of a new standard on revenue recognition. The new standard is a convergence of both body’s existing guidance.
Compliance Week

FIRMS

Sterne Agee dumps management after initiating KPMG lawsuit
Alabama-based brokerage Sterne Agee, which last week filed a lawsuit accusing auditor KPMG of negligence, has abruptly replaced CEO Jim Holbrook Jr. with Eric Needleman.
Investment News

ECONOMY

House prices continue to rise
The S&P Case-Shiller Home Price Index released on Tuesday shows that house prices are still gaining, despite losing momentum. The report found that prices increased 0.2% in the first quarter this year from the fourth quarter of 2013. Year-on-year, prices nationwide are up 10.3%. In the year to February however, they rose 12.9%.
Wall Street Journal

INTERNATIONAL

Big Four criticised over bank audits
An annual assessment of audit quality from the UK’s accountancy watchdog has criticised KPMG, PwC, Deloitte and EY for failing to spot the oncoming of the 2007 credit crunch and subsequent economic crisis, whilst auditing the country’s big banks and building societies. The Financial Reporting Council found that audit quality “continues to fall below average”. In particular, auditors have failed to challenge banks and building societies on the insufficient money they have set aside against potential losses on their loans.
The Times of London

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