Winter has come to the Northern Hemisphere, with wind and snow and rain afflicting many holiday travellers. The fourth world reached the end of its 13th b'ak'tun, or Mayan date 220.127.116.11.0, earlier today, on December 21, 2012. The good news is this didn't mean "the end of the world"; the bad news is that concern about the Mayan Calendar may have had something to do with what has - hasn't - happened in Washington. Did concern about the world ending contribute to there being no Plan A or Plan B. Is "end of the world" just another way of saying, "Skidding off the Fiscal Cliff"? As they often say on the Sunday morning talk shows, it's too early to tell.
It's not too early, however, to know that 2013 will be a challenging year for business tax professionals. Nor is it too early to say with certainty that the need for top-quality tax education and unsurpassed networking opportunities will be important. Thus, it is not too early to know that THE place to be on St. Patrick's Day 2013 is the Grand Hyatt Washington for TEI's 63rd Midyear Conference. The conference will begin on Sunday, March 17, and continue through lunch on Wednesday, March 20. Its theme will be "Backing Away from the Precipice: Tax Policy, Practice, and Procedure in 2013 and Beyond." Speakers will include acting IRS Commissioner Steve Miller. Entertainment at the Tuesday banquet will be The Capitol Steps.
For complete details, please click here.
Vast Majority on Lookout for Temporary ‘Stop Gap’ Measure on Issue
NEW YORK, Dec. 14 – Almost half of senior executives polled said they did not expect an agreement on the so-called “fiscal cliff” negotiations by year-end, according to a survey of more than 2500 business leaders conducted by KPMG’s Tax Governance Institute (TGI) earlier this month.
In the survey, 48 percent of respondents said they did not expect an agreement on the “fiscal cliff” by Dec. 31, while 32 percent said that they thought there would be resolution by the year-end. Some 19 percent were not sure.
At the same time, a vast majority of respondents (77 percent) are also on the lookout for a temporary “stop gap” measure on the looming issue which -- if left unresolved -- would result in a combination of tax increases and forced spending cuts on Jan. 1.
KPMG’s Hank Gutman, principal and director of the TGI and former chief of staff of the U.S. Congressional Joint Committee on Taxation, said: “It’s clear from our survey findings that the business community doesn’t think the government will be able to resolve the ‘fiscal cliff’ by Dec. 31. Prudent companies are taking steps now to assess the potential implications.”
In any agreement, 55 percent of respondents said they would like to see a combination of government spending cuts and tax rate increases on higher-income individuals, while 32 percent said they would most like to see cuts in government spending, including entitlement programs.
Some 54 percent of respondents expect any agreement to include the extension of the 2001/2003 tax rates for those with income below $250,000, but not for taxpayers with income of $250,000 and above; 22 percent said there would be agreement on a plan that would temporarily extend all current tax rules.
In addition, the survey revealed that 33 percent said they do not expect enactment of any business tax reforms until beyond 2015; some 26 percent said they expect reform in 2014. Only 11 percent said they expect business tax reform in 2013.
If the corporate tax rate is reduced, most respondents (38 percent) predicted that the new rate would be 28-29 percent, while a quarter of respondents (26 percent) said they see the rate falling to 30-31 percent. Eighteen percent said the rate would go to 25-27 percent.
“Lowering the corporate tax rate from its current 35 percent to 25 percent in a revenue-neutral manner will not be easy,” Gutman said. “The cost of reducing the rate is going to have to be offset in some way, and that offset is likely going to come out of the business community,” Gutman said.
In other survey findings, all focused on U.S. economic recovery:
· Some 40 percent of respondents believe the “fiscal cliff” has been a significant issue over the past 12 months with regard to economic recovery in the United States.
· Forty-nine percent feel hiring by U.S. businesses will be the most important driver of any economic recovery over the next 12 months.
· And 45 percent feel increased certainty on U.S. taxation for individuals and businesses will have the most significant affect on economic recovery in 2013.
The survey reflects the responses of more than 2500 members of the Tax Governance Institute -- including board and audit committee members, chief financial officers and tax directors -- who participated in the TGI’s Dec. 6 video webcast, “Gutman, Kies, Talisman Address the Fiscal Cliff and Tax Reform.” A replay of the video webcast is available here.
NEW YORK, Nov. 29 – KPMG’s Tax Governance Institute (TGI) invites board members, CFOs and other interested parties to a live video webcast featuring insight and perspective from key Washington, D.C., insiders on what may result from negotiations on the “fiscal cliff” and business tax reform, on Thursday, Dec. 6, from 3 p.m. to 4:30 p.m. (ET).
Hank Gutman, KPMG principal, director of the TGI and former chief of staff of the U.S. Congress Joint Committee on Taxation, will moderate the webcast, which will include a panel discussion with high-profile Washington lobbyists Ken Kies and Jon Talisman. The panelists will explore both the possible outcomes of the negotiations over the fiscal cliff and the longer-term prospects for individual and business tax reform.
Board and audit committee members, CFOs, tax directors and other business professionals interested in attending the program, titled “Gutman, Kies and Talisman Address the Fiscal Cliff and Tax Reform,” can register by logging on to: www.taxgovernanceinstitute.com.
“As politicians debate how to avoid going over the ‘fiscal cliff,’ contain unsustainable budget deficits, reform the tax system, and cut spending, business leaders and individual taxpayers ponder what it all may mean for them,” Gutman said. “Few people inside or outside of D.C. have a better vantage point than Ken Kies and Jon Talisman from which to tell what is and is not fiscally or politically possible.”
· Kies is managing director of the Federal Policy Group, and former co-managing partner of the Washington National Tax Services office of PricewaterhouseCoopers LLP, chief of staff of the Congressional Joint Committee on Taxation and Republican chief tax counsel to the Ways and Means Committee of the U.S. House of Representatives.
· Talisman is founding partner of Capital Tax Partners and former assistant secretary of the U.S. Treasury for Tax Policy in the Clinton Administration, Democratic chief tax counsel for the Senate Finance Committee, and legislation counsel of the Congressional Joint Committee on Taxation.
“CFOs, audit committee members and other executives should find this webcast of special interest,” Gutman added.
Part of the KPMG Institute Network (www.kpmginstitutes.com), the Tax Governance Institute (www.taxgovernanceinstitute.com) provides opportunities for board members, corporate management, stakeholders, government representatives and others to share knowledge regarding the identification, oversight, management, and appropriate disclosure of tax risk. A summary of the Institute’s recent insights on corporate tax reform can be found here.
BUSINESS LEADERS PREPARED TO GIVE UP INCENTIVES
FOR LOWER STATUTORY CORPORATE TAX RATE
Manufacturing Deduction, Research & Experimentation Tax Credits, Accelerated Depreciation All Placed On The Table
NEW YORK, Nov. 16 – Business leaders are clearly coming to the realization that if they want to see meaningful U.S. corporate tax reform they will need to give up some tax preferences in exchange for a lower statutory corporate tax rate, according to a survey by KPMG LLP, the U.S. audit, tax and advisory firm.
In a survey of more than 680 business executives, almost 80 percent of respondents from both U.S. domestic and multinational companies said they would be willing to accept the repeal of certain tax incentives in exchange for the lower overall tax rate.
Among those who support the concept of corporate tax reform, accelerated depreciation (68 percent) and the manufacturing deduction (66 percent) were the two most cited tax incentives that respondents were willing to give up. Surprisingly, research and experimentation tax incentives were cited by 52 percent of respondents overall, the findings revealed.
“Business leaders understand the fiscal challenges of the United States and are increasingly recognizing that a hard stance on incentives with respect to corporate tax reform will not work,” said Hank Gutman, principal with KPMG LLP and former chief of staff of the U.S. Congress Joint Committee on Taxation. “They know that for effective reformation of business taxation to take place, incentives once considered untouchable need to be up for debate.”
According to the survey, only 16 percent of respondents expect fundamental tax reforms in 2013, while such reforms were expected by 2014 by 25 percent of those polled and by 2015 or beyond by 29 percent. Thirty percent said they were unsure when any reform would be enacted.
The U.S. corporate tax rate is the top business tax concern among those surveyed (40 percent) followed by taxation of international operations (24 percent) and financial statement disclosure issues (17 percent). Of particular note, of 289 domestic companies surveyed, 16 percent said that employee benefits and executive compensation is their top business tax concern.
“Many commentators believe that the goal of U.S. tax reform should be to replicate the results of the 1986 Tax Reform Act, which simplified the tax code, broadened the tax base and eliminated many tax preferences,” Gutman said. “But today the fiscal challenges are very different.
“The reality is that any corporate tax reform will have to be at least revenue neutral, which will create winners and losers in the business sector,” Gutman continued. “As a result, some of the objectives being discussed for corporate tax reform may end up being mostly aspirational.”
One interesting disconnect among the findings revealed that CFOs, audit committees and boards who are discussing tax reform are, for the most part, not discussing the topic with their tax managers. In fact, only 11 percent said they were doing so. Instead, most discussions were taking place primarily with the finance executives and the C-Suite, according to the survey.
The survey also revealed that 36 percent of respondents said they felt the corporate tax system is seriously flawed and needs a complete overhaul while another 59 percent said the system has some flaws and needs some reform. Concerning a question on what those polled think is flawed about the U.S. corporate tax system, respondents most named a tax rate that is too high (76 percent) and foreign source income that is not properly taxed (51 percent).
If the corporate tax rate is reduced, an overwhelming majority of respondents (82 percent) expect the new corporate tax rate to be 29 percent or less, down from its current statutory high of 35 percent. Of those respondents, 42 percent expect a rate of between 25 to 27 percent, and 22 percent expect a rate of 28 to 29 percent. Only 18 percent expect a rate below 25 percent.
“Reduction of the corporate rate is very important,” Gutman said. “Proponents believe this will make the U.S. more attractive to foreign direct investment and reduce incentives to move income off-shore. All proposals to date espouse a reduction of the corporate rate to 25 to 29 percent and assume a revenue neutral outcome. The unanswered question is how to achieve that neutrality.”
When asked how the government will make up for the revenue shortfall if the corporate tax rate is reduced to 30 percent or less, a majority of total respondents (64 percent) expect the government to reduce business tax preferences while 25 percent of the audit committee/board respondents and 48 percent of CFOs expect the government to increase tax rates on the capital income of high-net worth individuals.
Concerning the possible adoption of a national consumption tax to generate additional revenue, 31 percent of respondents polled said they expect that the government would enact a Value-Added Tax (VAT). When asked if they individually would support a VAT to lower the corporate tax rate, 67 percent said no or not sure, while 32 percent said they would.
“To date, the business tax reform discussion has been long on concept but short on detail,” Gutman said. “In the zero-sum game that is created by budget constraints, the principal goal of significant rate reduction may be unattainable without an additional revenue source, such as a national consumption tax, financial transaction tax, or a form of energy tax.”
In other survey findings:
· The majority (56 percent) of those polled said that lowering the corporate tax rate is seen as more important than reforming the taxation of non-U.S. source income.
· Most respondents (40 percent) do not plan to be actively involved in efforts to shape the outcome of the corporate tax reform debate while 33 percent were unsure about their plans.
· Moreover, 66 percent of respondents said they were taking a “wait and see” approach to preparing for corporate tax reform because it has not yet achieved enough of a footing to warrant action.
KPMG’s “2012 Tax Reform Survey” was conducted by the firm’s Tax Governance Institute between July and mid-September of 2012. A total of 684 business executives were polled, including directors of tax, vice presidents of tax, chief tax counsels, chief financial officers, controllers, treasurers, audit committee members and chairs, and board members and chairs.
(from Tax Prof Blog)
Leonard E. Burman (Syracuse) and Joel B. Slemrod (Michigan), Taxes in America: What Everyone Needs to Know (Oxford University Press, Nov. 22, 2012):
Despite their passion and fury, contemporary Americans are remarkably clueless about how their tax system works. But with heated debates over taxation now roiling Congress and the nation, an understanding of our tax system is of vital importance. Taxes in America
, by preeminent tax scholars Leonard E. Burman and Joel Slemrod, offers a clear, concise explanation of how our tax system works, how it affects people and businesses, and how it might be improved. Accessibly written and organized in a clear, question-and-answer format, the book describes the intricacies of the modern tax system in an easy-to-grasp manner. Burman and Slemrod begin with the basic definitions of taxes and then delve into more complicated and indeed contentious concerns. They address such questions as how to recognize Fool's Gold tax reform plans. How much more tax could the IRS collect with better enforcement? How do tax burdens vary around the world? Why do corporations pay so little tax, even though they earn trillions of dollars every year? And what kind of tax system is most conducive to economic growth?
Washington Council Ernst & Young has released its post-election analysis, summarizing both the results of the Presidential and Congressional elections and the implications for avoiding/dealing with the "fiscal cliff" and the prospects for tax reform and other legislation, during the coming lame duck session of Congress and in 2013.
Monday, November 12, 2012
3:30 pm ET
Approved for 1 CE or 1 RCH credits by attending this Webinar.
With some 10,000 jurisdictions and tens of thousands of proposed rule changes every year it's a major accomplishment just to keep up with today. But having tax insight will help you keep pace with how current and proposed legislative changes may impact your business.
In this segment of our continuing series of Tax Insights Webinars, you will gain valuable information in two key areas:
- Unemployment insurance (UI) has seen an increase in changes and activity as states struggle with tax revenues. Learn how the UI system is supposed to work and what has been happening lately.
- A look ahead and the landscape of tax credits and incentives that may impact your business in 2013.
As a special bonus for webinar attendees, you will also receive a checklist from ADP that might help you plan for and execute your smoothest employment tax year-end ever!
ADP Speakers include:
Wendy Seyfert, Vice President of Agency Relations
Charles Asensio, Vice President of Government Affairs
KPMG LLP, the U.S. audit, tax and advisory firm, has announced that P. Scott Ozanus has been elected to serve as deputy chairman and chief operating officer of the U.S. audit, tax and advisory firm. Ozanus, who most recently held the position of vice chair of KPMG’s tax practice, was elected to the second-ranking leadership position by the KPMG Board of Directors and ratified by the full partnership. Ozanus succeeds Henry Keizer, who is retiring at the end of the year.
KPMG also announced that Jeffrey C. LeSage will succeed Ozanus as vice chair of the firm’s tax practice and that Laura Newinski will assume LeSage’s role as national managing partner of tax.
“I’m proud to welcome Scott to this new role and look forward to working closely with him as KPMG’s chief operating officer,” said John Veihmeyer, KPMG’s Chairman and CEO in the U.S. and the Americas. “Scott has an extraordinary grasp on our operating processes and the key components that drive our success and the success of our clients. His proven ability to lead and generate results makes him the right person for this position. He will be instrumental in building on the firm’s strong growth in recent years, and ensuring KPMG remains at the forefront of a rapidly changing business environment.”
Ozanus has more than 30 years of experience in what are now the “Big Four” international accounting, tax and advisory firms. He joined KPMG in 2002 and prior to serving as vice chair of the Tax practice, was the West area region managing partner for Tax. Earlier Ozanus served as managing partner of KPMG’s Dallas office and southwest area managing partner. Under his leadership, the U.S. Tax practice has grown significantly faster than the industry average. Ozanus began his career in the Dallas office of Arthur Andersen.
“I am honored to be elected by the Board and partners to this role and help lead a firm with such a legacy of success,” said Ozanus. “KPMG attracts the top talent in the profession, and is strongly positioned for growth in today’s dynamic marketplace. I am looking forward to working with John, our leadership team, and all of our partners and professionals to deliver the highest quality services to our clients that is the hallmark of KPMG.”
Ozanus, who earned a Bachelor of Business Administration degree in accounting from Texas A&M University, currently serves as a board member for the Cox School of Business at Southern Methodist University, and recently completed his term as vice chair of The Heart Hospital Baylor Plano. He is the former chairman of the board for the United Way of Metropolitan Dallas, and served on the board of trustees of the Parish Episcopal School of Dallas. In addition, Ozanus served on the board and finance and audit committee for the Greater Dallas Chamber of Commerce. In 2008, he received the “Torch of Conscience Award” from the Southwest Region of the American Jewish Congress, which recognizes an individual for enriching the community.
Ozanus also said: “I congratulate Jeff and Laura on their new roles. I know from working closely with them for many years that they will serve the tax practice and the Firm exceptionally well. We’re proud to have their leadership in these roles as we continue to build on all that the tax practice has accomplished in recent years.”
LeSage joined KPMG in 1986 and was named to the firm’s partnership in 1992. He has served as national managing partner of the tax practice since July 2010. During his tenure, the practice saw strong, steady growth, reflecting a focus on providing outstanding service and business insight to clients. He has held several leadership positions in his 25 years with the firm, including serving as the East regional managing partner for Tax Services, area managing partner for KPMG’s Mid-Atlantic and Northeast regions from 2003 to 2008, and the Global partner-in-charge of KPMG’s International Corporate Services practice.
Newinski succeeds LeSage as national managing partner for KPMG’s tax practice. She joined KPMG in 1988 and was elected to the partnership in 1997. She previously served as the Tax partner in charge for KPMG’s Northern Heartland Gateway West business unit and most recently as West region managing partner for Tax. In her time as the regional managing partner – a role she assumed in July 2010 – she led the region to significant business growth in Tax. As the lead tax partner on several multinational Fortune 500 companies, Newinski led and coordinated multi-disciplinary teams across the country and globally. She is a member and past president of the Professional Accounting Council at the University of Iowa, from which she earned a Bachelor of Administration. Newinski also holds a Masters in Taxation from the University of Minnesota’s Carlson School of Management and is a member of the American Institute of Certified Public Accountants. She serves as a board member of Catholic Charities of St. Paul and Minneapolis and previously served on other charitable boards.
TEI’s Global Tax Advocacy Task Force, which was chartered in 2011, to help refine the Institute’s role in an increasingly global tax environment, has been named the No. 3 influencer in global tax in 2012 by the International Tax Review. The following story about the TEI group, taken from the November 2012 issue of the magazine, is reprinted with permission.
International Tax Review presents its Global Tax Top 50 for 2012. The list comprises the top 50 influences in international tax, with a top 10 ranking.
International Tax Review publishes an annual list of what it considers to be the top 50 most influential people and organisations in global tax. For 2012, we have also ranked the top 10 in order for the first time.
This adds an extra dimension to the list, comparing the roles of government officials, taxpayers and their CEOs, international organisations and pressure groups….
TAX EXECUTIVES INSTITUTE
The Tax Executives Institute is the only global organisation to solely represent taxpayers’ views as its purpose.
A core function of TEI is to raise the views of its members with revenue agencies, multilateral organisations and lawmakers around the world.
When the Global Tax Advocacy Taskforce was formed by the TEI this year to review its processes and practices related to its multijurisdictional activities, it was bound to have an influence on tax policy and development internationally.
The taskforce’s set of nine recommendations, or charter objectives, included calls for working more closely with organisations such as the OECD and the UN, for example, on developments in the BRIC (Brazil, Russia, India and China) countries; responding more effectively to treaty issues and ensuring that TEI’s advocacy was coordinated efficiently across Asia, Europe, the Middle East and Africa and North America.
As joint-chairs of the taskforce, Vince Alicandri, vice president, corporate tax for Hydro One, a Canadian utility company, and Janice Lucchesi, vice president of tax in North America for Akzo Nobel, the Dutch multinational paints, coatings and chemicals company, were responsible for ensuring the charter objectives were adhered to.
“Internally, we have seen more members become involved, enriching our efforts and allowing us to do more,” said Lucchesi. “Externally, 2012 has witnessed significant taxrelated activities at both the OECD and UN level. TEI has filed several significant submissions with the OECD, as well as with the European Commission, which have reflected the coordinated input from both European and North American international tax related committees.”
“The taskforce has made recommendations that will ensure multijurisdictional international tax issues affecting Institute members are discussed, evaluated, and acted upon in a coordinated fashion,” added Alicandri.
Facebook, FirstEnergy, Owens & Minor and Schnitzer Steel recognized for tax and technology innovations
Berwyn, PA – October 31, 2012 – Technology innovation has proven to be crucial for companies managing global income and transaction tax obligations. The corporate tax and IT professionals responsible for these innovations have not only helped to better manage compliance and risk, but are also unleashing new value that benefits the entire company.
To honor these innovators and their companies, Vertex Inc., the leading provider of corporate enterprise tax solutions, recently named the winners of the company’s 2012 Corporate Tax Innovation Awards. This year’s honorees, including Facebook, FirstEnergy, Owens & Minor, Inc. (NYSE-OMI) and Schnitzer Steel, were recognized on October 22 in front of over 500 of their colleagues and peers at Vertex Exchange 2012 in Orlando, Fla.
“This year’s winners illustrate the potential of every corporate tax department to innovate and meet challenges head-on,” said Jeff Westphal, President and Chief Executive Officer of Vertex Inc. “From streamlining the provision process and managing tax from the cloud, to automating sales tax collection at thousands of locations, this year’s winners represent the very best in thought leadership in corporate tax technology and emerging best practices in corporate tax.”
Now in its ninth year, Vertex’s Corporate Tax Innovation Awards recognize forward‐thinking organizations that have discovered inventive ways to leverage their Vertex Solutions to overcome real‐world business issues. Winners are selected based on their innovative use of Vertex’s corporate enterprise tax solutions and services, how they are tailored to their company’s specific needs and the development of new best practices in corporate tax.
Innovation Award winners are honored each year at Vertex Exchange, the company’s annual conference for corporate tax and technology professionals. Vertex Exchange offers attendees to opportunity to meet with their peers, Vertex professionals, and the industry's leading tax and technology experts to learn, share innovative ideas, and network.