Corporate Close-Up: Five State Tax Trends To Watch In 2016
Bloomberg BNA
As we begin the Year of the Monkey, lists of upcoming trends abound. Whether you are ready to try a new hair style, visit this year’s hottest travel destinations, or shake up your menu, there is a list to safely guide you into the new year. If you’re wondering what 2016 has in store for corporate income tax, we have you covered. Based on Bloomberg BNA coverage of the 34th Institute on State and Local Taxation hosted by the New York University School of Professional Studies, here are five top trends to watch in 2016: 1. Gillette decision and possible resolution of MTC litigation at the state level. The California Supreme Court unanimously ruled against Gillette and five other multistate companies.
IRS Adjusts Employer-Provided Vehicle Values for 2016
Accounting Today
The Internal Revenue Service has issued the maximum vehicle values for 2016 that taxpayers need to determine the value of personal use of employer-provided vehicles. The vehicle value is used under the special valuation rules provided under section 1.61–21 (d) and (e) of the Income Tax Regulations, which apply to the taxation of fringe benefits. In Notice 2016-12, the IRS said the maximum value of employer-provided vehicles first made available to employees for personal use in calendar year 2016 for which the vehicle cents-per-mile valuation rule provided under section 1.61–21(e) may be applicable is $15,900 for a passenger automobile and $17,700 for a truck or van.
Are Vendors Hyping Complexity Of FASB’S Standards To Generate Business?
Bloomberg BNA
Not long ago, during a meeting of the Financial Accounting Standards Board and one of its committees, the topic came up that some vendors may be hyping up the complexity of certain accounting rules to get business. Misinformation has filtered into company meetings, after having been disseminated by vendors as factual, according to the discussions during a meeting of FASB’s Small Business Advisory Committee late last year. One accounting auditor told of a board meeting whereby a client was getting calls from vendors frequently about “you’ve got to purchase this new software; you’ve got to do these things” in relation to the forthcoming credit losses standard. The vendor created hype where there wasn’t any, and this has created a problem for FASB, according to the discussion.
Fooling The Right People Some Of The Time
Forbes
For hedge fund billionaire David Einhorn 2015 was a year to forget. Thanks to some glaringly bad investments–including big bets on SunEdison and against Amazon–his Greenlight Capital lost 20% and assets under management shrank by more than $3 billion as limited partners withdrew funds. Einhorn’s personal net worth dropped by nearly half a billion dollars. But among the 47-year-old hedge fund star’s numerous miscalculations, a small business development company named Fifth Street stands out as perhaps his most perplexing and embarrassing loss. Last year stock of Greenwich-based Fifth Street Asset Management plummeted 76%, and Einhorn, one of its largest outside shareholders, lost $8 million. The stock’s collapse was part of an investor drubbing in which more than $1 billion in market value was lost in a matter of months.
White House: Budget Request Will Include Doubling SEC, CFTC Funding by 2021
Wall Street Journal
The Obama administration will call on lawmakers to double the budgets of the top U.S. market cops over the next several years, the White House announced Monday, a push almost certain to encounter opposition from the Republican-controlled Congress. The big request, which the White House is set to unveil formally Tuesday, calls for boosting annual funding for the Securities and Exchange Commission and the Commodity Futures Trading Commission to $3 billion and $500 million, respectively, by the fiscal year starting Oct. 1, 2020, according to a blog post by Jeffrey Zients, director of the National Economic Council. “The President will continue working to make sure that the financial system works for everyone,” Mr. Zients wrote.
Community Banks Concerned about FASB Changes
Accounting Today
A group of community bankers from the Independent Community Bankers of America met last week with the Financial Accounting Standards Board to discuss their concerns with FASB’s upcoming impairment standard on credit losses. The three community bankers—Greg Ohlendorf, president and CEO of First Community Bank and Trust in Beecher, Ill.; Lucas White, vice president and director of The Fountain Trust Co. in Covington, Ind.; and Tim Zimmerman, president and CEO of Standard Bank in Monroeville, Pa.—warned that FASB’s Current Expected Credit Loss, or CECL, proposal could irreversibly damage the ability of community banks to continue meeting the needs of local customers and communities, according to the ICBA. Michael Gullette, vice president of accounting and financial management at the American Bankers Association, also participated in the roundtable meeting along with representatives of three other banks, according to the ABA.
IRS Management of Unemployment Taxes Falls Short
Accounting Today
The Internal Revenue Service needs to have better processes in place to administer its federal unemployment tax program, according to a new report. The report, from the Treasury Inspector General for Tax Administration, evaluated whether the IRS’s Certification Program for the Federal Unemployment Tax Act, or FUTA, ensures the accuracy of FUTA credit claims. FUTA requires federal and state governments to work together to establish and administer unemployment insurance programs to provide benefits to unemployed workers. The IRS is responsible for collecting the FUTA tax, which is a federal employer tax on wages paid to employees to fund State workforce agencies.
CFO Searches Drag On as Demand Takes Off
Wall Street Journal
Finding a new finance chief is a tough slog nowadays. Hunts took longer in 2015 than 2014, with nearly a third of them dragging on for more than four months, according to a recent survey of 39 executive-search firms by the Association of Executive Search and Leadership Consultants. Directors and key shareholders typically bristle at having an important post left unsettled for so long. Blame picky prospects and choosy businesses. Many top finance executives would prefer a step up the corporate ladder in their next job, and companies spend extra time pursuing a chief financial officer with more operational expertise.
Roadblocks on the Route From Wall Street to Washington
New York Times
For some at the top of Wall Street, there is only one job considered better: a top job in Washington. Every presidential election cycle, financiers jockey for position among the candidates to become their biggest fund-raisers and, more important, close advisers. The conventional view is that these investment bankers and money managers enter politics to influence policy. But that’s only part of it. For Wall Street’s elite bundlers and consiglieres, the endgame is a senior role in a White House administration — the most prestigious of which is secretary of the Treasury. Speculation has long been rampant that a small group of Wall Street executives, including Hamilton E. James of Blackstone Group, Laurence D. Fink of BlackRock and Roger C. Altman of Evercore, would love the top Treasury post if Hillary Clinton won the election. Warren E. Buffett once suggested that Jamie Dimon of JPMorgan Chase should be Treasury secretary.
Negative Interest Rates Are a Dead End
Wall Street Journal
The Bank of Japan recently announced that it would follow the European Central Bank’s lead and implement a “negative interest rate” policy. Reducing interest rates is supposed to increase spending and investment, spurring growth. It won’t work. Negative central-bank interest rates will not create growth any more than the Federal Reserve’s near-zero interest rates did in the U.S. And it will divert attention from the structural problems that have plagued growth here, as well as in Europe and Japan, and how these problems can be solved. Part of the impetus behind a central bank’s negative interest-rate policy is a desire to devalue the currency. With lower market interest rates, holders of euros, for example, may sell them to flee to countries with higher interest rates—driving down the euro’s exchange rate, boosting European exports and growth. But it is impossible for every country in the world to depreciate its currency relative to others.