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The Daily

NEWS HIGHLIGHTS FOR WEDNESDAY - 4.6.16

By:
Maya Lindsay
Published Date:
Apr 6, 2016

NYSSCPA Members in the News

Louis DeMars (Nassau)
Tax Tips for Travel Agents
Travel Market Report
Did you really procrastinate until now to deal with your taxes? For those who failed to pay heed to the advice in our December article, here’s a recap of some of the tips for independent and home-based travel agents—and some ideas to get you off on the right foot for 2016.

Other Accounting and Finance News

AICPA Completes Clarity Project for Attestation Standards
Accounting Today
The American Institute of CPAs' Auditing Standards Board has completed its Clarity Project by issuing its final standard. The issuance of Statement on Standards for Attestation Engagements (SSAE) No. 18, Attestation Standards: Clarification and Recodification clarifies the SSAEs, also known as the attestation standards. The now-completed Clarity Project involved redrafting the standards that the ASB issues by using drafting conventions that make the standards easier to read, understand and apply.

Stamp out the hedge-fund tax loophole
Crain’s New York Business
Sometimes legislation requires ingenuity, foresight and critical thinking. In other cases it's just obvious. A bill that one of us, Sen. Klein, has just introduced to close the carried-interest tax loophole in New York falls into the latter category. Carried interest takes its name from the actions of merchants hundreds of years ago “carrying” their cargo for trade. Today the term has nothing to do with that.

Nonprofits Balk at Accounting for Government Grants under New Rev. Rules
Bloomberg BNA
There’s a major issue brewing among not-for-profit entities related to the Financial Accounting Standards Board’s revenue rules: are moneys nonprofits receive from federal government grants considered revenue from contracts with customers, or something else? The answer will determine the accounting burden not-for-profit entities will have to bear; it’ll determine whether they need to account for them under Topic 606, Revenue from Contracts with Customers, or another standard.

New York Considers Allowing Non-CPAs To Lead Firms
CPA Practice Advisor
After failing to pass muster as part of New York's state budget deal, a new press is on to score state legislative approval of a bill that would allow non-certified public accountants to make partner -- and reap the benefits of such a position -- at accounting firms. Tucked into Gov. Andrew Cuomo's executive budget and the state Senate's one-house budget was a provision that would explicitly allow such firms to give non-CPAs to a minority ownership stake, granted the firms meet certain conditions.

Why Things Are Looking Up for Risky Assets
Wall Street Journal
The Federal Reserve almost certainly won’t raise short-term interest rates at its policy meeting later this month. And traders are betting a June rate increase is unlikely. Some even think the Fed will stay put for the rest of the year. But why? The U.S. economy appears to be sounder now than it has been in years, notwithstanding presidential candidate Donald Trump’s warning of a “very massive recession” on the horizon. Job growth has not only been steady, but more people are finally returning to the labor force. Incomes are rising, albeit slowly, and inflation is climbing closer to the Fed’s preferred 2% target.

Is Block Advisors A Threat To CPAs?
Forbes
The little tiff between Block Advisors and the AICPA over Block’s ad that dissed CPAs does not seem to have created that much brouhaha beyond the coverage here and on Going Concern.  Too bad.  I was looking forward to it being a thing.  Nonetheless, I looked into it just a little bit further. I’m fairly certain that, AICPA’s rush to defend our brand notwithstanding, most of my brother and sister CPAs are not worried about competition from Block Advisors. The more interesting question is whether they should be.

Pfizer to Walk Away From Allergan Deal
Wall Street Journal
Late Tuesday, the sides were still working out how much the planning had cost Allergan, but it is expected to be much less than the full $400 million, one of the people said. The breakup fee is relatively small, especially given Pfizer’s market value of some $200 billion. The decision to walk-away is the latest setback in Pfizer’s long-running efforts to overcome what Chief Executive Ian Read has said was the company’s competitive disadvantage with foreign rivals that faced significantly lower tax bills.

IRS Sponsors Contest to Redesign Taxpayer Experience
FEDweek
The IRS has announced what it called its first foray into crowdsourcing, launching a “tax design challenge” to help improve the taxpayer experience with the agency. The competition “invites the public to imagine the taxpayer experience of the future and specifically design an online experience that better organizes and presents a person’s tax information. The goal is to make it easier for a person to manage their tax responsibilities, and use their own tax data to make informed and effective decisions about their personal finances,” it said.

CFOs Becoming More Strategic
CPA Practice Advisor
Put away the bean counter visor. A new study shows that CFOs are becoming true partners to the business and spending less time in manual
accounting processes. CFOs are focused on a range of strategic initiatives, including managing risk and enhancing customer satisfaction, as well as implementing technology systems that can help the business run more efficiently and achieve greater business sustainability in an uncertain economic environment. That's according to the results of a new survey by Intacct, a provider of cloud ERP software.

On Inversions, the Treasury Department Drops the Gloves
New York Times
Tax lawyers at the Treasury Department have grappled in recent years with the many corporations finding ways to merge with overseas “inversion” partners and, as a result of the merger or acquisition, move their legal residence offshore to reduce tax payments. The Treasury’s new administrative guidance that was released on Monday tackles a wide range of tax issues related to inversions, including new approaches to multistep acquisitions and earnings-stripping.

IRS’s inversion rules include earnings-stripping provisions
Journal of Accountancy
The IRS issued a package of proposed and temporary regulations on Monday designed to reduce the tax benefits and incentives for corporate inversions. These new rules aim to curtail an inverted company’s ability to access foreign subsidiaries’ earnings without paying U.S. tax. In a corporate inversion, a multinational company based in the United States replaces its U.S. parent with a foreign parent, usually in a lower-tax jurisdiction.

Labor Dept Cracking Down On Exempt Salary Fraud
CPA Practice Advisor
Ahead of the soon-to-be released white-collar overtime rule overhaul, the Department of Labor has begun pursuing employers that abuse the exempt classification system. On March 15, the DOL filed a federal lawsuit against a small Ohio restaurant chain, alleging that managers misclassified hourly workers by paying them a flat fee for all hours worked and calling the jobs salaried, exempt positions. The DOL lawsuit against Salsitas Mexican Restaurant and Cantina alleges that the misclassification and salary scheme meant several employees wound up earning less than the minimum wage.

Cuomo official: 421-a is dead, but replacement is inevitable
Crain’s New York Business
Gov. Andrew Cuomo's top aide said Tuesday the administration is waiting on a construction union and a real estate trade group to replace the controversial property-tax exemption called 421-a, even after the two groups failed at the same task last year. Secretary to the Governor Bill Mulrow, who was speaking at a Crain's breakfast, said "421-a itself is dead. We tried to see if there was a way to revive 421-a, but the question is whether there will be some successor tax-abatement program that allows rental housing to be built here."

Financial-Advice Rule Has an Unlikely Champion
Wall Street Journal
The champion behind an anticipated proposal roiling the retirement-advice industry is a civil servant most Washington outsiders have never heard of. Phyllis Borzi, a 69-year-old assistant labor secretary, is an unlikely advocate for the rule, given the Labor Department doesn’t typically get involved with investment advice. But she has made it her mission to hold retirement-savings advisers to a “fiduciary” standard, which requires them to put their clients’ financial interests above their own. A rule to that effect is expected to be unveiled this week.

Wall Street Lower After I.M.F. Chief’s Comments
New York Times
United States stocks sank for a second day on Tuesday as the head of the International Monetary Fund gave a downbeat outlook for the world economy. Disney shares fell after the company’s expected successor to Robert A. Iger, its chief executive, announced he was leaving the company. Allergan stock plunged after the Treasury Department announced tax rules that would complicate the company’s planned merger. The Standard & Poor’s 500-stock index lost 20.96 points, or 1 percent, to 2,045.17. The Nasdaq composite fell 47.86 points, or 1 percent, to 4,843.93.