Accounting News Roundup: Don't Drive Angry on Tax Day; IRS Dogging It on Audits of Ultra-rich; Auditor Musical Chairs in Hong Kong | 04.11.12

Death, Taxes Collide as Fatal Crashes Mount on Filing Day [Bloomberg]
Deaths from traffic accidents around April 15, traditionally the last day to file individual income taxes in the U.S., rose 6 percent on average on each of the last 30 years of tax filing days compared with a day during the week prior and a week later, according to research published in the Journal of the American Medical Association. Even allowing Americans to file their taxes electronically hasn’t negated the crash trend, lead researcher Donald Redelmeier said. The findings suggest stress, lack of sleep, alcohol use and less tolerance to other drivers on tax deadline day may contribute to an increase in deaths on the road, Redelmeier said. “An increase of risk in this magnitude is about the same as what we observe on Super Bowl Sunday, a time notorious in the U.S. for drinking and driving,” said Redelmeier, a professor of medicine at the University of Toronto in Canada, in an April 6 telephone interview. The research showed that there were 226 fatal crashes for each of the 30 tax days and 213 fatal accidents for each of the 60 control days.

How to Really Simplify the Tax Code [Economix/NYT]
Many people will spend money on accountants, tax software or storefront tax-preparation services. The cost in terms of time alone runs to the tens of billions of dollars, with billions more spent out of pocket. The aggravation factor is beyond calculation. Politicians often rail against the complexity of the tax system as the key source of taxpayer frustration. Historically, however, voters have been unwilling to support meaningful simplification efforts and happily put up with complexity if it saves them in taxes. They seem always to fear that “simplification” is some sort of code word for raising their taxes while reducing someone else’s. Another barrier to simplification is a loss of privacy. In 2003, the Treasury Department put forward a proposal to create a return-free tax system for most taxpayers, as many other countries have. In essence, the Internal Revenue Service would calculate your taxes for you and send you a bill or a refund. The Treasury proposal went nowhere, for two reasons. First, reporting of income and tax withholding would have to increase to provide the I.R.S. with the data needed to accurately calculate people’s taxes. But people have been highly resistant to additional withholding; a law requiring it on interest income was enacted in 1982 but almost immediately repealed after widespread complaints. The second problem is that the tax system would have to be radically simplified to allow the return-free system to operate.

IRS tax auditing lags for ultra-wealthy: report [Reuters]
A new U.S. Internal Revenue Service team looking at the business activities of the ultra-wealthy has missed its own goals, reviewing only one privately held company and 10 partnerships in fiscal 2011, said a Syracuse University research group on Tuesday. The IRS team in late 2010 set a 2011 goal of auditing 15 privately held companies known as S-corporations and 60 partnerships during the year, said the Transactional Records Access Clearinghouse (TRAC) at Syracuse. "This program has not lived up to the fanfare with which it was announced," said TRAC, which uses data obtained by court order under Freedom of Information Act requests. The IRS defended its work. The TRAC "report is highly misleading and it's absolutely wrong to suggest that we're not auditing millionaires," said Terry Lemons, an IRS spokesman. He acknowledged that the tax-collecting agency's "global high wealth group" had missed its business audit targets, citing "severe budget limitations."

UBS fends off lawsuit of billionaire tax evader [Reuters]
A U.S. federal judge ruled on Tuesday in favor of Swiss bank UBS AG in a lawsuit brought by Igor Olenicoff, a billionaire former client who ran afoul of the tax-collecting Internal Revenue Service and tried to blame the bank. Olenicoff sued UBS in 2008, accusing the bank of fraud, conspiracy and other charges in handling some $200 million he kept in offshore accounts and claiming that UBS had wrongfully advised him that he did not have to report them to the IRS. Judge Andrew Guilford of the U.S. District Court in Santa Ana, California, issued a harshly worded ruling on Tuesday, about a month before the case was due to go to trial.
 
A Tax Code of Politics, Not Reason [NYT]
There are, in fact, more efficient ways for government to collect money. They are much less complicated. And they can raise a lot of revenue to solve our long-run budget deficit and pay for the increased benefits demanded by our aging society. What’s more, they can do so without raising income tax rates. Unfortunately, history suggests we won’t really consider these alternatives.
 
Best Buy CEO Quits in Probe [WSJ]
Best Buy Co. BBY [...] Chief Executive Brian Dunn resigned abruptly Tuesday amid what the company described as a probe into his "personal conduct," adding to the woes of the slumping consumer-electronics retailer, whose big-box business model is crumbling. "Certain issues were brought to the board's attention regarding Mr. Dunn's personal conduct, unrelated to the company's operations or financial controls, and an audit committee investigation was initiated," the company said in a statement. "Prior to the completion of the investigation, Mr. Dunn chose to resign."
 
Cheung Kong Names PriceWaterhouseCoopers As New Auditor, Replacing Deloitte [Dow Jones]
Blue-chip developer Cheung Kong (Holdings) Ltd. [...] said Tuesday it named PriceWaterhouseCoopers as its new auditor, replacing long-time accountant Deloitte Touche Tohmatsu in a move aimed at making the reporting of its results more efficient as key unit Hutchison Whampoa Ltd. [...] also uses PwC. "As the accounting principles and standards applicable to Cheung Kong and Hutchison Whampoa become increasingly complex...and for the purpose of efficiency, consistency and the facilitation of more timely reporting, we have decided that (the two companies) should appoint the same auditor," Edmond Ip, Cheung Kong deputy managing director, said in a statement.
 
I Can’t Believe This Hot Dog Stuffed Crust Pizza Isn’t American [Gizmodo]
Quite possibly the most repulsive thing I've ever seen.

 

Comments