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The IRS Is Giving Gulf Oil Spill Victims Their Full and Undivided Attention This Saturday

Attention “self-reliant nonconformists who don’t pay much heed to everyday rules and regulations”! The IRS is offering you help with your nonconformist ways this very Saturday!


If you’re not interested in conforming with, you know, the Internal Revenue Code, then the Service might be a little bit less accommodating. Sure, it’s a Saturday but this is the government offering you help for free. No physical harm intended.

The Internal Revenue Service announced the locations of Taxpayer Assistance Centers in seven Gulf Coast cities that will be open this Saturday, July 17 to provide help to taxpayers impacted by the BP oil spill.

The following locations will be open from 9 a.m. to 2 p.m. Central Time:

1110 Montlimar Drive, Mobile, Ala.
651-F West 14th St., Panama City, Fla.
7180 9th Ave. North, Pensacola, Fla.
2600 Citiplace Centre, Baton Rouge, La.
423 Lafayette St., Houma, La.
1555 Poydras Street, New Orleans, La.
11309 Old Highway 49, Gulfport, Miss.
Individuals who have questions about the tax treatment of BP claims payments or who are experiencing filing or payment hardships because of the oil spill will be able to work directly with IRS personnel at any of these locations on Saturday.

Accounting News Roundup: Are “Tax-Aware” Juries the Solution to Deductible Punitive Damages?; Financial Fake Twitter Feeds; Deloitte’s Czech Problem | 07.02.10

Damages Control [NYT]
Because BP could end up paying a metric asston in punitive damages over the Deepwater Horizon whathaveyou, the Senate recently approved a repeal of punitive damages awarded in civil disputes being deductible for tax purposes.

The problem is that it probably won’t work, as Gregg Polsky and Dan Markel, two law professors at the University of North Carolina at Chapel Hill and Florida State University write in an op-ed in today’s Times:

“When plaintiffs and defendants reach a settlement before a trial, which happens in most cases, they aren’t required to specify which parts of the settlement are punitive and which are compensatory; therene number. That allows defendants to disguise the amounts that they would have paid as punitive damages as additional compensatory damages.

And because the measure maintains the deductible status of compensatory damages, nearly all punitive damages will remain, as a practical matter, deductible. This easy circumvention surely explains the meager revenue projections from the measure: $315 million over 10 years.”

The solution, according to Polsky and Markel is to make juries “tax aware” so that they may adjust their findings appropriately, “the prospect of tax-aware jurors would also raise the amounts of settlements before trial — when, again, most cases are actually resolved. This is because the amount of a settlement depends on the amount that a jury is expected to award after a trial. If tax-aware juries became the norm, plaintiffs would push for higher settlements, and thus both settling and non-settling defendants would bear the correct amount of punishment. Under the Senate’s approach, in contrast, only the very few non-settling defendants would bear that punishment.”

Five Fake Finance Twitter Feeds [FINS]
These are far better reasons to be on Twitter than Ashton Kutcher or Kim Kardashian.


Charities fail to communicate in annual reports: Deloitte [Accountancy Age]
Whatever they are communicating, it’s still more informative than a “Transparency Report.”

More cloud accounting benefits [AccMan]
“It is becoming increasingly obvious that clouding computing benefits as they apply to the accounting arena stretch way beyond the ability to save time, effort and cost. As I meet with more customers, I am discovering benefits that only customers can express.”

Apollo Said to Hire PricewaterhouseCoopers’s Donnelly as CFO [Bloomberg BusinessWeek]
“[Gene] Donnelly, who starts in his new role today after 29 years at New York-based consulting firm PricewaterhouseCoopers LLP, fills a vacancy left by the departure of Kenneth Vecchione in January, said the person, who asked not to be identified because the hiring wasn’t announced. Barry Giarraputo, the company’s chief accounting officer, had been serving as interim CFO.”

Deloitte answers fraud reports [The Prague Post]
Francine McKenna tweeted about this story yesterday, where Deloitte has been cited by one Czech newspaper as being investigated by Czech anti-corruption police.

“Deloitte has been put on the defensive since the June 28 report in the daily Lidové noviny (LN) that quoted unnamed sources alleging a slush fund used to bribe public officials and fraudulent accounting that gave clients better financial results. Deloitte says the results of an internal review highlighted ‘certain deficiencies in management reporting,’ but considers the results an internal matter and will not make any comments.”

Accounting News Roundup: G-20 to ‘Stabilize’ Debt by 2016; Auditors May Be Forced into Whistleblower Role on Banks; Yes, Taxes Are Historically Low | 06.28.10

G-20 Agrees to Cut Debt [WSJ]
“The wealthiest of the Group of 20 countries said they would halve their government deficits by the year 2013 and ‘stabilize’ their debt loads by 2016, a signal to international markets and domestic political audiences they are taking seriously the need to wean themselves from stimulus spending.”

Once you catch your breath from laughing, the President also cited the tax code specifically and his threatening to put some (i.e. Congress) in a tight spot:

“They might have to make deeper cuts in deficits to comply with its pledge. A White House statement said that government debt in the fiscal year15, would be at an “acceptable level.” President Obama said that next year he would present “very difficult choices” to the country in an effort to meet deficit goals.

The president cited his disappointment with the U.S. tax code. ‘Next year, when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up, ’cause I’m calling their bluff,’ Mr. Obama said.”

Bank auditors eyed for whistleblower role [FT]
A paper from the UK’s Financial Services Authority puts forth the discussion of requiring auditors to work more closely with regulators on irregularities found during the bank’s audit engagement.

“Experts say bank executives are nervous about the prospect of increased bilateral discussions between regulators and auditors. Auditors have been fearful the paper could thrust the profession into a regulatory spotlight it has so far avoided.”

Koss Fraud: We didn’t bother to look at the endorsements on our own checks, but Grant Thornton should have! [Fraud Files Blog]
Fraud sage Tracy Coenen presents her latest view on the Koss fraud mish-mash and how Koss management has managed to make themselves “look like absolute morons.”


BP Loses $22 Billion in Legacy of Share Buybacks [Bloomberg]
“The sum represents the hole after the 52 percent plunge in BP shares since the Deepwater Horizon exploded and sank, resulting in the worst oil spill in U.S. history. BP bought back more than $37 billion of its stock in a bid to return money to investors between 2005 and 2008. Those shares are now worth $15 billion, excluding dividends.”

Martin Ginsburg, Noted Tax Lawyer and Husband of Justice Ginsburg, R.I.P. [ATL]
Mr Ginsburg was a tax law professor at Georgetown for many years and was known for his great sense of humor, as evidenced by his faculty bio, noted by our sister site, Above the Law:

Professor Ginsburg is co-author, with Jack S. Levin of Chicago, of Mergers, Acquisitions, and Buyouts, a semi-annually updated treatise which addresses tax and other aspects of this exciting subject. The portions of the treatise written by Professor Ginsburg are, he is certain, easily identified and quite superb.

Open Letter to the Securities and Exchange Commission Part 9: Overstock.com’s Excuses Simply Don’t Add Up [White Collar Fraud]
It appears Sam Antar has caught Overstock.com in another disclosure snafu but this time it isn’t really clear whether the company gave the wrong excuse, lied to the SEC or simply doesn’t know what they’re doing, “Overstock.com’s 2008 10-K report claimed that a reportable “gain contingency” existed as of November 7, 2008. However, the company contradicted itself and claimed to the SEC reviewers that reportable reportable ‘gain contingency’ did not exist on November 7, 2008.

If Overstock.com’s 10-K disclosure is true, the company’s explanation to the SEC Division of Corporation Finance can’t be true. Likewise, if Overstock.com’s explanation to the SEC Division of Corporation Finance is true, the company’s 2008 10-K disclosure can’t be true.”

Accounts bodies revise workplan [FT]
Convergence 2.0.

Today’s taxes aren’t too bad [Don’t Mess with Taxes/Kay Bell]
Kay Bell provides some perspective on tax rates over the last century. The following graphic should help clear up any confusion.


Accounting News Roundup: Financial Reform Finalized; Banco Espirito v. BDO 2.0; Small Win for Skilling, Big Loss for PCAOB? | 06.25.10

U.S. Lawmakers Reach Accord on New Finance Rules [WSJ]
By the end of this one, can’t you picture an exhausted Barney Frank with his tie loosened to mid-torso, pants undone with fly wide open open and some staffer dabbing his sweaty brow?

“After more than 20 hours of continuous wrangling, Congressional Democrats and White House officials reached agreement on the final shape of legislation that would transform financial regulation, avoiding last-minute defections among New York lawmakers that had threatened to upend the bill.

After months of uncertainty about how the U.S. would craft new rules, the agreement offers thince the financial crisis of how markets and the government will interact for decades to come. The common thread: large financial companies are facing a tougher leash.”

Just in case you missed it yesterday, former SEC Chairman Arthur Levitt isn’t nearly as excited as some people about the bill. The President is expected to sign the bill before July 4.

Sidenote on this one: how the Journal managed to slip Maxine Waters through as one of a dozen “players” in this bill should cause you to question – if even for just a minute – the credibility of the paper.

Florida Appeals Court Turns Down Heat, For Now, On BDO Seidman [Re: The Auditors]
Francine’s take on the decision by the Florida 3rd District Court of Appeal to order a trial in the Banco Espirito v. BDO case. An event she isn’t thrilled about, “My doubts about the efficacy of a new trial are based on the disappointing, frustrating and completely unsatisfying way the court and the judges in this case have proceeded. Some of the additional comments raised by the Appeals Court do not bode well for this plaintiff’s chances next time around.”


Supreme Court Rolls Back a Law Born of Enron [NYT/Floyd Norris]
In more Congressional ineptitude (at least in the eyes of the SCOTUS), former Enron CEO Jeff Skilling won his case at the high court, arguing that “the concept of committing fraud through depriving an employer of ‘honest services’ was not adequately defined in the law,” Floyd Norris writes.

In other words, the “idea” of fraud being a kickback or a bribe is obvious and was defined. Manipulating mark-to-market and off-balance sheet accounting rules or “something else equally outrageous” were not and thus the law was unconstitutional. Long story/short, Norris writes, is that

Funny story on the way to this Skilling outcome – if the SCOTUS rules against the PCAOB (it is expected on Monday), “It will blame Congress for writing bad laws,” Norris writes. And who forced Congress into action on Sarbanes-Oxley?

BP: Oil-Spill Cost Hits $2.35 Billion [WSJ]
Has anyone handicapped this? Obviously the $20 billion reserve is a good ballpark figure but the overs have to be a pretty solid bet on that. Takers?

Caturano being acquired by RSM McGladrey [Boston Business Journal]
The firm fka RSM McGladrey purchased Caturano and Company, the fifth largest firm in Boston. The deal, if approved by H&R Block, would make RSM McGladrey…the fifth largest firm in Boston.

Gulf Coast Workers Not Really Down with Taxes on Their BP Payments

Wait! You mean we have to pay taxes if we receive cash? When the hell did this happen? What if you’re part of the “self-reliant nonconformists who don’t pay much heed to everyday rules and regulations” community? Does that earn you a pass?

The AP reported on some workers on the Gulf Coast who are simply not aware of the notion of income taxes and would very much like to keep it that way:

Out-of-work Gulf Coast shrimper Todd Pellegal spent his first $2,500 check from BP quickly, paying off bills and buying groceries for his family.

He never even considered putting some of it away for taxes.

Now he’s among the people up and down the Gulf Coast reeling from the oil spill disaster who are surprised — and frustrated — to find out the Internal Revenue Service may take a chunk of the payments BP PLC is providing to help them stay afloat.

Many were already angry about how long the oil giant took to cut the checks. So when they got the money — generally about a few thousand dollars each so far — they spent it fast.

“If they’re going to pay you a lump sum, like for a year, then bam, take the taxes out of the check,” said Pellegal, of Boothville, La. “But a little bit at a time, they shouldn’t.”

Right, because withholding taxes from a paycheck isn’t how it works for every other person in the country who pays income taxes. Whoever heard of “net pay”?? But don’t bother suggesting planning for such a phenomenon as being paid by check:

“They should do a projection of their taxable income and determine if there is going to be a tax liability and have enough to cover that,” said Crystal Faulkner, a partner in the Cincinnati-based accounting firm of Cooney Faulkner & Stevens LLC.

That doesn’t sit well with Cherie Edwards, who is now only working one day a week at her job booking charter fishing trips at Zeke’s Landing in Orange Beach, Ala. The lost hours due to the oil spill are costing her about $270 week.

She said she got her claim number from BP on Thursday and plans to file an application in the coming day. So far, she said, no one has mentioned to her about a potential tax liability.

“I haven’t even thought about taxes. Wow. That makes me mad,” said Edwards, who has one child in college and another in high school. “I’m already losing money, and now I’ve got to figure out how to hold back money to pay taxes?”

Jesus lady, you’re right. Getting used to the $0 tax liability and then all of a sudden learning that you are required by law to pay them would piss off just about anyone.

IRS May Tax Payments to Gulf Coast Victims [AP via Tax Lawyer’s Blog]

Transocean Saved Billions in Taxes by Moving Legal Domicile Offshore

While BP continues to get murdered in the press for its role in the Deepwater Horizon nightmare in the Gulf of Mexico, we bring you a new reason to hate on another big player in this mess, Transocean. Martin Sullivan writes in Tax Analysts’ Tax Notes about the billions in taxes Transocean has managed to avoid since moving its domicile offshore – first to the Cayman Islands and then to Switzerland.

For those of you not completely up-to-speed on your Deepwater Horizon cast of baddies, Transocean was the owner and operator of the De BP was the project operator (think of a general contractor) of the rig, paying Transocean $500,000 a day to drill the well.


Sullivan writes in his piece that despite Transocean being legally domiciled in Zug, Switzerland, (a transaction known as an inversion or corporate expatriation) it really does very little to change the substance of the company’s operations, “These tax-motivated restructurings occur with little or no real change in day-to-day business operations. Top executives, key personnel, and all significant business operations in the United States before the transaction remain in
the United States.”

The transactions were controversial to be sure, and companies that engaged in them were likened to Benedict Arnold by politicians when the came under fire back in the early Aughts. To get an idea of Transocean’s savings, Mr Sullivan presents data that shows the company’s preinversion average effective tax rate of 31.6% and its postinversion tax rate of 16.9%. This saved the company just over $1.8 billion in taxes over the last ten years.

Transocean consummated their inversion back in 1999, so they were far ahead of the curve, as the tax benefits for inversions were stripped out in the code effective for transactions that occurred after March 4, 2003 but the savings have added up over the years as the company saved over $750 million just last year.

But Transocean has largely stayed out of the spotlight in this whole shitshow and has been in CYA mode virtually the whole time, consistently citing an indemnification agreement with BP, filing to limit its liability:

As set forth under Federal Law, the complaint also asks that the companies be judged not liable on claims for certain, defined losses or damages relating to the casualty or, if they are judged to be liable, that the liability for such claims be limited to the value of their interest in the Deepwater Horizon rig and its freight including the accounts receivable and accrued accounts receivable as of April 28, 2010. The petitioners assert in the filing that the entire value of their interest does not exceed $26,764,083.

And scoffing at any notion of not paying its dividend, reminding everyone that they declared it long before explosion on the rig they were operating, “Transocean will honor all of its legal obligations arising from the Deepwater Horizon accident. The dividend proposal was announced on February 16, 2010, described in the preliminary proxy statement which was filed with the Securities and Exchange Commission on March 1, 2010, and approved by shareholders at the company’s annual general meeting on May 14, 2010.”

Throw the decade or so of tax savings and it sounds like Transocean has it made in the shade. How’s that for corporate responsibility and accountability? It’s not like we’re dealing the largest environmental disaster ever.

Transocean: Better at Tax Planning Than Oil Drilling [TaxProf]

Accounting News Roundup: Dell Looks to Settle SEC Probe; BP’s Request for Tax Docs Causes Issues for Fishing Communities; Salesforce CFO: We Need Sales People! | 06.11.10

Dell, CEO Are in Talks to Settle SEC Probe [WSJ]
The SEC’s probe, launched in 2006, into Dell had initially focused on some accounting manipulation that has now ensnared founder and CEO Michael Dell focusing on disclosure and omissions related to Intel Corp. and negligence-based fraud charges.

The Journal reports that the possible fraud charges “suggests that the SEC may suspect that Mr. Dell unintentionally made statements that he should have known were misleading.”

In anticipation of the settlement, the company will restate its most recent earnings report, reducing its net income by $100 million.


The fishermen and the tax man [Los Angeles Times]
BP is requesting tax records from people in fishing communities in order process claims of lost work related to the Deepwater Horizon spill. Those seeking payment need to submit a commercial fishing license, proof of residence and tax statements. The problem is that many of these people do not keep tax records since they are paid in cash for their work.

More than 25,000 claims have been submitted so far and payments to about 12,000 have been made, totaling $36 million, according to the LA Times.

BP, through Graham MacEwan says that there’s a plan although like most of this crisis, the company isn’t sure how it will be fixed, “BP Chief Operating Officer Doug Suttles has been telling parish council members over the past few days that if someone’s tax documents are not available, we will find other metrics. I don’t know exactly how we are going to do that yet.”

Salesforce CFO: Company Aggressively Hiring Sales Staff [Dow Jones]
Cloud trailblazer Salesforce.com is looking to add more sales personnel, having added 18,000 new customers over the last 12 months according to CFO Graham Smith.

Mr Smith also said the company is rolling out two new products in the near future including Chatter, a “a social-networking application for office collaboration” and VMforce, a collaboration with VMware, Inc. that will give Java developers a new way to deploy applications over the web.