Finance

Congressional auditors have uncovered a series of security breaches at the Internal Revenue Service that may jeopardize taxpayer funds, the privacy of IRS records, and the physical safety of employees at the tax service.In a report to Congress, auditors from the U.S. Government Accountability Office revealed a series of troubling practices, including the failure of managers at many Taxpayer Assistance Centers to adequately guard against internal theft by larcenous IRS employees.

National Taxpayer Advocate Nina E. Olson’s list of objectives — detailed in the first of her two annual required reports to Congress — zeroes in on the problems that she intends to focus on during the fiscal year ahead.At least one of the objectives — which focuses on the liabilities of incentive stock options under the Alternative Minimum Tax — has a good chance of being resolved, according to Tim Carlson, president of the Coalition for Tax Fairness and pro bono attorney for a number of victims of the anomaly. “Pending legislation will fix it, and it has support from both sides of the aisle,” he said.

Two senators criticized the nonpayment of federal taxes by many U.S. companies and foreign companies doing business in the U.S. after a report was issued this week.

Troubled housing lender Freddie Mac posted its fourth consecutive quarterly loss and performed even worse than expected by analysts.

Senate Finance Committee Chairman Max Baucus, D-Mont., accused the Internal Revenue Service of falling short on efforts to combat taxpayer identity theft.

Sen. Barack Obama, D-Ill., called for an "emergency energy rebate" of $1,000 to be offered to families this fall, along with a $50 billion stimulus package to help jump-start job creation.

Whether John McCain or Barack Obama becomes the country’s next chief executive, they will need to look not only at tax reform, but international tax reform early in their administration.“We may find it wise to get to [international] tax reform very early,” advised Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, during recent Capitol Hill hearings on the issue.

The Senate Finance Committee held a hearing on incentives for providing health benefits in the Tax Code.

President Bush has signed into law a bill that will help homeowners facing foreclosure and shore up Fannie Mae and Freddie Mac.

The Senate has passed a housing rescue plan by a vote of 72-13 aimed at stemming the tide of foreclosures and shoring up Fannie Mae and Freddie Mac.

The plunge in home prices in the U.S. as a result of the collapse of the subprime mortgage market may force banks and lenders to write down as much as $1 trillion from their balance sheets according to one expert.Bill Gross, who manages Pacific Investments Management Co. -- the largest bond fund in the world -- said the massive writedowns would blunt bank lending as well as force the sales of assets.

Senators Max Baucus, D-Mont. and Chuck Grassley, R-Iowa, chairman and ranking member of the Senate Finance Committee, announced they would introduce six new measures to curb offshore tax evasion. The steps include: * Lengthening the statute of limitations for prosecuting individuals who fail to file a foreign bank account report. * Clarifying IRS authority to enforce filing requirements for these reports. * Clarifying the information that must be included in these reports. * Requiring taxpayers to file the reports with their individual and corporate income tax returns. * Revising the definition of ownership to include beneficial ownership of a corporation. * Including the reports in the Tax Code section that causes the statute of limitations not to expire before three years after the taxpayer furnishes the required information. The announcement was made at a hearing to discuss the findings of the Government Accountability Office investigation into the Ugland House, a law firm's office building in the Cayman Islands and the registered home to thousands of corporations. "Plainly, there's a lot of financial activity in the Caymans," said Baucus. "There's a virtual feast going on down there. That has led to some crowded halls in the Ugland House. And up to half of those Ugland House tenants - around 9,000 entities - are Americans." The investigation into Ugland House is somewhat misguided, according to Daniel J. Mitchell, senior fellow at Cato Institute. "The implication is there can't be 10,000 businesses in this building, but where a company is registered has nothing to do with where they conduct business. Companies are registered in Delaware because they have very good corporate and tax law. No one will argue that it's not normal to go to a jurisdiction that is very well regulated and regarded and where the courts are honest, as in the Cayman Islands."

The Securities and Exchange Commission and the Federal Reserve are each pushing to gain regulatory authority over investment banks. At a hearing on Capitol Hill, SEC Chairman Christopher Cox and New York Federal Reserve President Timothy F. Geithner each outlined plans for the monitoring of commercial and investment banks. Both laid blame for the "patchwork" of regulatory agencies in lieu of one overseer for much of the current roiling of the financial markets. Cox urged lawmakers to give his agency responsibility over investment banks pointing out that the commission currently has authority over the markets in which they operate. Earlier this year, the Treasury Department proposed merging the SEC and the Commodity Futures Trading Commission into a single entity while expanding the oversight capacity of the Federal Reserve.

The House passed a bill aimed at shoring up the mortgage industry and preventing foreclosures after the president dropped his veto threat.

The Senate Finance Committee held a hearing on the use of offshore corporate tax shelters in the Cayman Islands, on the heels of hearings elsewhere in the Senate on individual tax havens in Switzerland and Liechtenstein.

Executive CPA leaders from 81 of the top 100 accounting firms in the U.S. visited Capitol Hill to discuss some of the key legislative issues confronting the accounting profession.

The tab for the proposed bailout of mortgage securities concerns Fannie Mae and Freddie Mac could run as high as $25 billion, according to an estimate released by the Congressional Budget Office.

A Senate subcommittee plans to release another blockbuster report on the use of foreign tax havens after the first reports caused repercussions both here and abroad.

Consideration of any tax reform for small business must take into account the difficulties small-business owners face when deciding how to structure their business and comply with the Tax Code’s complex requirements, said Dewey Martin, a Hampden, Maine-based CPA.Martin, who testified at the recent hearings before the Senate Finance Committee on business entities and small-business tax reform, is a small-business owner himself, as well as an advisor to 200-plus small-business owners and chair of the Accounting Department at Husson College in Bangor, Maine.

As a Senate subcommittee and the Internal Revenue Service probe the use of Swiss bank accounts as tax havens by UBS, Sen. Carl Levin, D-Mich., has called for revoking the U.S. banking license of UBS.