FRAUD IN THE SPRING
As spring wore on, talk of fraud was in the air -- as was legislation: A bipartisan group of lawmakers introduced legislation that would increase the penalties on tax preparers who defraud taxpayers and the Internal Revenue Service by altering tax returns for personal benefit without their clients' knowledge.
At the same time, congressional hearings on identity-theft-related tax fraud saw calls for the Internal Revenue Service and the Social Security Administration to do more to curb this scourge (though some, including National Taxpayer Advocate Nina Olson, noted that really good identify theft safeguards could delay people's tax refunds for months). Meanwhile, a Treasury Inspector General for Tax Administration report found problems with IRS customer service to victims of identity theft. The service said it was working on it.
On the audit side, a survey of more than 900 auditors from firms of all sizes by audit confirmation service provider Confirmation.com found that 37 percent expect to uncover fraud at their clients this year -- though they anticipated that their competitors would find fraud at a much higher rate of 66.9 percent.
Finally, there was an uproar when it was discovered that Yahoo chief executive officer Scott Thompson didn't have the computer science degree he claimed to have; he "only" had an accounting degree -- as if he needed anything else.
The Committee of Sponsoring Organizations of the Treadway Commission postponed the release of the updated version of its Internal Control-Integrated Framework to the first quarter of 2013, instead of the fall of 2012. (See story, page 16.)
In a major ruling, the Supreme Court effectively limited the ability of the IRS to pursue taxpayers over tax shelter cases for more than three years, as opposed to six. The case involved the limits of the government's ability to collect tax deficiencies stemming from a taxpayer's overstatement of the basis in property, with the question being whether the IRS must assess the owed taxes within the ordinary three-year time limit, or a longer six-year period that the government favored.
When not being castigated about identity theft, the IRS kept busy in other ways: To start, it delayed for a year the proposed effective date for cost basis reporting by brokers for debt instruments and options, in Notice 2012-34. It also increased the tax-deductible annual contribution limitation for health savings accounts, in Revenue Procedure 2012-26. And it issued a trio of notices related to the health care reform law, including how one might determine whether a health insurance plan provides "minimum value," in Notices 2012-31, 2012-32 and 2012-33.
State tax officials are expanding their conceptof what constitutes a taxable economic presence in their state as more economic activity moves online, according to a survey by Bloomberg BNA. The shift is driven, in part, by new technologies like cloud computing and online group coupon sites.
The chairman of the International Accounting Standards Board, Hans Hoogervorst, at a conference in London in April, talked up the potential of the Extensible Business Reporting Language, or XBRL, "to improve the effectiveness of financial reporting." The use of the data-tagging technology has been catching on globally, including in the U.S.
MAJOR MERGER
Major Texas firms Whitley Penn and Null-Lairson merged, expanding Top 100 Firm Whitley Penn's presence across the Lone Star state. (See M&A Watch, on page 40.)
Two Top 100 Firms named their next chief executives: Mississippi-based Horne announced that Joe Havens would become executive partner of the firm, succeeding Hugh Parker. Havens started with the firm in 1984, and became a partner at 30. At Denver-based RGL Forensics, meanwhile, Angie MacPhee was named chief executive officer. She joined the firm as chief financial officer in 2010, and was promoted to chief operating officer last year.
Tax preparation giant H&R Block announced plans to lay off 350 full-time employees in its Kansas City, Mo., headquarters and close approximately 200 of its underperforming company-owned offices.
Kenneth Leventhal, CPA, founder of one of the largest CPA firms in the country, died on May 8 at the age of 91. (See page 53.)
