* IRS CONTINUES CRACKDOWN ON FRIVOLOUS CASES: The Internal Revenue Service is reminding taxpayers that the agency isn't kidding around when it comes to frivolous cases aimed at delaying tax collections.
In published cases since the beginning of 2004, the U.S. Tax Court has imposed penalties totaling $117,500 against taxpayers for pursuing frivolous cases, according to IRS data released last week. Penalties in those cases ranged from $1,500 to $25,000 - the maximum sanction on those who misuse their right to a court review in an effort to stall their tax payments.
That brings the total penalties in such cases since 2001 to $378,900. In addition, the IRS noted that appeals courts in the Second, Ninth and Tenth Circuits upheld six earlier Tax Court decisions assessing penalties totaling $15,600.
While the IRS ordinarily cannot enforce collection while a collection due process appeal is pending, it noted that in an April 2005 decision, the Tax Court, for the first time, allowed the IRS to pursue collection even though an appeal had been filed. In Burke v. Commissioner, 124 T.C No. 11, the court permitted the IRS to proceed with a levy, agreeing that the "taxpayer had used the collection review procedure to espouse frivolous and groundless arguments and otherwise needlessly delay collection."
* PCAOB CHAIR SAYS TAX SERVICES, INSPECTIONS ARE PRIORITIES FOR REST OF '05: In addition to its ongoing work on the implementation of Auditing Standard No. 2, the Public Company Accounting Oversight Board will focus on rules related to auditor independence and tax services and strengthening its enforcement staff during the second half of the year, according to its chairman.
PCAOB Chairman William McDonough said that the board will soon consider adopting rules on auditor independence and tax services, based on a proposal that the PCAOB issued for comment last December.
"The public comments have helped us see certain specific areas in which the proposal could be improved and we are working now to fashion those improvements," McDonough said during June 2 remarks to attendees at the SEC and Financial Reporting Institute, sponsored by the Leventhal School of Accounting at the University of Southern California, Pasadena.
In addition, the board will look to hire 80 or more additional inspectors to help nearly 300 registered public accounting firms, McDonough said. He said that by the end of 2005, the PCAOB expects to have roughly 450 staff.
Continuing its task of inspecting registered public accounting firms, McDonough said that the board will inspect the largest eight U.S. firms again this year, as well as the single non-U.S. firm that has more than 100 public company audit clients, KPMG's affiliate in Canada.
The board will also continue to monitor and assist in the implementation of Auditing Standard No. 2, which set out the steps that auditors must take to support their attestation on management's assessment of their internal control over financial reporting, as required under Section 404 of Sarbanes-Oxley.
The board recently issued additional guidance on implementing AS 2, and was to meet with its Standing Advisory Group in June in a session focused entirely on that topic. In addition to the SAG, McDonough said that the board has "numerous channels" for feedback about how issuers, auditors and others feel Section 404 implementation is going.
During his speech, McDonough noted that PCAOB oversight has "triggered a profound shift in the overall character of public company auditing. Most important, our oversight has changed auditors' attitudes toward their accountability."
* MP&S, DECOSIMO FORGE ALLIANCE TO OFFER INTERNATIONAL TAX SERVICES: Top-ranked accounting firms Marks Paneth & Shron LLP of New York City and Chattanooga, Tenn.-based Decosimo CPAs have forged a strategic alliance to provide sophisticated international tax planning and consulting services to midsized businesses.
MP&S Decosimo Global will operate as a strategic alliance between the two firms, supplementing the services that they will continue to offer independently in their respective regions.
MP&S Decosimo Global will provide services that include international tax compliance, audit and return preparation; tax-efficient tax planning and restructuring; international management advisory services; transfer pricing; captive insurance companies; and asset protection trusts.
