PwC Fined $25M For Concealing Client’s Sanctions Violations

PwC Building

(Photo credit: Wikipedia/Wistula)
August 22, 2014

Global accounting and audit firm PricewaterhouseCoopers got slapped with fines and suspensions this week for improperly making edits in a report sent to New York’s top banking regulators on behalf of a foreign client.

International accounting and audit titan PricewaterhouseCoopers received a $25 million dollar fine from the New York Department of Financial Services earlier this week after being found guilty of inappropriately altering the language in a report submitted on the behalf of an international client. The Bank of Tokyo Mitsubishi had initially revealed the occurrence of wire transfers conducted with countries currently under U.S. economic sanctions, including Iran. After being pressured by the Japanese client, PwC edited language in their initial report so that the sanctions violations would be less noticeable to banking regulators.

“We are continuing to find examples of improper influence and misconduct in the bank consulting industry,” said Benjamin Lawsky, New York’s Superintendent of Financial Services, regarding the department’s ruling. PwC was also suspended from doing any consulting work for banks that are regulated by the department for a full two years.

In defense of his firm’s actions, PwC’s Miles Everson asserted that the report in question had both been “detailed” and “disclosed the relevant facts.” Everson also added that “PwC is proud of its long history of contributing to the safety and soundness of the financial system by serving as subject matter experts in banking regulatory and compliance matters and the firm is committed to improving continuously and meeting changes in regulatory expectations. This resolution reinforces that commitment.”

Source: USA Today Money

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New Mexico Accountant Pleads Guilty To Stealing $1.3 Million

lady justice

August 19, 2014

New Mexico accountant has pleaded guilty to defrauding the government of $1.3 million in unemployment benefits.

Jason Gonzales of Velarde, New Mexico pleaded guilty this week to stealing over a million dollars in state and federal unemployment benefits. Gonzales filed false claims under the names of unsuspecting individuals throughout New Mexico, Texas and Colorado. He then cashed numerous unemployment assistance debit cards after having received them in his post office mail box. The 41 year old accountant faces up to 120 years in prison on federal charges including identity theft and mail fraud.

Source: KRQE Albuquerque

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Canadians spend more income on taxes than shelter, clothing, food combined

Fraser Institute chart

(Image credit: The Fraser Institute)
August 15, 2014

Study shows average Canadian citizens spend around 42% of income on taxes compared to just 36% on their everyday necessities.

Canada’s Fraser Institute, a public policy think tank, published a research study on Monday titled Taxes versus the Necessities of Life: The Canadian Consumer Tax Index, 2014. The findings of the study include data that suggests on average Canadians spend almost 42% of income on taxes — federal, provincial, local and indirect — but just 36% on simple everyday needs such as shelter, clothing and food. Additionally, the study revealed that tax expenditures have grown faster than any other basic need, having been just 33.5% of total income expenditures in 1961.

“While there’s no doubt that taxes help fund important services, the real issue is the amount of taxes that governments take compared to what we get in return. There is a lot of room for improvement when it comes to the delivery of government services,” stated Charles Lammam, co-author of the report.

Even though tax rates usually tend to increase over time as governments continue to provide a wider range of services, and the Canadian economy seems to be in overall good standing, Lammam still believes it behooves Canadians to question whether they are getting good value from their tax dollars.

“[Healthcare] is the largest and most important budget, but independent analyses have shown that Canada does not get same level of return for taxes on health care. We don’t get the same outcomes as others. We are faltering here and there is an opportunity for us to change the way programs work,” states Lammam.

Source: National Post

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American Expats Suing Over Canadian Deal With IRS To Cut Down On Tax Evasion

Supreme Court of Canada

Supreme Court of Canada (Photo credit: Wikipedia/Taxiarchos228)
August 12, 2014

The constitutionality of a U.S.-Canada intergovernmental agreement designed to go after American expatriates trying to evade the IRS is brought into question by a lawsuit filled in a Canadian federal court.

A lawsuit was filled on Monday in a Vancouver federal court challenging the constitutionality of an intergovernmental agreement between the U.S. and Canada known as the U.S. Foreign Account Tax Compliance Act. In the agreement, Canadian banks are required to share the account information of Americans with the IRS. The suit, filled by two American expats, is being funded by the Alliance for the Defense of Canadian Sovereignty. The plaintiffs argue that the agreement violates Canada’s constitution as well as the Canadian Charter of Rights and Freedoms by creating a distinction between dual nationals and all other Canadians.

Other countries have made very similar agreements with the U.S., and a representative for the Canadian Department of Finance, which regulates Canadian banking practices, stated that “The government is confident that the legislation in question [which implements the agrement] is constitutionally valid.”

The U.S. tax code currently exempts up to around $100,000 of income earned abroad, but officials in Washington are seeking stronger enforcement of the requirement that expatriates disclose the existence of foreign bank accounts to the IRS. Canada has one of the largest populations of Americans expats, with an estimated one million residents with U.S. citizenship.

Source: The Wall Street Journal

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Accounting Is Most Profitable Industry In America

accounting most profitable industry

August 8, 2014

Study by financial information company finds accounting industry the most profitable in America.

Sageworks, a financial data aggregator based in North Carolina, just released their findings on the most profitable industries in America. At the top of the list were businesses related to accounting, tax prep, bookkeeping, and payroll services with a 19.8% profit margin. The profit margin for a business is its profits divided by sales.

Other industries that made the top five were, in order: legal services, oil and gas, business machine rental and leasing, and dentist offices. Sageworks notes that businesses that buy few goods and provide specialized services continue to top their annual ranking.

Source: Chicago Tribune

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Democratic Senators Ask President To Stop Corporate Tax Inversion

Ne-Yo performs

August 6, 2014

On Tuesday, three Democratic senators sent the President a letter asking him to exercise the powers of his office to “reduce or eliminate” tax breaks for companies that move their headquarters to offshore tax havens.

Three prominent Democratic senators wrote a letter to President Barack Obama on Tuesday urging him to use executive powers to cut back on tax breaks for American corporations that move their corporate headquarters overseas via tax maneuvers known as corporate inversion.

Republicans have addressed the issue by promoting tax reforms that lower corporate tax rates at home, instead of changing the laws and regulations that could affect corporate inversion. Democrats argue that lowering corporate tax rates will not be enough to discourage corporate inversion and that many overseas corporate tax rates are simply far too low to compete with.

The senators, Richard Durbin, Jack Reed and Elizabeth Warren, also pointed out that the companies in question increase the overall tax burden of other U.S. taxpayers by continuing to benefit from federal expenditures like patent protection, tax credits for research and infrastructure spending.

Source: The Washington Post

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R&B Star Ne-Yo Suing Former Accountant For $8 Million

Ne-Yo performs

(Photo credit: Wikipedia/Lunchbox LP)
August 1, 2014

Singer is accusing once trusted accountant of fleecing him for millions.

Yesterday, Shaffer Chimere Smith, known by stage name Ne-Yo, filled a lawsuit in a Manhattan federal court against former ”Manager, confidant, trusted adviser and friend,” Kevin Foster. Foster began managing the singer’s business and accounting needs back in 2005, eventually departing from an established firm to launch his own. Ne-Yo loyally followed his trusted friend to the new firm.

It was soon discovered that Foster had been transferring funds around without the permission of his client. Another accounting firm was employed to look into the matter more closely and ”uncovered instances of Foster engaging in self-dealing and inappropriate conduct.” Examples of such incidents include forging the singer’s signature on loan documents and investing money in a fledgling bottled water company, of which, unbeknownst to Ne-Yo, Foster was president and CFO.

The Grammy winner’s lawsuit aims to secure about $4.5 million in defrauded funds and $3.5 million in fees collected by Foster since 2005.


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House Passes Bill To Simplify Student Tax Credit

House passes simplified student tax credit
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July 30, 2014

The House passed legislation last week intended to consolidate several higher education tax incentives into one.

The U.S. House of Representatives passed H.R. 3393 Thursday. The bill, also known as the Student and Family Tax Simplification Act, attempts to combine components of the American Opportunities Tax Credit, Hope Credit, Lifetime Learning Credit, and tuition deduction into an expanded American Opportunity Tax Credit. Under the newly passed legislation, a 100% tax credit is provided for the first $2000 in tuition and course materials. A 25% credit would then be available for the next $2000, resulting in a maximum credit of $2500.

Other provisions of the bill make up to $1500 of the credit refundable and restrict the credit to up to four years of post-secondary education.

House Republicans praised the bill as a win for those hoping to make education more accessible for lower and middle income families, while also simplifying an unquestionably complex tax code.

House Democrats, however, maintain that the bill does more harm than good. Rep. Sander Levin, D-Mich., expressed his opposition to the bill by asserting that graduate students and lifetime learners will be adversely affected, and also noting the fact that the average undergraduate now takes more than four years to complete a degree.

The bill now moves onto the Democratically controlled Senate for continued debate.

Source: Accounting Today

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Ernst & Young Accountant Becomes No. 1 Triathlete In World

(Photo credit: Milwaukee Journal Sentinel)
July 25, 2014

Ernst & Young accountant who became a triathlete is ranked first in the world.

Ernst & Young accountant, Gwen Jorgensen, was approached by USA Triathlon in 2010 as they hoped to turn her into one of their next top athletes. Jorgensen was an NCAA swimmer and runner while attending the University of Wisconsin, and had little experience been a competitive cyclist.

Four years later, Jorgensen is the top ranked female athlete in the International Triathlon Union’s 2014 World Triathlon Series thanks to her fourth consecutive first place finish; an accomplishment previously never made by any female triathlete.

Her former boss at Ernst & Young, Mark Hellmer, encouraged her to pursue the career change, explaining to her, “You’ll always have a place at EY to fall back on.” Interviewed by The Wall Street Journal, Hellmer stated, “I knew she would do well, but I didn’t foresee her becoming a world (leader).”

Now, the 28 year old stands to be team USA’s best chance at taking home gold two years from now at the Olympics in Rio De Janeiro. Keep up the great work Gwen!

Source: The Wall Street Journal

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House Passes New Set Of Tax Breaks For Donations

US House of Representatives
July 21, 2014

U.S. House of Representatives passed a handful of new tax breaks designed to increase charitable donations.

The United States House of Representatives passed an assortment of new tax breaks last Thursday intended to promote charitable donations. In one of the provisions, people over 70 years old would be rewarded for making donations from their individual retirement accounts. Another would allow individuals to claim deductions for donations made after the end of the year and before April 15. The bill also included tax breaks for land owners who donate land for conservation purposes, and business that donate food.

The White House has threatened to veto the bill while citing that its effects would increase the budget deficit. The President has also accused House Republicans of supporting tax breaks that mostly benefit the wealthy.

The bill, now on it’s way to be debated in the Senate, passed with 277 for and 130 against.

Source: ABC News

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