2/19/2012(from PricewaterhouseCoopers - Canada)
Delivering results: Growth and value in a volatile world.
Soft copies of the report are available online at: www.pwc.com/ceosurvey. .
In this year’s survey, CEOs commented on how they see the global economy evolving this year and beyond, and how they expect to deliver business results in this turbulent environment. The worldwide poll of 1,258 CEOs in 60 countries – including 130 CEOs from Canada – reveals high levels of confidence despite continued uncertainty in a number of major economies.
Below are key findings relevant to Canadian CEOs:
· 88% of Canadian CEOs are confident in their growth prospects for the year ahead, compared to 84% globally. This despite 48% of Canadian CEOs believing that the global economy will decline over the next 12 months (same as global).
· Canadian CEOs believe their organizations have been less affected by global turmoil than their global counterparts. For example, the sovereign debt crisis was the key global issue to affect Canadian companies – with 38% saying it had a direct financial impact – but 56% globally were affected.
· 66% of Canadian CEOs plan to make changes to their strategy in the next 12 months, compared to 70% globally. This is being driven primarily by customer demand (79%) and economic growth forecasts or uncertainty (74%). Competitive threats (72%) and the availability of talent (50%) were cited as other reasons.
· Cost reduction remains a key focus for Canadian CEOs. Although last year only 55% of CEOs said they expected to initiate cost cutting measures in the next year, 82% of this year’s respondents reported that they had in fact cut costs in the last 12 months. For the next 12 months, 66% of CEOs globally say they will cut costs compared to 73% in Canada.
· Mergers and acquisitions (M&A) are seen as the best strategic growth opportunity by Canadian CEOs (25%), followed by new product or service development (23%). Globally the focus is on increasing market share in existing markets (30%) and similarly on new products and services (28%). Only 12% of CEOs globally saw M&A as the main opportunity for growth.
· Canadian CEOs believe emerging markets are significantly less important than developed markets to their company’s prospects than their global counterparts. 55% of Canadian CEOs disagreed that emerging markets are more important to their growth than developed economies, compared to 24% of CEOs globally. 2/18/2012Roger Wheeler, a former TEI member and a recipient of TEI's President's Award, writes a monthly column for International Taxation. He is his offering from the magazine's February 2012 issue.
Roger Wheeler - IT Feb 2012.pdf from Tax Analysts
Stuart M. Lewis, senior tax counsel with Buchanan Ingersoll & Rooney PC in Washington and a former chair of the American Bar Association Section of Taxation, died February 13, according to John Warner, co-managing shareholder of Buchanan Ingersoll & Rooney's Washington office.
Lewis was 66. He had been ill for some time with amyotrophic lateral sclerosis, also known as Lou Gehrig's disease, Warner said.
Lewis's practice focused on employee benefits and qualified plans, Warner said. Lewis headed the firm's tax section and served as managing shareholder of the Washington office before Warner was elevated to that position, he said. He described Lewis as a creative and technically brilliant attorney who brought out the best in other people.
Susan Serota, a partner with Pillsbury Winthrop Shaw Pittman LLC in New York, said Lewis excelled as a lawyer and was a wonderful colleague and mentor to many in the employee benefits community.
"Stuart was an exceptional and well respected tax attorney and a leading light in employee benefits law," she said. "His contributions to pension and deferred compensation tax policy issues will be long remembered. He will be greatly missed." Part of Lewis's professional legacy is the people he encouraged to get involved in ABA, Warner said. He was chair of the ABA tax section from 2009 to 2010.
Richard Shea, a partner in employee benefits with Covington & Burling LLP, said Lewis was most known professionally for journal work, for conferences he ran, and for the Washington luncheon group events he hosted.
"He got very good people to come, and the discussions were always very technical and of high quality," Shea said.
Lewis was also an adjunct law professor at Georgetown University and editor of the Compensation Planning Journal. He earned undergraduate and law degrees at the University of Virginia.
According to the Buchanan Ingersoll & Rooney website, Lewis had obtained a private letter ruling from the IRS addressing the contribution of stock options to a 401(k) plan by Travelers Insurance (later Citigroup). He also obtained a favorable private letter ruling for Citigroup regarding a transfer of assets from a U.S. pension trust to a Puerto Rican pension trust and victories in the U.S. Tax Court in cases involving deferred compensation, stock options, and split-dollars life insurance, it said.
Lewis loved traveling to Italy and mastered Italian in later life, Warner said. Lewis wrote a book of stories for his granddaughter in the language, and students in his Italian class had it published along with illustrations, he said. Warner called the book "wonderfully whimsical."
"It was a side of him that I don't know how many people knew about," he said. "It's always tricky to say that any lawyer, especially a corporate or tax lawyer has sort of a common touch, but Stuart obviously did and made a real impression in so many ways on many people." 2/14/2012from BNA
The Financial Crimes Enforcement Network (FinCEN) Feb. 14 extended the deadline for filing TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), for certain individuals with signature authority over, but no financial interest in, one or more foreign financial accounts.
In Notice 2012-1, FinCEN said it is extending the deadline to June 30, 2013, for filers affected by two previous notices.
Notice 2011-1 addressed those affected by the signature filing exceptions under 31 CFR Section 1010.350(f)(2)(i)-(v). Notice 2011-2 addressed certain employees or officers of investment advisers registered with the Securities and Exchange Commission.
FinCEN said in Notice 2012-1 that it is extending the deadline for another 15 months due to “additional questions and concerns” raised on the exceptions in the two previous notices.
2/13/2012(from the Internal Revenue Service)
FS-2012-10, February 2012
The Administration’s Fiscal Year (FY) 2013 Budget request for the Internal Revenue Service is approximately $12.8 billion, a $944.5 million increase (8%) over the FY 2012 enacted level but only a $639.3 million increase (5.3%) from the level enacted for FY 2011. A significant portion of the increase from FY 2012 represents the Administration’s request to restore lost revenue resulting from reductions in IRS funding made over the past two years. This request is designed to provide the resources necessary to administer and enforce the current tax code, implement recent changes to the law to update the Code and serve the American taxpayer in a timely manner.
In FY 2011, the IRS collected $2.415 trillion in taxes, representing 92 percent of federal government receipts. The IRS processed more than 144.7 million individual returns during the 2011 filing season and issued almost 110 million refunds totaling $345 billion.
To collect the revenues required to fund the policies passed by Congress and meet long-term obligations to the American people, the IRS FY 2013 funding request reflects a continued commitment to improving tax compliance through the balance of quality taxpayer service with fair enforcement of the tax laws. It also supports the Administration’s strategic goal of managing the government’s finances in a fiscally responsible manner.
The IRS consistently achieves a high return on investment for its activities while running a fiscally disciplined operation. In FY 2013, the IRS expects to identify nearly $71 million in cost savings from increased use of electronic return filing, reductions in non-case related travel and streamlining operations.
Enforcement Program
The FY 2013 budget includes $403 million in new IRS enforcement activities, which are expected to raise $1.48 billion in revenue annually at full performance, once new hires are fully trained and develop broader experience by FY 2015. This is a 4.3-to-1 return on investment. The return on investment is even greater when factoring in the deterrence value of these investments and other IRS enforcement programs, which is conservatively estimated to be at least three times the direct revenue impact.
The enforcement budget also includes $200 million in additional examination and collection programs that will generate more than $1.1 billion in additional annual enforcement revenue by FY 2015. Investments such as these in IRS enforcement programs are especially important to further the IRS’ mission of improving tax compliance.
Specific areas where the proposed FY 2013 funding will enable the IRS to continue to strengthen enforcement efforts and reduce the tax gap include:
- Improving international compliance by individual and business taxpayers. In FY 2013, the IRS will continue to address offshore tax evasion by individuals through such efforts as increased examinations and the special offshore voluntary disclosure program. To ensure business entity compliance, the IRS will provide additional international technical specialists to increase coverage of complex international transactions;
- Protecting revenue by expanding efforts to identify fraud and prevent issuance of questionable refunds, including tax-related identity theft. The increase in funding will help support efforts to reduce erroneous refund payments, including non-compliant and fraudulent claims by prisoners and claims for the Earned Income Tax Credit (EITC) by ineligible taxpayers;
- Implementing tax law changes that make available the use of new information reporting requirements to help address the underreporting tax gap; and
- Enhancing IRS oversight of complex financial situations, including transfer pricing and uncertain tax positions.
Return Preparer Initiative
The FY 2013 budget request includes $35 million to strengthen return preparer compliance. One of the most important initiatives that the IRS has undertaken in recent years is the Return Preparer Initiative, the foundation of which is mandatory registration for all paid tax return preparers. In addition, the IRS is developing requirements to establish mandatory competency testing and continuing education for preparers to ensure that taxpayers are hiring preparers who have a minimum level of competency and adhere to professional standards. This initiative is core to the IRS’ tax gap strategy and will increase government revenue, and support high-priority, preparer-related enforcement activities.
Implementation of Tax Law Changes
The request provides $128 million to support IRS efforts to implement programs that are designed to ensure compliance with a number of recent changes to the tax laws, and to help taxpayers understand them. Recent tax law changes include the reporting provisions related to merchant payment cards and third party reimbursements (included in the Housing and Economic Recovery Act of 2008), basis reporting on securities sales (included in the Emergency Economic Stabilization Act of 2008), and the non-exchange related tax law changes included in the Affordable Care Act (ACA).
Infrastructure Requirements
The FY 2013 budget also requests funding for the IRS to continue the development of new information technology systems, and substantial modification and enhancement of existing systems necessary to implement the new premium assistance tax credit and other tax law provisions related to the insurance exchanges created in the Affordable Care Act.
Taxpayer Service Program
The FY 2013 request provides funding for the IRS to continue delivering services using a variety of in-person, telephone and web-based methods to help taxpayers understand their tax obligations, correctly file their returns and pay taxes due in a timely manner.
The IRS is committed to expanding the use of electronic transactions, including increasing the e-File rate and expanding taxpayer service options available through the Internet. In 2011, there were more than 319 million visits to IRS.gov, and more than 77.9 million taxpayers checked their refund status by accessing Where’s My Refund? in English or in Spanish on the IRS website.
Business Systems Modernization
In FY 2013 the IRS will continue the modernization of its IT systems. It will strategically invest in state-of-the-art capabilities, such as online taxpayer services, and focus on the second phase of the core taxpayer account database, known as Customer Account Data Engine 2 (CADE 2), to ensure the long-term viability of IRS tax processing systems.
In 2012, the IRS delivered the most significant update to its core tax processing system in decades. Through the deployment of the first phase of CADE 2, the IRS transitioned to a daily processing cycle from a weekly batch cycle. Also for the first time, IRS processing systems began accepting all 1040 forms electronically through a modernized e-filing capability.
2/9/2012(from Tax Prof Blog)
Joshua Blank  (NYU) presents Corporate Tax Abuse in the Supreme Court (with Nancy Staudt (USC)) at the NYU Alumni Tax Luncheon in Los Angeles (Beverly Hills Hotel):
Corporate tax advisors often wish to minimize a corporation’s tax liability but want to do so without creating the risk that a court will reject the tax strategy as “abusive.” Courts’ decisions in this area of the law, however, are notoriously difficult to predict. While scholars and practitioners have devoted substantial time and energy to debating how judges should decide controversies involving corporate tax abuse, this Article is the first to conduct a large-N quantitative study of court decisions in an effort to identify the factors that influence how courts actually decide corporate tax abuse cases. Our findings are surprising—but very robust—and, for this reason, we believe they may have significant implications for corporate tax planning, litigation and settlement strategies.
Our study reviews nearly 1,000 U.S. Supreme Court cases decided between 1909 and 2011, roughly 140 of which involve allegations of corporate tax abuse. Our principal findings run counter to the conventional wisdom that judges are erratic and unpredictable when it comes to deciding corporate tax abuse cases. We uncover a number of factors that systematically increase and decrease the probability that the government will win when it challenges a corporate tax strategy in court. The flavor of our findings can be described as follows. The probability of government success increases when the taxpayer has engaged in accounting irregularities, when the initial controversy arises from the IRS’s denial of a corporate refund claim, when the government is the petitioning party, and when federal spending on national defense escalates. The probability of government success decreases when the transaction at issue involves a third party and multiple transaction steps—unless alleged simultaneously in the briefs filed in Court, a strategy that increases the government’s chances of winning. Perhaps most surprising, notwithstanding the nearly obsessive attention paid to the business purpose doctrine by practitioners, scholars, and policymakers, the government’s assertion that the transaction at issue lacked a non-tax business purpose has either no statistically significant effect or a negative effect on the outcome of these cases.
Our study raises several important questions, both empirical and normative. These include whether tax lawyers can exploit the findings of this study when planning transactions and litigation strategies, whether the business purpose for a corporation’s transaction should affect the tax treatment of that transaction, and whether the findings of this study are generalizable to the corporate tax abuse decisions in lower federal courts.
2/8/2012IR 2012-15 (Feb. 8, 2012):
The Treasury Department and the IRS today issued proposed regulations for the next major phase of implementing the Foreign Account Tax Compliance Act (FATCA).Enacted by Congress in 2010, the law targets non-compliance by U.S. taxpayers using foreign accounts. The regulations lay out a step-by-step process for U.S. account identification, information reporting, and withholding requirements for foreign financial institutions (FFIs), other foreign entities, and U.S. withholding agents.
The proposed regulations implement FATCA’s obligations in stages to minimize burdens and costs consistent with achieving the statute’s compliance objectives. The rules and implementation schedule are also adjusted to allow time for resolving local law limitations to which some FFIs may be subject.FATCA was enacted in 2010 by Congress as part of the Hiring Incentives to Restore Employment (HIRE) Act. FATCA requires FFIs to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
In order to avoid being withheld upon under FATCA, a participating FFI will have to enter into an agreement with the IRS to: - Identify U.S. accounts,
- Report certain information to the IRS regarding U.S. accounts,
- Verify its compliance with its obligations pursuant to the agreement, and
- Ensure that a 30-percent tax on certain payments of U.S. source income is withheld when paid to non-participating FFIs and account holders who are unwilling to provide the required information.
Registration will take place through an online system which will become available by Jan. 1, 2013. FFIs that do not register and enter into an agreement with the IRS will be subject to withholding on certain types of payments relating to U.S. investments.
After many months of intensive discussions with foreign governments, the Treasury Department today also jointly issued a statement with France, Germany, Italy, Spain and the United Kingdom expressing mutual intent to pursue a government-to-government framework for implementing FATCA – an important step toward addressing legal impediments to financial institutions’ ability to comply with the regulations.
The statement does not contemplate an exemption from FATCA for any jurisdiction, but instead offers a framework for information sharing pursuant to existing bilateral income tax treaties and allows FFIs to report the necessary information to their respective governments rather than to the IRS. The joint statement will serve as a model for the United States’ work with other countries, as Treasury officials continue to engage in discussions with foreign governments about the effective and efficient implementation of FATCA by their financial institutions
TEI Project
TEI's IRS Administrative Affairs and International Tax Committees are developing comments on the new FATCA regulations. The almost 400 pages of regulations are broad in their scope, and we welcome your comments on any aspect of these proposed rules. Please send your comments to Ben Shreck, TEI Tax Counsel, at bshreck@tei.org. If you are interested in helping to develop, draft or review the Institute’s comments, please let Ben know. 2/7/2012(from the Council on State Taxation)
Last Friday, the U.S. House Judiciary Committee issued its final report on H.R. 1864, the Mobile Workforce Income Tax Simplification Act. H.R. 1864 would greatly reduce the current nonresident personal income tax compliance burden imposed both on employees who travel for short periods outside of their state of residence and on their employers. The Committee recommended passage of H.R. 1864, and the bill is now eligible for action by the House. Sources in the Capitol indicate that consideration on the “suspension calendar”—which allows the bill to be voted on expeditiously—is a strong possibility. The bill’s prospects were enhanced by the favorable report from the CBO issued on January 25. COST and its allies are currently meeting with House leaders and with Senate offices to build support for the measure in that chamber. Please contact Maureen Riehl [if your interested in learning more about COST's efforts to pass this legislation].
The following is being posted at the request of Alex Kolbl of TEI’s EMEA Chapter.
Given TEI’s sizable membership in Zürich, the EMEA Chapter is proposing to launch a series of Tax Executive Institute roundtables in the Zürich area.
TEI is the preeminent professional organization of in-house Tax Professionals. Our members are business executives who are responsible for taxation matters on an administrative or policy-making level, or whose work is otherwise primarily concerned with the problems of business taxation. TEI members are accountants, lawyers, and other corporate and business employees who are responsible for the tax affairs of their employers in an executive, administrative, or managerial capacity. TEI is a unique forum of tax knowledge sharing, networking across borders and industry and education for Tax Executives. We are some 300 Tax Executives in the EMEA Chapter from all over Europe, Middle East and Africa.
The proposed roundtables will not be restricted to TEI members, but are open to all in-house tax professionals. So please do not hesitate to pass on the message to other in-house tax professionals. (Practitioners and government authorities may not participate). The roundtables allow for a free sharing of information and practical experience on themes proposed by each participant.
The proposed date for our first meeting is Wednesday, 22 February 2012, at 06:00 PM. The location has not yet been confirmed. If you are interested in participating, please let me know, and I will then send you an invite with more precise meeting details.
2/6/2012
TEI's 2012 Federal Level 1 Tax Course will be held from April 29 to May 4 at the Kellogg Center at Michigan State University in East Lansing, Michigan. In-house tax professionals should register now to ensure their spot at this perennial first-in-class program.
In boom times and bust, Tax Executives Institute's programs have been a cornerstone in the training of rising tax professionals. For more than four decades, TEI's Federal Level 1 Tax Course has provided in-house tax employees with a solid foundation in federal taxation and their employers with the lowest cost, highest value return on their training dollar. Thousands have attended the program, and year after year it is ranked as one of TEI's best.
In addition to the "book learning" and insights imparted by a top-notch faculty, TEI's Federal Level 1 Tax Course provides unparalleled networking opportunities. The friendships cultivated at TEI's courses provide a lifelong resource of professional colleagues to draw upon when presented with novel tax issues. Moreover, the course will make manifest the value of belonging to a professional organization devoted to life-time learning and according its members a full complement of networking and advocacy opportunities. There are other tax organizations out there, but none whose history is so storied, whose network is larger, whose advocacy successes are so plentiful, and whose roster of members is as full of Chief Tax Officers and other respected, effective organizations. If you're not aware of TEI, the organization's Federal Tax Course-Level I is a good place to begin.
The specific subjects to be covered, the faculty, and general information about the Federal Tax Course are in the online brochure. So are the registration procedures and deadlines.
Never has the need for high-quality, affordable tax education been greater. Applications for the course will be processed on a first-come, first-served basis. By registering early, you can ensure you or your staff's participation in educational programs that — year after year — have proven to be of the highest quality and benefit to TEI's membership.
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