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Week of May 29, 2009 • Issue No. 040
▲ NO TAX INCREASES UNTIL 2011, GEITHNER TELLS CONGRESS
▲ FOCUS ON FRAUD: STREET SMARTS
▲ WANT OR NEED A BUSINESS VALUATION IN 2009 – REASON 9 OF 9
▲ No Tax Increases Until 2011, Geithner Tells Congress
The Obama administration will not ask Congress to raise taxes until 2011, Treasury Secretary Timothy F. Geithner told Congress on May 21. Geithner, testifying before the House Appropriations Subcommittee on General Government and Financial Services, also pledged to improve the IRS’s international tax enforcement activities.
President Obama has made clear that he will not seek any major revenue increases until 2011, when the (economic) recovery should be firmly in place. Once the economy recovers, the federal government must get its “fiscal house in order.” The Administration will work with Congress to make the tax changes that are necessary to reduce deficits and to do so in a manner that is fair to all Americans, per Geithner.
The Administration has already proposed extending all of the lower individual marginal income tax rates in the Economic Growth and Tax Relief Reconciliation Act of 2001; however, the pre-EGTRRA rates of 36- and 39.6-percent would revive after 2010. The President has also called on Congress to limit itemized deductions for higher-income individuals. At the same time, the president has proposed making permanent several tax incentives targeted to middle income individuals, including the Making Work Pay credit and the American Opportunity tax credit.
In other news, Geithner asked lawmakers to approve the administration’s fiscal year 2010 budget request for the IRS . Additional funding would enable the IRS to hire 755 employees to increase examinations of tax returns for businesses and higher-income individuals; 300 employees to expand the IRS document matching program; and 491 employees to improve collection operations, Geithner explained.
Geithner also wants to hire more tax professionals at the Treasury Department. He told lawmakers that the Office of Tax Policy's career staff includes 30 lawyers and 44 economists, as well as support staff, for a total of 93. “This is lower than its usual complement of over 100 professionals.”
The Administration aims to increase staffing to 108 positions. The additional staff is needed to perform analysis and revenue estimates for new policy proposals, conduct research for, among other things, congressionally mandated studies, and develop regulations and guidance for new legislation.
Other topics to watch:
▲ Focus on Fraud: Streets Smarts, from the desk of Marty Grausam, CPA, CFE, CISA
Earlier in the year, this column addressed some common myths about fraud and why and how a business owner can make it not easy for occupational fraud to occur.
As a revisit to those thought-streams and for summarizing comments, business owners and management need to develop and maintain a high degree of street smarts for help with preventing and/or detecting occupational fraudulent activity.
• REMEMBER, ANYONE CAN COMMIT FRAUD.
For example: A former Pennsylvania State Treasurer; a former police chief of a prominent west Michigan city; a city police detective of an eastern Michigan city; Enron; WorldCom; Bernie Madoff; …..
• THINK DIRTY, HOW COULD I BEAT THE SYSTEM?
For example: Are there apparent internal control deficiencies that need to be fixed?
• PAY ATTENTION TO DETAIL.
For example: Erasures; dual endorsements that appear similar.; …..
• FOLLOW UP ON RUMORS.
For example: People love to talk, so listen and there may be clues in conversations or discussions with employees and management; living beyond one’s life style; …..
• CHECK YOUR HUNCHES.
For example: Extraordinary activity with one vendor; obvious nervousness of an individual employee in a higher risk, vulnerable position; …..
If you have questions or concerns about fraud prevention and detection for your business, please contact our office. We will be happy to respond.
▲ WANT OR NEED A BUSINESS VALUATION IN 2009 -REASON 9 OF 9
Financial and Tax Reporting
Certain financial & tax reporting situations necessitate a independent valuation service. When your company offers and issues stock options, or transfers or sells equity interests, a valuation is required to report related compensation expense and for the recipients to accurately report income.
If you are planning for or find yourself in this type of situation, please contact Les Prangley, CPA, CVA to see if a business valuation is needed or required at 616.774.9004 or lprangley@pmcpa.com.