Details

Written by: Steel Rose

Published: 31 May 2013

WASHINGTON — The Internal Revenue Service today announced the availability of the spring 2013 issue of the Statistics of Income Bulletin, which features information on high-income individual income tax returns filed for tax year 2010. 

Taxpayers filed almost 4.3 million returns with adjusted gross income of $200,000 or more for 2010. These high-income returns represent about 3.0 percent of all returns filed for the tax year.

The Statistics of Income (SOI) Division produces the SOI Bulletin on a quarterly basis.  Articles included in the publication provide the most recent data available from various tax and information returns filed by U.S. taxpayers. This issue of the SOI Bulletin also includes articles on the following topics:

$1·         Sales of capital assets.  For tax years 2007 - 2009, data from individual
income tax returns show that taxpayers realized the highest net capital gains
of $914 billion in 2007, while only $37 billion were reported for 2009.

$1·         Municipal bonds. The municipal bonds market was still dominated by almost 22,000 tax-exempt governmental bonds issued in 2010, raising $293.6 billion in proceeds for public projects, such as schools, transportation infrastructure and utilities.

$1·         Nonresident alien estate tax. Executors for estates of nonresident aliens filed 1,887 tax returns in filing years 2009-2011. Returns filed were predominantly for estates of decedents who died between 2007 and 2010, and data from these returns showed an overall decline in the total gross estate and net estate tax owed.

$1·         International boycott reports. For tax year 2010, about 132 U.S. entities received 3,200 requests to participate in unsanctioned international boycotts, down from 160 U.S. entities and 3,500 requests in 2009. 

The Statistics of Income Bulletin is available for download at IRS.gov/taxstats. Printed copies of the Statistics of Income Bulletin are available from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954. The annual subscription rate is $67 ($93.80 foreign); single issues cost $44 ($61.60 foreign).

For more information about these data, write to the Internal Revenue Service (RAS:S), Director, Statistics of Income, 1111 Constitution Ave., NW (K-Room 4160), Washington, DC 20224-0002.

Related Items:          

$1·         SOI Bulletin: Spring 2012

$1·         Historical Tables and Appendix

$1·         Tax Statistics

Details

Written by: Steel Rose

Published: 30 May 2013

Cathy Kearney, an accountant in the Irish city of Cork, lives with her husband and children in a large, but far from grand, farmhouse. She is also, at first sight, the brains behind much of Apple's exceptional global success in recent times.

Kearney is the Silicon Valley computer giant's top lieutenant in Ireland, and has overseen the explosive success of the company's operations in Cork, responsible for selling iPads, iPhones and MacBooks to scores of markets across Europe, the Middle East and Africa. No less than $22bn of Apple's profits – two-thirds of the total for the group – came from Kearney's Cork companies in 2011 alone. Back in the United States, Tim Cook, Apple's chief executive, has described this international success as unprecedented.

US Senate officials have been gathering information about Apple's Irish operations on suspicion that the group is aggressively – though legally – shifting profits from operations around the world, particularly from the US, to Ireland in order to pay less tax.

Of particular interest to the investigators was a cluster of companies, registered at Apple's Cork office, to which had been transferred development rights, outside the Americas, to many of the group's products. As one senator put it last week, Apple had "shifted that golden goose to Ireland". Poring over paperwork for these companies, Senate staff saw the familiar names of senior California-based Apple executives, including Cook himself. They also saw Kearney's name – again and again.

Probing further, among the companies they alighted on was Apple Operations International, the top Apple holding company in Cork. Kearney is the only AOI director in Ireland. Directors' duties usually include attending board meetings. But the Senate officials discovered she had attended just seven of 33 AOI board meetings over almost seven years – once in person, the other six by telephone. All but one of the meetings were in California, where the other directors were based.

Link to video: Apple's dirty little tax secret

Meanwhile, in four years, almost $30bn of profits poured into AOI, though it has no physical presence or employees in Cork or, indeed, anywhere else on the planet. One source on the Senate subcommittee on investigations joked that AOI and others were "iCompanies – i for imaginary, invisible".

Today, Kearney's formal business title is vice-president of European operations for another Cork company, Apple Distribution International. But it is her directorships of AOI and other Apple subsidiaries that have attracted attention. They help satisfy incorporation requirements under Irish law, and some of them do employ staff in Cork. What surprised investigators most was that at least three of these companies, including AOI, appeared to have no tax residency anywhere in the world.

Their boards have been able to tell the Irish tax authorities that Kearney, the sole Irish-resident director, cannot be judged to manage or control these companies, and that important decision-making rests in California.

As a result, AOI and others are not deemed tax resident in Ireland.

Meanwhile, because these same companies are incorporated at addresses in Ireland, under US law they appeared not to be tax resident in the US either. "Magically," observed Senate committee chair Carl Levin, "it's neither here nor there."

The Cork accountant is indeed an important woman, running a Cork office of up to 4,000 staff.

But she has also helped saved Apple billions in tax.

Story reported by Simon Bowers in The Guardian. Follow the link below for the complete story.

The Guardian, Wednesday 29 May 2013

Details

Written by: T. Steel Rose, CPA

Published: 29 May 2013

WASHINGTON – Although the Internal Revenue Service’s (IRS’s) travel card program controls are generally effective, the agency needs to take more aggressive action to address card misuse.

This is a finding of a new audit report released today by the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA initiated this audit to assess the controls that the IRS uses to identify potentially fraudulent or abusive use of individually billed travel cards.

TIGTA found that the design and implementation of travel card controls intended to identify transactions occurring outside of official travel are generally effective and IRS delinquency rates are below one percent.  However, current controls do not include any steps designed to detect inappropriate or personal use while employees are on official travel.

TIGTA’s audit also revealed that the disciplinary actions taken by the IRS in response to confirmed misuse were less severe than those suggested in the IRS penalty guidelines in approximately half of the cases reviewed.  Further, hundreds of cardholders with evidence of significant financial problems, including insufficient funds checks or suspended and charged-off accounts, were not referred for reevaluation of national security clearances and background checks.

“As its mission includes requiring taxpayers to pay taxes owed on time and voluntarily, the IRS should take further steps to address employees who do not voluntarily pay their travel card bills on time,” said J. Russell George, the Treasury Inspector General for Tax Administration.  “Identified misuse should be met with appropriate disciplinary action in order to maintain the integrity of the program,” he added.

TIGTA recommended that the IRS make improvements in several areas, including designing controls to detect personal use of the travel card while employees are on official travel.  TIGTA also recommended that the IRS develop a process for referring cardholders with evidence of financial problems to personnel security officials for reevaluation of the employees’ security clearances and suitability for their positions.

In its response, IRS management agreed with the recommendations and plans to implement several corrective actions.  In addition, the IRS noted that some of the corrective actions have already been implemented.

http://www.treasury.gov/tigta/auditreports/2013reports/201310032fr.pdf">Read the report.