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Senate Democrats are expected to today unveil a scaled-back version of a Biden administration proposal to crack down on tax avoidance and evasion, following complaints about privacy from conservative groups and the banking industry. Initially, financial institutions were to be required to provide the IRS with additional information on bank accounts with more than $600 in annual deposits or withdrawals. However, the new proposals will reportedly raise the threshold to $10,000, and will exempt all wage income from counting toward the $10,000 threshold withdrawal, intending to ensure it applies to only larger account holders. 

 

Washington Post

A trio of moderate House Democrats is urging party leaders to "pause" a key piece of President Joe Biden's tax plan that would raise the minimum rate that U.S. corporations pay on their overseas income. In a letter to House Speaker Nancy Pelos (D-CA) and House Ways and Means Chairman Richard Neal (D-MA), Reps. Tom O’Halleran of Arizona, Lou Correa of California and Henry Cuellar of Texas, said they wanted to wait and see how other countries implement a new global agreement that would establish a 15% minimum rate on multinational corporations, regardless of where they're headquartered. That deal, struck by 136 countries and jurisdictions, could take years to enact worldwide. "These new rules in the Ways and Means draft would allow other countries to take advantage of our rules, and harm U.S. companies," they said. "If we wait, it will allow Congress the opportunity to adjust the implementation of the policy based on how G-20 countries write their own GILTI regimes."

 

Fox News

PCAOB inspections showed some improvement in firms' audit performance during 2020 compared with the previous year, although a board staff report released Monday said inspectors continue to identify deficiencies that recur from year to year. In 2020, the PCAOB inspected 510 audits from a total of 114 U.S. audit firms, plus 107 audits from 39 non-U.S. audit firms. For the majority of the annually inspected audit firms, PCAOB inspectors identified fewer findings in 2020 compared with 2019. At the board's triennially inspected audit firms, some improvements were noted, but the PCAOB staff said deficiencies remain high. The most common areas of audit deficiencies mostly remained consistent with past years, including: internal control over financial reporting; revenue and related accounts; accounting estimates; and critical audit matters. The PCAOB inspectors also noted good practices that inspectors observed at audit firms in 2020, including: the real-time monitoring of in-process audit engagements, incremental steps in response to the COVID-19 pandemic; and the use of practice aids to assist engagement teams in identifying risks for each factor relevant to management's estimation process.

 

Journal of Accountancy

EY has named Chris Smyth as EY Americas Private Equity leader, succeeding Bill Stoffel with immediate effect. Most recently, Mr. Smyth served as the EY U.S.-central region strategy and transactions managing partner.

 

PE Hub

The U.S. Navy has added Deloitte Consulting as an awardee on a potential $246.8m contract vehicle to support the modernization of the service branch’s logistics and supply chain management systems. Naval Supply Systems Command received 10 offers for the NAVSUP Strategic Transformation program, which includes Naval Sustainment System-Supply, the Department of Defense said Monday. Boston Consulting Group‘s federal group, Grant Thornton‘s public sector business and McKinsey & Co. were awarded positions on the multiple-award indefinite-delivery/indefinite-quantity contract July 30th. Awardees will compete for task orders for strategic services to help transform logistics operations, supply chain, and technology across the enterprise.

 

Washington Technology

GovConWire

Industrial production in the U.S. declined in September as supply chain disruptions in the auto industry and lingering effects of Hurricane Ida weighed on manufacturing and mining output during the month. Industrial production, which includes output at factory, mining and utility companies, fell at a seasonally adjusted 1.3% in September from the previous month, data from the Federal Reserve released Monday showed. Manufacturing output, the biggest component of industrial production, fell 0.7% in September compared with August. Motor vehicle and parts production decreased 7.2% amid the shortage of semiconductors. The lingering effects of Hurricane Ida also contributed to the drop in manufacturing, by 0.3 percentage point

 

CNBC

Reuters

Wall Street Journal

Confidence among U.S. homebuilders increased in October as demand remained strong despite growing affordability challenges stemming from rising material prices and shortages, according to a measure released Monday by the National Association of Home Builders in conjunction with Wells Fargo. Builder confidence in the single-family home construction market rose four points to 80, down from 85 in October 2020, but still well above the 50-mark separating optimism from pessimism. Of the index’s three components, current sales conditions rose five points to 87. Sales expectations in the next six months increased three points to 84 and buyer traffic climbed four points to 65. The biggest concern for builders now is affordability, as they raise prices to meet the rising costs of land, labor and materials. Regionally, looking at the three-month moving averages, builder sentiment in the Midwest rose 1 point to 69. In the Northeast it was unchanged at 72. Both the South and West were also unchanged at 80 and 83, respectively. “Building material price increases and bottlenecks persist and interest rates are expected to rise in coming months as the Fed begins to taper its purchase of U.S. Treasuries and mortgage-backed debt,” said Robert Dietz, chief economist at the NAHB. A forecast just released by the Mortgage Bankers Association predicts the average rate on the 30-year fixed mortgage will hit 4% by the end of 2022, up from around 3% now.

 

CNBC	Market Watch

The Washington portion of Facebook’s tax battle with the IRS concluded on Monday after six days of testimony focused on the state of the company at the time it transferred various intangible assets to an Irish subsidiary. The trial started in early 2020 in San Francisco, where dozens of current and former Facebook employees testified. The key issue for the court to decide is whether Facebook paid its taxes based on what a company unrelated to Facebook, unlike the Irish subsidiary, would have paid for Facebook’s September 2010 platform technology, access to part of its user base, and trademark and marketing assets. The trial, which focuses on the company’s 2010 tax returns, is scheduled to pick back up on January 18th.

 

Bloomberg Law

Billionaire Richard Li's U.S. IPO of his Asian insurance group, FWD Group Holdings Ltd, is stalling amid regulators' increasing unease over the long arm of the Chinese government. The insurer hasn't been able to secure final approval from the SEC for the listing. The commission has been asking the company about risks such as whether the Chinese government could extend its authority to Hong Kong-based firms like FWD. The insurer has also faced pushback from some investors on concerns about the regulatory risks and valuation.

 

Bloomberg

There is a growing emphasis on psychology in financial planning, merging traditional advice with elements of behavioral finance, according to the Certified Financial Planner Board’s 2021 Practice Analysis Study. “The objective of understanding the psychology of financial planning is not to turn financial planners into therapists,” said CFP Board chief executive Kevin Keller. “But to help professionals strengthen their listening and communication skills.” Asset managers may also use financial psychology when guiding clients through investment decisions, particularly when the stock market dips. “A lot of people say ‘I can handle a 10% or 20% correction’ until it happens,” said Michael Cornfeld, owner of Heritage Investors Management in Bethesda, Maryland. Managing assets is like a cross-country road trip with clients in the back seat, Cornfeld said, and they expect to find harsh conditions, like snow, ice, flooding and flat tires. In those scenarios, he may drive faster, adding to their stock market positions. But in the meantime, Cornfeld aims to keep clients in the car, regardless of the conditions, such as the news or cocktail party gossip, describing his role as “investment counselor.”  

 

CNBC

The IRS is teaming up with international organizations and regulators this week to call attention to the dangers of charity fraud. The Charity Fraud Awareness Week campaign brings together a group of charities, regulators, law enforcement organizations and nonprofits from around the globe with the goal of raising awareness of fraud and cybercrime affecting organizations and to create a safe space for charities and their supporters to discuss fraud and share helpful practices. “We especially advise taxpayers to be on the lookout for scammers who set up fake organizations to take advantage of the public's generosity,” said Rob Malone, director of the IRS’s Exempt Organizations and Government Entities division, in a statement Monday. “They take advantage of tragedies and disasters, such as the COVID-19 pandemic. Campaigns like Charity Fraud Awareness Week can help remind everyone to remain vigilant.”

 

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