Monday, May 23, 2011

H & R [Block] vs. DoJ?

The Department of Justice has announced that it has filed suit to stop the merger of Second Story Software and its TaxACT product with H & R Block, the large tax-preparer which markets Tax Cut software. The combination would mean that the merged company plus Intuit (TurboTax) would control 90% of the do-it-yourself tax software market. As expected, H & R Block called the merger smart and pro-competitive, while Second Story Software did not comment.

On the substance, the Justice Department position is reasonable here, a business segment 90% conrolled by two companies would be able to establish powerful barriers to entry. Additionally, H & R Block has hardly been a paragon of virtue, with its run-ins over Rapid Refund Loans. However, the Holder Justice Department hardly has been on best behavior either; albeit that most of its flaws have stemmed from political rather than economic calculations. In sports, the obvious solution would be a double forfeit.

Thursday, May 19, 2011

What's [Happening] in YOUR State Board of Accountancy?

Accounting Today/WebCPA reminded practicing CPAs today that State Boards of Accountancy have significant influence over the practice of accounting: sometimes for good (West Virginia's requirement of a "financial literacy" course in their high school curriculum), sometimes for bad (imposing sales taxes on services of Texas CPAs) and sometimes for trivial (Idaho's elimination of CPA oversight of lottery drawings) or bizarre (California's apparent attempt to hold CPAs responsible for the fiscal shortcomings of elected officals in municipal governments).

Other than the annual impact of Tennessee's "privilege" tax, I am not aware of any particular activities of Tennessee legislators on CPAs here. Having said that, never underestimate the willingness of legislators to attempt to make changes for the sake of making chances. The need to fix laws, whether or not they are "broke," must be a strong narcotic for elected officals.

Update: Thanks to reader Angela, two adjustments: [1] some items here are from state legislatures rather than state boards of accountancy, [2] some items listed above are proposed but not presently in existence.

Monday, May 09, 2011

Pensions and the Public Employee: Can the Unions Escape a "Union vs. Taxpayer" Position?

Considerable news attention followed efforts by Republican governors in the Midwest, particularly Michigan and Wisconsin, to reduce state spending by cutting into pensions, tenure and other benefits of public employees, particularly unionized employees, of these states. After bruising but successful efforts by Republicans in these states; some Democratic governors, such as in Maryland, have adopted less stringent but still cost-cutting provisions in their states. In a period of tight budgets, compensation and benefits for employees have become a ready target as some economists have found that BOTH compensation and benefits are higher for public employees in comparison to private counterparts in numerous states.

As a public employee (state of Tennessee) myself, it has been distressing to receive no raise for the last two years; especially in view of what appears to be an increasingly inflationary future. That said, the best strategy for public employees seems to be a quiet, behind-the-scenes approach; in a season when many are having trouble getting jobs and where both state and the U.S. government struggle to get revenues to cover spending; the politican calling for cuts in state and federal budgets for employee benefits very easily may be more popular than a union head calling for greater benefits and protection of public employees.

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