Note to CEOs: Stand By Your Tax Returns
By on May 12th, 2005 at 1:54 pm
Note to CEOs: Stand By Your Tax Returns
For years, corporations have fought controversial battles to gain the same legal rights as citizens. But now, having been largely successful, they want to evade the responsibilities that come with those rights. As the Wall Street Journal reports, Corporate America is fighting a proposal to force CEOs to officially certify their companies’ tax returns. It’s a commonsense measure: if citizens can be held liable for falsifying their tax returns, so should corporations and their executives. That kind of responsibility might force companies to be more honest, and stop ripping off America by evading taxes.
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If they succeed then can’t we refuse to pay taxes on the grounds that we’re people too?
If a corporation is a legal “person” and doesn’t have to pay taxes, or get punished for lying on its tax return then can’t I as a legal “person” avoid taxes or lie on my return without punishment?
Z.
May 12th, 2005 at 2:00 pmTherefore, I’d suggest that every one of us become a ..corporation. Why, I can be the CEO of ..myself and shed responsibility of my tax returns! Now, if you can suggest an easy way for me to become an off-shore corporation, then I’d be indebted to you [well, in theory, because I don't want to pay anything to advance the other causes of a world-wide empire that I'm advocating]
May 12th, 2005 at 2:01 pmmaybe you can incorporate yourself in the carribean?
May 12th, 2005 at 2:09 pmI don’t have a WSJ account so I can’t read the article.
What does it mean for a CEO to “certify” a tax return? As I understand it, a corporation is currently liable for their tax return accuracy. The employee making a falsification would get in trouble.
May 12th, 2005 at 2:32 pmFull Article:
CEOs May Soon Be Required
To Certify Corporations’ Taxes
By AMY SCHATZ
Staff Reporter of THE WALL STREET JOURNAL
May 12, 2005; Page B2
Chief executives may soon be required to certify their companies’ tax returns under a corporate-governance provision attached to a highway-spending bill before Congress.
The language would require CEOs to personally certify corporate tax returns and ensure that procedures are in place to assure the returns’ accuracy or face perjury penalties. It was attached to the highway bill this week by the Senate Finance Committee, which has spent two years unsuccessfully trying to find a permanent home for the provision.
Business groups including the U.S. Chamber of Commerce have foiled previous attempts to pass the rule and are taking aim once again.
“This is like asking a member of Congress to be personally liable for understanding everything in the budget resolution they just voted for,” says Tita Freeman, a spokeswoman for the Business Roundtable, an influential U.S. lobbying group representing CEOs.
Since a corporate officer already must certify the return, the provision is redundant, the Chamber argues. “The CEO is relying on his officers to do that certification,” says Chris Myers, the Chamber’s director of congressional and public affairs.
In practice, the measure would simply require corporate tax divisions to spend significant time briefing CEOs, says Mark Prysock, director of tax and economic policy at Financial Executives International, which represents U.S. corporate treasurers, controllers and chief financial officers.
The idea was originally proposed during the debate over the 2002 Sarbanes-Oxley corporate-governance reform law by then-Sen. Zell Miller (D., Ga.), who suggested that if individuals are responsible for the accuracy of their own tax returns, CEOs should be responsible for corporate returns. Congress eventually decided CEOs and chief financial officers would be required to certify the accuracy of quarterly and annual reports, but the tax requirement was dropped.
The Senate Finance Committee later embraced the provision after it was modified so CEOs would only be required to certify material aspects of the returns. Essentially, the rule would make it more difficult for CEOs to plead ignorance if the Internal Revenue Service concludes the company has relied on illegal tax shelters.
If the measure is approved, CEOs could face a felony conviction and fine up to $100,000 and a jail term up to three years for knowingly signing off on a corporate return that isn’t correct.
The Senate is expected to pass the six-year highway spending bill Friday, after a procedural effort by Republican leaders to prevent the measure from increasing about $11 billion to $295 billion failed on a 76-22 vote. The White House has threatened to veto any highway bill that comes to the President’s desk that exceeds the roughly $284 billion figure passed by the House.
May 12th, 2005 at 2:33 pmI think we as Democrats need to work at painting the Tax Refusnik Republicans as greedy scam artists that are making America weaker by refusing to pay their fare share and bankrupting the nation with their deficits. We need to get the message out that not paying your taxes is not patriotic.
May 12th, 2005 at 2:33 pmThis is a bit tricky, quite frankly.
Corporate officers–even for non-profits like the Center for American Progress (home of ThinkProgress.org)–have limited liability for many good reasons. In other words, you can’t generally hold an executive personally responsible for a decision or action taken by the corporation.
That being said, I think this measure does make good sense insofar as it requires to CEO to both met and acknowledge meeting his or her responsibilities to company employees, shareholders, customers and the general public.
We’ve seen too much recently of CEOs who claimed ignorance of everything fiscal even while they were making–or authorizing–all the key decisions.
If this law is limited in scope, it seems a good one to me. If not, then not.
Btw, I agree–as usual–with Editor DFPS. Let me not hijack the thread but refer people also to John Podesta’s Testimony for the President’s Tax Reform Panel:
May 12th, 2005 at 2:56 pm
When CEO’s and CFO’s start facing direct criminal prosecution for falsifying their tax forms, for corporations that they demand be treated like citizens, then maybe basic essential reforms might begin.
May 12th, 2005 at 5:13 pmWe need to come up with real reform so CEO’s can fully pay their share of taxes and not screw us over
May 12th, 2005 at 7:39 pmSince Congress has decided that individuals should not be able to clear their debts through bankruptcy filings, shouldn’t corporations be held to the same standard?
May 12th, 2005 at 8:14 pmNote to CEOs: stand by your tax returns
Whiny bastards.
For years, corporations have fought controversial battles to gain the same legal rights as citizens. But now, having been largely successful, they want to evade the responsibilities that come with those rights. As the Wall Street Jou…
May 13th, 2005 at 2:29 pm