IRS Regulator, Warren Fed Push, FX Loans: ComplianceCarla Main
The U.S. Internal Revenue Service lacks the authority to regulate paid tax preparers, a federal appeals panel said, upholding a lower-court ruling that threw out licensing rules for as many as 700,000 practitioners.
The IRS issued new rules in 2011 to address concerns about the performance of some preparers. The agency relied for authority on an 1884 law empowering it to regulate practitioners before the Treasury Department. The law cannot be “stretched so broadly” to include authority to regulate tax preparers, the ruling panel said.
An estimated 142 million individual returns were filed for the 2011 tax year, and almost 70 million taxpayers used a paid preparer, the U.S. Justice Department said yesterday in a statement highlighting its anti-fraud efforts. The agency said crooked preparers often falsify information to claim refundable tax credits for their clients. Some preparers sell customers deceptive loan products with exorbitant fees.
The libertarian Institute for Justice in Arlington, Virginia, which argued the case on behalf of three tax preparers challenging the IRS rules, hailed the decision as a “major victory not just for tax preparers but for taxpayers.”
“The IRS is currently reviewing the decision,” Julianne Breitbeil, an agency spokeswoman, said in an e-mailed statement.
The case is Loving v. IRS, 13-5061, U.S. Court of Appeals for the District of Columbia (Washington).
Senate’s Warren Pushes Fed to Require Board Votes on Bank Fines
The Federal Reserve should revise enforcement policy to require board-member votes on penalties exceeding $1 million or force changes in banks’ management, two lawmakers wrote in a letter to Fed Chairman Janet Yellen.
Senator Elizabeth Warren and Representative Elijah Cummings, both Democrats, urged Yellen to make the change to bolster the Fed’s accountability and to protect taxpayers against financial-industry risk-taking. They support an increase in the board’s direct role in overseeing enforcement and supervision to reduce systemic risk.
The letter from the lawmakers came as Yellen testified at a House Financial Services Committee hearing to deliver her first report to Congress.
Hungarian Court Can Alter FX Loan Clause, EU Court Aide Says
Hungarian courts can change the exchange-rate margin on $15 billion in foreign-currency loans if lenders are deemed to have calculated installments in an unfair way, an adviser to the European Union’s top court said.
EU law doesn’t prevent Hungarian courts from examining the fairness of exchange-rate margins and “from replacing the term at issue with a supplementary provision of national law,” Advocate General Niels Wahl of the EU Court of Justice said yesterday in a nonbinding opinion. The Luxembourg-based court follows such advice in most cases.
The EU court’s ruling will determine the power of Hungarian judges to examine clauses in foreign-currency loans that make borrowers bear the exchange-rate burden and whether they may change clauses rather than annulling an entire loan.
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Sprecher of ICE Says Banning Maker-Taker Would Simplify Trading
Jeff Sprecher, whose purchase of NYSE Euronext made his IntercontinentalExchange Group Inc. the biggest owner of U.S. stock markets, said banning the pricing system that prevails on exchanges would simplify them.
The protocol of paying some brokers for providing standing orders to buy and sell shares while charging others to trade against them, known in the industry as maker-taker, could be prohibited without excessive deliberation, Sprecher said yesterday at a Credit Suisse Group AG conference in Florida.
Sprecher has emerged since the NYSE acquisition as a critic of modern exchanges.
Comings and Goings
SEC Said to Hire Ex-Finra Exec Luparello to Run Trading Division
The U.S. Securities and Exchange Commission is poised to name Stephen Luparello, a former executive of Finra, the Wall Street self-regulator, as its top overseer of exchanges, brokerages and clearing firms, according to three people familiar with the matter.
SEC Chairman Mary Jo White has selected Luparello as the new director of the Trading and Markets Division, said the people. Luparello, who now a partner in the Washington office of law firm WilmerHale, previously served as vice chairman of the Financial Industry Regulatory Authority, where he worked for more than 16 years.
The post is one of the agency’s more senior staff positions. Luparello would be responsible for developing White’s plans for reviewing regulation of stock exchanges and competitors such as dark pools, as well as drafting new regulations to control risks posed by automated trading systems. He’d also take over responsibility for finishing Dodd-Frank mandated derivatives rules for the portion of that market overseen by the SEC.
Luparello, 55, didn’t immediately respond to messages seeking comment. SEC spokesman John Nester declined to comment.