October 15, 2012
Marcum LLP and Twenty-First Securities Corp. Urge Public Companies to Pay 2012 Dividends Before Year-End; Help Shareholders Avoid Major Tax Increases of the Fiscal Cliff
New York City, NY - Marcum LLP, a top national accounting and advisory firm, and Twenty-First Securities Corporation, a New York brokerage and financial services firm, are joining forces to urge publicly traded companies to pay year-end 2012 quarterly dividends to shareholders on or before December 31, when the tax cuts enacted by the Bush administration in 2003 are due to expire. By moving their payable dates into the current calendar year, public companies will enable shareholders to benefit from the current 15% dividend tax rate before an anticipated tax hike takes effect as of January 1.
"Unless the Bush tax cuts are extended, shareholders will have tremendous tax exposure in 2013, with rates that could potentially triple. Moving their dividend pay dates into the 2012 tax year is an easy, no-cost way for companies to help shareholders avoid the extreme impact of this part of the so-called fiscal cliff," said Joseph Perry, Marcum Partner-In-Charge of Tax and Business Services.
Robert N. Gordon, president of Twenty-First Securities Corporation, offers an example using Wal-Mart Stores, Inc.'s (NYSE:WMT) already declared dividend to be paid on January 2, 2013, for shares held as of December 7, 2012. "We estimate that there will be dividends issued to individual shareholders on that date totaling $922.0 million. At the 2012 rate of 15%, shareholders will pay $138.3 million in taxes on those dividends. If received in 2013, those same dividends will cost shareholders a minimum of $173.3 million (at 18.8%) or as much as $400.1 million (at 43.4%), absent an extension of the lower rate," Mr. Gordon states. The 18.8% rate reflects the current 15% dividend tax plus a 3.8% Medicare surcharge on unearned income. The 43.4% rate includes a 39.6% tax on dividends as ordinary income plus the 3.8% surcharge.
"By rolling their dividend pay date back by just 48 hours, Wal-Mart alone could potentially save shareholders $261.8 million. Multiply that by all the companies that issued prior quarter dividends in just the first two weeks of this year, and the tax savings are in the billions. That's what I call economic stimulus!," Mr. Gordon says. Between January 1 and January 15, 2012, $16.1 billion in dividends were paid by 256 companies.
"This is the most attractive and accessible option available to public companies looking for shareholder friendly programs. We are recommending that all our publicly traded clients move their fourth quarter dividend pay dates into 2012," said Robert Spielman, a Partner in Marcum's Tax and Business Services Division and a member of its State and Local Tax Practice group.
About Twenty-First Securities Corporation
Founded in 1983 and based in New York City, Twenty-First Securities Corporation is a multi-faceted brokerage and financial services firm dedicated to achieving superior returns with low-risk targeted investments. The firm specializes in searching out and exploiting inefficiencies in the market. The firm’s understanding of these glitches allows it to develop and execute sophisticated hedged investments and arbitrage strategies. Assets under direction are measured in the billions. For more information, visit www.twenty-first.com.
About Marcum LLP
Marcum LLP is one of the largest independent public accounting and advisory services firms in the nation, with offices in major business markets throughout the U.S., Grand Cayman and China. Headquartered in New York City, Marcum provides a full spectrum of traditional tax, accounting and assurance services; advisory, valuation and litigation support; and an extensive range of specialty and niche industry practices. The Firm serves both privately held and publicly traded companies, as well as high net worth individuals, private equity funds and hedge funds, with a focus on middle-market companies and closely held family businesses. Marcum is a member of the Marcum Group, an organization providing a comprehensive array of professional services.