October 13, 2013
Timothy Larson, Partner-in-Charge, Tax & Business Services, New York City, Quoted in Crain's Article "Ready for Fiscal Failure? Check"
By Aaron Elstein
Disaster prep used to focus on storms. Now it's debt default.
Many businesses have plans in place to deal with natural disasters. Now firms are scrambling to come up with contingencies for a man-made fiasco that threatens the economy with recurring frequency. Across the city, business leaders are trying to figure out how their companies would be affected if Uncle Sam missed an interest payment on a portion of its $12 trillion in outstanding debt.
The scurrying is perhaps most frantic at financial institutions, where government bonds make up a significant part of their capital cushions. Bankers say they are making sure they have lots of cash on hand if they suddenly need it to replace U.S. Treasury bonds as collateral in trades, and some institutions are reportedly stockpiling cash in case anxious consumers want to withdraw large sums.
Other companies, especially those whose biggest customer is the federal government, are reining in expenses, while still others don't seem to have a clue about what to do.
If contemplating financial apocalypse weren't already plenty to cope with, some New Yorkers face the inconvenient fact that this week taxes are due for anyone who requested a six-month extension on filing their return in April. The piper must be paid by Tuesday, and though most of the government shut down earlier this month, the IRS remains very much open for business.
"The government needs tax revenue to prevent a default," said Tim Larson, partner-in-charge for tax and business services at the New York office of accounting firm Marcum. "I tell people, 'Sorry, you need to pay your taxes, but refunds are going to be slow or halted.' "