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Tax Contingencies

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IRS Scales Back Its Draconian Schedule UTP Draft, And Requires The Finalized Schedule In 2010

September 2010 On September 24, 2010, the IRS issued Announcement 2010-75. This covers final Form 1120, Schedule UTP (Uncertain Tax Positions Statement) and related instructions. While the final schedule eliminates some two particularly onerous provisions, the remaining disclosures are still of great importance to all corporate taxpayers. The IRS instituted a five-year phase-in for filing [...]

Tax Accrual Workpapers Are Probably Safe From The IRS’s Probing Eyes

To maintain accounting records under generally accepted accounting principles, companies need to assess the likelihood of judgmental positions being sustained. The recent tax case United States vs. Textron, No. 06-198T (Aug. 29, 2007), is important in establishing a taxpayer’s right to prevent disclosure of (i) its internal analyses of these controversial tax positions, and (ii) [...]

IRS Loses Another Case Involving Auditor Work Papers

  In Regions Financial Corp. v. United States, (N.D. Ala., No. 2:06-CV-00895-RDP, 5/8/08), the IRS lost another battle in its effort to get information from outside accountants’ tax accrual work papers. This case could be particularly damaging to the IRS’s position because the Court’s rationale arguably would apply regardless of which split in authority is [...]

First Circuit Applies New Standard Restricting Work Product Privilege When Information Is Used For Financial Reporting

The attorney work product doctrine, now codified in Federal Rule of Evidence 26(b)(3), protects from discovery documents prepared "in anticipation of litigation or for trial." Courts apply different tests to interpret this phrase. A minority of courts apply a stringent test under which documents are protected only if they were created for the "primary purpose" [...]

The FASB’s Gift To The IRS

Updated January 2007 In June 2006, the Financial Accounting Standards Board (FASB) issued FIN 48, an amendment to existing standard no. 109, "Accounting for Income Taxes."  At first blush, the pronouncement seems simple, fair, and straightforward, but it will have a huge unintended consequence.  The pronouncement requires that, starting in 2007, corporations that took aggressive [...]