Tax Matters

Korb Reassures on FIN 48

august 2007

The IRS recently released an internal memo written in March 2007 by Chief Counsel Donald Korb stating that documents prepared pursuant to FASB Interpretation no. 48, Accounting for Uncertainty in Income Taxes, are considered tax-accrual workpapers and thus are subject to the IRS’s "policy of restraint.” The IRS has a longstanding policy of restraint with respect to requesting tax accrual workpapers from a business during an examination of a tax return. This policy was implemented by the Service in recognition that the workpapers generally provide estimates of potential or contingent tax liabilities relating to tax positions taken by the taxpayer, and any overzealous requesting of workpapers by IRS examiners might result in an erosion of the quality of such workpapers over time. For the memo, see www.irs.gov/pub/irs-utl/am2007012.pdf .

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