Accounting for income taxes is very much in the public spotlight in 2012 as sweeping tax reforms are taking center stage in election-year issues, and standard-setters are reconsidering the accounting rules for private companies.
Taking the initiative in these challenging times, the Financial Accounting Foundation (FAF) selected “accounting for uncertainty in income taxes” as the standard for its first post-implementation review. This standard was originally issued as FASB Interpretation No. 48 (FIN 48), and it has been widely faulted for:
- not providing a commensurate amount of value compared to the cost to implement,
- raising the risk of adverse economic consequences by providing a “roadmap” that leads tax authorities to risky tax positions, and
- for reflecting a standard-setting bias toward large public companies.
To help companies sort through the issues, our latest Messenger highlights the FAF’s findings and provides helpful background information on the reporting requirements, related regulatory developments, and special challenges for smaller and nonpublic entities.