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FIN 48: Accounting For Uncertainty In Income Taxes |
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CHALLENGE
On July 13, 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48 (“FIN 48”)—the most significant change to accounting for income taxes since FAS 109 was issued in 1992. Under FIN 48, companies must separately account for and disclose the financial impact of Uncertain Tax Positions on their financial statements and in the footnotes thereto. Now, companies seeking to legitimately reduce their overall tax burden and maximize cash flows with respect to taxes must interpret and implement these new accounting rules with little or no authoritative guidance to rely on. With the complexities and varying interpretations of the tax law, companies are being forced to “second guess” whether their positions will ultimately prevail, and arguably must allow others (i.e., auditors, analysts, etc.) to question these positions as well. FIN 48 prescribes a new minimum probability threshold for a tax position to be benefited in the financial statements. One of the most controversial aspects of FIN 48 is the increased reporting and disclosure requirements of Uncertain Tax Positions, most notably of those that fall below the more likely than not (“MLTN”) threshold.
SOLUTION
True Partners has the experience to guide you and your company through the regulatory and subjective maze of FIN 48. We have experienced and trained professionals who understand the complexities of the tax taw, the requirements of tax accounting, and the process of documenting and supporting your positions. True Partners is the type of independent advocate that is not bound by any of the Sarbanes-Oxley related conflicts and can help you stay ahead of the curve in complying with FIN 48—from the initial review to updating your Uncertain Tax Positions annually to reflect the most recent changes in tax law. We can design and implement internal controls and compliance processes to ensure your company identifies and properly discloses all Uncertain Tax Positions. Steps in the process of implementing FIN 48 that we can perform or assist with include:
• Gathering information about and documenting the company’s Uncertain Tax Positions (“UTPs”)
• Analyzing the technical merits of the company’s UTPs for purposes of determining which positions should be recognized
• Writing and updating opinions and memoranda in support of the company’s UTPs
• Performing computations and measurement of the UTPs to assess the financial statement impact on the company
• Calculating applicable interest and penalties on a current and going forward basis
• Preparing and drafting newly required footnote disclosures
• Updating assessments of any changes in judgment that might result in the recognition, derecognition, and changes in the measurement of tax benefits
• Representing and preparing defense strategy for any potential and resulting audits
THE TRUE PARTNERS TEAM
John V. Aksak, CPA Northeast Managing Director
631 777 6310 |
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John P. Bennecke, Managing Director
312 235 3337 |
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Michael Chen, Managing Director
408 625 5088 |
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Gregg P. Dluginsky, CPA Managing Director
631 777 6311 |
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Louis Gomes, CPA Managing Director
408 625 5099 |
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Andrea L. Gronenthal, CPA, Managing Director
312 235 3328 |
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Stanley W. Jozefiak, ESQ Managing Director
312 235 3306 |
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Robert J. McDonald, CPA Managing Director
312 924 3219 |
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Lawrence P. Salus Jr., ESQ, CPA Managing Director
312 235 3319 |
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Ross J. Valenza, CPA Managing Director
813 434 4002 |
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Dorota Borchardt, Manager
312 924 3214 |
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Thomas L. Decamp, CPA Manager
813 434 4012 |
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Sonali Fournier, CPA Manager
813 434 4017 |
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Tara J. Hibbard, CPA Manager
312 924 3212 |
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John Hurst, Senior Manager
408 625 5054 |
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Tanesha S. Jones, ESQ CPA Manager
312 924 3206 |
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Bernadette McConie, CPA Senior Manager
631 777 6314 |
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Sara E. Neff, ESQ Senior Manager
312 924 3216 |
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Timothy D. Nolan, CPA, Senior Manager
202 253 0352 |
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Patrick J. Philpott, CPA Senior Manager
813 434 4014 |
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