A Litigation "Roadmap" for the IRS

Source: AICPA CPA Insider

In U.S. v. Textron Inc., the U.S. Court of Appeals for the First Circuit ruled that the IRS was entitled to a public company's tax accrual workpapers. The court rejected the company's claim that the workpapers, which included analysis by its in-house lawyers, were protected by the attorney work product doctrine. The workpapers were not prepared “in anticipation of litigation or for trial.” Rather, they were independently required by statutory and audit requirements.

The case is significant because the workpapers provide the IRS with a roadmap for identifying weaknesses in the corporation's tax position. Textron has asked the U.S. Supreme Court to review this issue. In the meantime, CPAs should carefully consider the types of information they request in connection with tax preparation and audit work.

For the complete article, click here and read “What You Say Can and Will Be Used Against You … by the IRS” in the October 13, 2009, issue.

From AICPA CPA Insider, October 13, 2009, www.CPA2biz.com.