A group representing financial executives has written to the Financial Accounting Standards Board asking to exempt private companies from the requirements of FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes."
William Koch, chair of Financial Executives International's Committee on Private Companies Standards Subcommittee, sent the letter to FASB Chairman Robert Herz. While explaining that the letter represents just the subcommittee's views and not necessarily those of FEI as a whole, he agreed with another letter written by Judith O'Dell, chair of FASB's Private Companies Financial Reporting Committee. O'Dell's committee also wants to exempt private companies from the requirements of FIN 48.
"The purpose of this letter is to point out that there is a very salient and relevant argument that was not mentioned in Ms. O'Dell's letter," wrote Koch. "We wish to emphasize that the vast majority of private companies are pass-through organizations, and as such, the bulk of the income tax attributable to the income of the firm is paid by the owner and not by the firm. Therefore, we believe that the requirement to spend accounting and auditing effort on the minor portion of tax that is paid by the firm on behalf of the owner is requiring the firm to spend limited resources on an issue that should not be given such a level of importance."
He urged the board to act quickly so as not to impact the 2008 audit cycle.
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