Financial Executives International has filed a friend of the court brief in support of a petition for review of the U.S. v. Textron case, involving the IRSs right to examine the tax accrual work papers of a company.
FEI urged the Supreme Court to hear arguments in the case, which concerns whether a public company can withhold from disclosure to the IRS tax accrual work papers that reflect the companys candid self-assessment of litigation hazards. The outcome of the case has broad implications beyond the tax field and affects every public company, FEI argued.
FEI maintains that a 2007 lower court decision in favor of aircraft maker Textron appropriately balances the competing interests of the IRS, the investing public, and the fairness considerations that protect attorney work product. The group believes a company should be able to share candid assessments of potential litigation claims with its outside auditors without worrying that the information would be accessible by its competitors or adversaries. However, the lower court decision was reversed by the en banc court of appeals and the Supreme Court is now being asked to weigh in on the issue (see Tensions Are Rising from IRS Victory in Textron Case).
The issues in the Textron case are extremely important to FEIs membership, and have a direct effect on all publicly held companies and their ability to prepare financial statements and efficiently file tax returns, said FEI senior director of government affairs Matt Miller. We strongly encourage the court to grant review in this case so that the court can clarify the scope of work-product protection. We hope the court will reach a decision that will allow companies to act in the best interest of their shareholders.
The Supreme Court is expected to act upon the Textron petition early this spring.
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