The compelling need to engage.
The Eye of the Storm
By some measures, tax professionals are in the eye the storm. While impending change swirls around us, the fall of 2005 has been relatively calm for tax executives, permitting us to work on several significant projects without being pulled off to address one crisis or another. Three major projects and several minor ones have occupied the Institute's committees the last few months. First, TEI's Financial Accounting Task Force worked diligently to prepare comments on the Financial Accounting Standards Board's exposure draft on uncertain tax positions. The release of the exposure draft (after several delays and much speculation of its terms) was somewhat anticlimactic, but the new interpretation would undeniably upend the financial accounting for income taxes and therefore was a wholly appropriate subject for TEI's attention.
The result of our task force's work is reprinted in this issue, and I commend Neil Traubenberg who has led our efforts and the other members of the task force for their stellar work. I am especially pleased that the implications of the FASB's project spurred many previously quiescent members to become engaged. While TEI is hardly alone in engaging on this important topic, I have no doubt that the work of the task force will have a positive effect on the end product (including, at a minimum, a delayed effective date).
Corporate E-Filing, Cuno, and Other Projects
The second area of involvement is corporate e-filing. From the release of the IRS's mandate in January, TEI has been front and center in meeting with both government officials and vendors, providing a reality check on what's possible and what's not, and educating our members about what lies ahead. While the IRS has regrettably indicated that it will not defer the effective date of the general mandate and has not yet issued guidance on taxpayer-specific waivers, it has yielded (as reported on TEI's website and in this issue) to requests that taxpayers be able to attach many forms and schedules as PDF files. I commend all of those who have participated in the meetings and conference calls with the IRS, moving the debate from catcalls and complaints to constructive suggestions and real progress. As is the case with the UTP project, the Institute's e-filing initiative has attracted many new members to the Institute's advocacy program, and the organization is the better for it.
Third, TEI was one of many groups that successfully urged the Supreme Court to review the Sixth Circuit's potentially disruptive decision in the Cuno v. DaimlerChrysler case. Left intact, the lower court decision could invalidate tax incentive programs throughout the United States and frustrate the States' efforts to attract business investment. The Institute's State and Local Tax Committee is at work on a follow-up brief in the case, which will be reprinted in a future issue.
Earlier in this column, I wrote that the Institute had been involved in several "minor" projects in addition to these three major initiatives. That's really a misnomer. If your company is located in Canada (or has significant operations there), there is nothing "minor" about the Canadian Parliament's annual hearing on tax and budget priorities. The Institute's testimony (reprinted in this issue) lays out a compelling case for making the Canadian tax system more competitive, and I commend our two Canadian committees--as well as Monika Siegmund, TEI's Vice President for Canadian Affairs, who delivered our testimony--for their work.
Similarly, the IRS's dual consolidated loss regulations are not "minor" to a significant number of our members. The same is true (but even more so) for the IRS's cost-sharing regulations. The Institute's comments on the former are reprinted in this issue, and on the latter will appear in the November-December issue. Again, all TEI members owe a debt of gratitude to those individuals who work so diligently and effectively on these projects.
Fundamental Tax Reform
One topic is noticeably absent from the foregoing list: fundamental tax reform. That's not because it is unimportant, but rather because of the President's decision earlier this fall to postpone the deadline for his Advisory Panel's report. Originally slated for release in the middle of the summer, the shifting of priorities wrought by Hurricanes Katrina and Rita (among others) caused the report to be deferred until the end of October. While the delay permitted the Institute (and many others) to focus on other important issues, the time to engage is now.
By the time you receive this issue of The Tax Executive, the report will have been formally transmitted to the Treasury Department and more than one interest group would have declared it "dead on arrival." It would be a mistake, however, to ignore the recommendations, because the Panel's two proposals would dramatically change the tax rules governing both individuals and businesses and thereby create both short-term and long-term winners and losers in an effort to achieve "long-term economic growth and job creation." It would be equally ill-advised to assume that "somebody else" will muster the support for (or opposition to) particular provisions. Whether one's perspective is narrow (how will this affect my company?) or broad (how will this affect my country?), tax executives need to engage. Now. TEI will be forming a task force to help direct its efforts in respect of the tax reform panel's recommendations. We would welcome your involvement.
I began this column by citing the vision of the tax executives who established TEI in 1944. All TEI members owe a special debt of gratitude to Paul Smith, the founder of the Institute. On the eve of the Institute's Annual Conference, I received a letter from Mr. Smith's son--also named Paul--which read in part as follows:
In 1944, I was away on military service and came home to find the word "TEI" a daily subject of conversation in our home ... seven days a week. TEI was an organization that my father enthusiastically and passionately believed in. He had visions of its becoming a much needed influence in tax matters.... I viewed TEI's website with a degree of pride when I studied the Institute's size and the worldwide influence it possesses. It is obvious that there have been many leaders over the past 60 years who have shared his vision and enthusiasm for all that has been accomplished by TEI.
As we move forward to address the challenges of financial accounting and fundamental tax reform--and whatever else the tax winds blow our way--may we be worthy successors to Paul Smith and the Institute's other founders.
Tax Executives Institute expresses its appreciation to the following sponsors of the Institute's 2005 Annual Conference:
ADP Tax Credit Services * Baker & McKenzie Deloitte & Touche LLP * Ernst & Young LLP KPMG LLP * Mayer, Brown, Rowe & Maw LLP McKee Nelson LLP * PricewaterhouseCoopers LLP RIA * Satis, Inc. * Sutherland Asbill & Brennan LLP Taxware, L.P. * Vertex Inc.
CrossBorder Solutions * DuCharme McMillen & Associates, Inc. * Fenwick & West LLP * Foley & Lardner LLP * Grant Thornton LLP * Jefferson Wells International, Inc. * Liquid Engines, Inc. Planitax, Inc. * TALX Corporation * TaxStream, LLC
Alston & Bird LLP * Baker & Hostetler LLP Jones Day * Miller & Chevalier Chartered Skadden, Arps, Slate, Meagher & Flom LLP Thompson Hine LLP
BDO Seidman, LLP * CBI Valuation Group, Inc. DLA Piper Rudnick Gray Cary US LLP McDermott Will & Emery LLP Ryan & Company, Inc. Wachovia Exchange Services, Inc.
Michael P. Boyle
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|Title Annotation:||financial accounting for income taxes|
|Author:||Boyle, Michael P.|
|Article Type:||President's Page|
|Date:||Sep 1, 2005|
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