Historia

IRS PLAN TO UNCOVER COMPANIES TAX STRATEGIES

Every year, thousands of the nation’s largest corporations are required report to the I.R.S. whether they, have reduced their tax bills by using questionable accounting strategies.

They have to supply an estimate of how they might owe if those strategies failed to withstand an audit.

They even have to set aside enough money to pay thegovernment if their claims are found to be improper.

But the corporations are not obliged to reveal precisely what those uncertain tax positions are and if the I.R.S. does not manage to ferret them out challenge them before the three-year statute of limitations expires, the companies can Keep the money.

Now, the Internal Revenue Service is calling an end to the game. Beginning next year, the agencyplans to mandate that corporations also provide a brief description of their uncertain tax positions and their rationale, offering essentially a road map for its auditors.

The stakes are enormous. According to one law firm‘s analysis of the most recent filings with the Securities and Exchange Commission, the companies in the fortune 500 this year reported more than $200 billion in uncertaintax position exceeding the $138 billion paid in corporate taxes last year. At least 40 companies exceeded $ 1 billion in such reserves: Microsoft`s was $5.4 billion; Bank of America reported $5.2 billion; the American International Group listed $4.8 billion; and Goldman Sachs, $1.9 billion.

Douglas H. Shulman, the I.R.S. commissioner, who and is promoting the plan, which has rattled theaccounting world, said it was intended to make tax collection more efficient and to urge businesses to comply more closely with the law. While some companies may pay more taxes, Mr. Shulman acknowledged, the new procedures would also help businesses by encouraging Congress and the I.R.S. to clarify ambiguous portions of the nation`s convoluted tax code more quickly.

“We are moving away from what Iwould describe as a contentious relationship, where we spend too much of our time identifying issues, to one where we the issues from the outset and spend our time engaging on appropriate issues,” Mr. Shulman said.

Though transparency may be considered a virtue by the person collecting taxes, it is viewed as a menace to the people whose job is to minimize them. Mr. Shulman`s initiative, which evenhis critics concede he has the authority to enact, has set off an anguished response from corporations and accountants. They predict that it will make a cumbersome system even more costly and confrontational.

David A Lifson, former president of the New York State Society of Certified Public Accountants, cautions that the will allow tax authorities to bully taxpayers by. According to S.E.C.filings, at least 11 corporations reported last year that their potential tax liabilities totaled 10 percent or more of their revenue. Starwood Hotels and Resorts posted a $999 million tax reserve, 21 percent of its revenue of $4.7 billion; Agilent Technologies reserved $930 million, 21 percent of its revenue of $4.48 billion.

After he was sworn in as commissioner in 2008, Mr. Shulman found thatauditors sometimes spent 2.5 percent of their time searching often in vain for what those positions might be. He decided that more disclosure would eliminate “a tremendous wastes of time for the auditors the taxpayer.”

As now written, Mr. Shulman`s plan would force corporations to file a new form, schedule UTP, providing a concise description of any uncertain positions and their rationale forclaiming them Mr. Shulman has said repeatedly that the I.R.S. will use the information to determine which tax rules are causing confusion, rather than to single out specific businesses for an audit.

I.R.S. officials say they do not know the total amount of uncertain tax positions reported by United States corporations. Even if they did, it would be difficult to project how much the government...