AICPA Tax eAlert - January 28, 2009 - Tax Briefing for State Society Leaders

This episode is a re-release of the AICPA Tax Briefing for State Society Leaders conference call that took place January 12 - 13, 2009. Below, please find a summary of the major points covered in the call.

FIN 48—There are two important FASB requirements for accounting for uncertain tax positions of non-public companies that your firm needs to do right now, and as the tax person in your firm or business, you’ll undoubtedly be involved. On October 15, 2008, FASB deferred the effective date of FIN 48 (Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes) for all non-public companies for one year, until 2009 for calendar-year companies. However, that means that in January of 2009, calendar-year private companies should complete a FIN 48 analysis of their year-beginning tax positions so that they can record the effect of the change in accounting method at the end of 2009. This analysis could be “backed into” later in the year, but as time passes it will be more difficult to recall all tax positions (not just those that are unlikely) for all types of taxes for all open years in all jurisdictions and what the level of certainty and values were under the law at the beginning of the year. So if a company has not already done this analysis and if it wants to report in accordance with GAAP, the earlier it starts now, the better.

Another new FASB requirement relates to 2008 financials and any interim 2009 financial statements. A FASB Staff Position (FSP) was issued on December 30 that added reporting requirements for private companies that elect to defer the effective date for the adoption of FIN 48. Specifically, they must explicitly disclose that they are electing to defer the effective date and also disclose the company’s accounting policy for evaluating uncertain tax positions. This applies to 2008 financials and interim 2009 financials, until FIN 48 is adopted. The FSP doesn’t discuss specifics, but unless a company has something unusual, we hope that some standard language will suffice, such as “Management has elected to defer the application of FAS FIN 48, Accounting for Uncertain Tax Positions in accordance with FSP FIN 48-3. The Company will continue to follow FAS 5, Accounting for Contingencies, until it adopts FIN 48.” Additional information on FIN 48 for private companies is included in the February issue of The Tax Adviser magazine that most Tax Section members receive.

Tax Practice Guides and Checklists—Tax section members receive an annual package of over 600 pages of engagement letters, organizers, checklists, and other practice guides, and they’re now posted online . These include return-specific checklists for preparing and reviewing tax returns. Some forms checklists come in simple and complex versions so that, for instance, you don’t have to use a complex individual return checklist for a child’s return. These practice guides are carefully prepared and reviewed by fellow practitioners for your use. They are up-to-date through the Emergency Economic Stabilization Act of 2008, and subsequent developments will be reported in your Tax Section E-Alerts. In prior years, we sent a CD-ROM version of the checklists, but to avoid delays in scribing and mailing the CDs and with most members now having broadband internet, this year we’re only distributing the checklists. You’ll have to log on and be recognized as a tax section member to access this premium web content, and if you’re not a member, you can join online at aicpa.org/tax or on the phone at 800/513-3037. Each document may be downloaded to your computer directly allowing you to use any or all of the Practice Guides and checklists at your convenience and without requiring you to be logged on to the AICPA web site. A “one click” option allows you to download the entire package in a few moments directly to your computer.

Audio E-Alerts—Tax Section member receive bi-weekly emailed e-alerts that report cur(continued)