Sales and Use Tax Reserve Strategies

Description

Intense scrutiny continues unabated by revenue agencies, regulators and investors on business practices in setting reserves for uncertain sales and use tax positions. Despite this current focus, the most on-point guidance for accounting for contingencies, FASB Statement No. 5, dates back to 1975.

Controversy over FASB's first draft of the much-needed overhaul of FAS 5 has FASB staff working on a revised exposure draft reflecting issues raised in industry input. But, corporate tax executives can no longer delay their own efforts to improve the adequacy of reserves for sales tax positions.

For now, whether the sales and use tax reserving practices of the past remain acceptable is a real concern for corporate tax departments. This uncertainty is heightened by tougher Sarbanes-Oxley-driven oversight due to the financial sector crisis.

Listen as experienced sales tax advisors share their insights and current best practices for creating prudent reserves against uncertain sales or use tax positions.

Outline

1. Background on efforts to update FAS 5
   1. June 2008 publication of exposure draft
   2. 2008 and 2009 public hearings and taxpayer protests
   3. Prospects for new exposure draft by end of 2009
2. Making initial decisions about a sales and use tax reserve
   1. Identifying use tax uncertainties
   2. Identifying sales tax uncertainties
3. Background on the role of FAS 5 in setting a sales tax reserve
   1. Range of likelihoods that future events will impair or lose asset or liability
      1. Probable standard
      2. Reasonably probable standard
      3. Remotely probable standard
   2. Considering audit detection in recognizing a loss contingency
4. Background on role of FAS 109 and FIN 48 in setting a sales tax reserve
5. Loss contingencies under FAS 5
6. Key practical issues under FAS 5, based on corporate taxpayer experiences

Benefits

The panel will offer alternatives to tackle these and other crucial issues for your tax staff:

• Evaluating likely reforms from the upcoming revision of FAS 5.
• Screening criteria to reveal any red flags that would draw an auditor's attention in your company's sales tax reserves.
• Deciding which terms of FAS 5 remain relevant in today's business and regulatory environments.
• Evaluating whether it makes sense to track parts of FIN 48 for sales tax reserves.
• Calculating reserves in M&A to avoid exposure.

NASBA CPE Sponsor

Strafford is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417 or by visiting www.nasba.org.

CPE Credit

Strafford is a NASBA CPE sponsor and our live seminars qualify for CPE credits. They offer you a high quality, cost effective, and convenient CPE option, with no lost travel time or expenses.