Tax Advice After Sarbanes-Oxley
Tax Advice After Sarbanes-Oxley
Tax services have been prominent in the news lately, as Congress, the SEC, the investing public and tax professionals have debated the breadth of tax-related services that accounting firms can or cannot provide to their audit clients under the Sarbanes-Oxley Act of 2002. Scrutiny has also been and will continue to be given to aggressive tax strategies undertaken in the quest for profit maximization and stock appreciation.
Sarbanes-Oxley requires explicit advance approval by a public company’s audit committee for the firm’s outside auditor to perform non-audit services, including tax services, that are not otherwise prohibited by the Act. On January 22 the SEC adopted final rules that make the audit committees responsible for exercising discretion as to whether tax services should be performed by the auditor, giving careful consideration to the potential impact on the independence and impartiality of the audit. The SEC considered and rejected rules that would have prohibited auditors from rendering certain services involving tax minimization strategies, advocacy and legal opinions.
Audit committees can be expected to devote intense attention to obtaining capable and balanced tax advice and to confirming that their companies have the right safeguards in place to assure that high-stakes tax decisions are independently scrutinized. In this environment, as companies rethink the manner in which they use outside auditors and other advisors in evaluating tax strategies and handling tax controversies, Caplin & Drysdale would welcome the opportunity to add its expertise to the mix.
Caplin & Drysdale is all about tax law, independent legal judgment, and knowledge and experience in the tax area gained through its members’ many years of government service and private practice. Since our founding almost 40 years ago by former IRS Commissioner Mortimer Caplin, we have designed tax solutions for clients in the context of complex financial transactions, acted as a sounding board for members of corporate tax and legal departments, and provided an independent review and analysis of proposed transactions. An important element of our capabilities is experience and frequency of dealing with government tax officials – a benefit to clients who are planning transactions, seeking rulings from the IRS, or trying to resolve tax controversies.
As one of the few remaining independent tax firms in the country, with over 35 tax lawyers practicing under one roof, we offer something unique in this era of mega-firms. We staff our cases efficiently so that our clients always have direct access to the working partner in charge of the matter. At the same time, our full cadre of tax attorneys, each with knowledge and experience in particular substantive and procedural areas, is available for consultation. We are proud to offer large-firm know-how and experience combined with the accessibility, nimbleness, and efficiency that characterize a legal boutique.
In this era of heightened scrutiny of corporate tax strategies by governments and the media, Caplin & Drysdale can add knowledge, judgment and experience to the review process, either as consultants to the tax professionals employed by your company or as advisors to senior management and the audit committee. Please consult other parts of our website for information on our practice areas and attorneys. Questions about technical aspects of Sarbanes-Oxley can be directed to Chris Rizek.