FIN 48 and Tax Compliance

We develop a model to examine the effects of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), on the strategic interaction between publicly traded corporate taxpayers and the government. Several of our findings contradict conject...

Full description

Saved in:
Bibliographic Details
Published in:The Accounting review 2010-09, Vol.85 (5), p.1721-1742
Main Authors: Mills, Lillian F., Robinson, Leslie A., Sansing, Richard C.
Format: Article
Language:English
Subjects:
Accounting standards
Applied economics
Corporate taxation
Disclosure
FASB Interpretations
FASB standards
Finance
Financial accounting
Financial liabilities
Financial reporting
Financial statements
Income tax
Income taxes
Regulation
Tax audits
Tax benefits
Tax liabilities
Tax returns
Taxes
Taxpaying
U.S.A
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We develop a model to examine the effects of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), on the strategic interaction between publicly traded corporate taxpayers and the government. Several of our findings contradict conjectures voiced by members of the business community regarding the economic effects of implementing FIN 48. Specifically, taxpayers with strong facts obtain higher expected payoffs from uncertain tax benefits and some disclosed liabilities understate the expected tax liability. Consistent with the common conjectures, however, some taxpayers are more likely to be audited or are deterred from entering into transactions that generate uncertain tax benefits because of FIN 48.
ISSN:0001-4826
1558-7967
DOI:10.2308/accr.2010.85.5.1721