Financial Executives International (FEI) has filed an amicus curiae "friend of the court" brief with the Supreme Court of the United States in support of a petition for review of the U.S. vs. Textron case. FEI urged the Supreme Court to hear arguments in this significant case which concerns whether a public company can withhold from disclosure to the IRS tax accrual work papers that reflect the company's candid self-assessment of litigation hazards, and has been vocal on this issue during the course of this case. The outcome of this case has broad implications beyond the tax field and affects every public company.

 

The petition was submitted jointly by FEI's Committee on Taxation and Committee on Corporate Reporting and prepared by the law firm Miller & Chevalier. The Committees maintain that a 2007 lower court decision in favor of Textron appropriately balances the competing interests of the IRS, the investing public, and the fairness considerations that protect attorney work product. This appropriate balancing should permit companies to share candid assessments of potential litigation claims with their outside auditors, for example, without fear that such information would be accessible by competitors or adversaries. Unfortunately, the lower court decision was reversed by the en banc court of appeals and, accordingly, the Supreme Court is now being asked to weigh in on the issue.

 

A brief timeline of the case, along with FEI's actions are as follows:

"The issues in the Textron case are extremely important to FEI's membership, and have a direct effect on all publicly held companies and their ability to prepare financial statements and efficiently file tax returns," said Matt Miller, FEI's Senior Director of Government Affairs. "We strongly encourage the Court to grant review in this case so that the Court can clarify the scope of work-product protection. We hope the Court will reach a decision that will allow companies to act in the best interest of their shareholders."

 

The Supreme Court is expected to act upon the Textron petition early this spring. A copy of the FEI brief is available upon request.

 

Financial Executives International (FEI) is an advocate for the views of corporate financial management. Its 15,000 members hold policy-making positions as chief financial officers, treasurers, and controllers. FEI enhances member professional development through peer networking, career planning services, conferences, publications, and special reports and research. Members participate in the activities of 85 chapters, 74 of which are in the United States and 11 in Canada.