FLORHAM PARK, N.J., Jan. 27 /PRNewswire/ -- Financial Executives International (FEI) today 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 filed today 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:
- August 29, 2007 – The Federal District Court in Rhode Island held that the tax accrual work papers of Textron, Inc., (NYSE: TXT) based in Providence, RI, were protected by attorney work-product protection and denied the IRS access.
- April 4, 2008 – FEI's Tax Committee and Committee on Corporate Reporting filed an amicus curiae brief in the U.S. Court of Appeals for the First Circuit in support of the District Court's decision.
- January 21, 2009 – A panel of the U.S. Circuit Court of Appeals for the First Circuit issued its ruling, which affirmed the District Court's holding that Textron's internal tax accrual work papers are privileged material.
- March 25, 2009 – The First Circuit granted a motion for rehearing en banc and vacated the court's earlier opinion affirming the lower court.
- August 13, 2009 – The full First Circuit, by a 3-2 vote, held that Textron's tax accrual work papers are not protected work product.
- December 24, 2009 – Textron filed a petition for certiorari seeking Supreme Court review of the First Circuit's decision.
- January 27, 2010 – FEI's Tax Committee and Committee on Corporate Reporting file amicus curiae brief with the Supreme Court of the United States in support of a petition for review of the case.
"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.
About Financial Executives International (FEI)
Financial Executives International (FEI) is the leading 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.
For more information on FEI, visit www.financialexecutives.org.
SOURCE Financial Executives International