Tax Notes Today spoke with Peter A. Barnes at a seminar on corporate social responsibility, hosted by New York University School of Law. The discussion focused on the possible effects of partial disclosure of income tax returns for publicly traded corporations. Publication of returns could cause readers to find weak positions and suggest audit strategies to the IRS. For the complete article, please visit Tax Notes Today's website (subscription required).
Excerpt taken from the article "Should Corporate Tax Returns Be Disclosed" by Lee Sheppard for Tax Notes Today.
Peter Barnes, recently retired from GE, argued that disclosure of APAs would discourage participation in a valuable program that functions as "an audit before you do the transaction."
Barnes, citing continuous auditing of large corporate taxpayers, argued that the implication of the argument for disclosure is that IRS agents are not doing their jobs adequately. Returns are difficult for nonprofessionals to read and don't contain important items like transfer pricing methods.
Barnes argued that naming is necessarily shaming, admitting that Twitter is not the best way for executives of shamed companies to respond to criticism of their tax planning.
Barnes argued that if corporations are to suffer opprobrium for tax planning, then so too should individuals who follow questionable advice from personal finance magazines. He pointed out that the largest companies are under continuous IRS audit -- GE has IRS agents on its premises every day who have the opportunity to issue information document requests for explanations of return positions.
Barnes responded that corporations understand the need to maintain a cooperative relationship with governments.