The impact of tax law uncertainty on the development of the Sarbanes-Oxley auditor independence rules with regard to tax shelters

William D. Terando and James M. Kurtenbach

Research in Accounting Regulation, 2009, vol. 21, issue 2, 118-124

Abstract: The paper examines the impact of tax rule uncertainty on the development of the Sarbanes-Oxley auditor independence rules. We show that the inability of Congress to articulate a concise and agreed-upon tax shelter definition forced the SEC to adopt their own definition that incorporates two characteristics common to most tax shelters: contingent fee arrangements and confidentiality. We also consider whether this definition eliminates the subjectivity in the tax shelter identification process because it reinstates the significant purpose standard (used for tax enforcement purposes) to assist auditors (and their public company clients) identify tax shelter transactions. We conclude that the new definition has reduced the incentive of auditors to provide tax related services to their public company clients.

Keywords: Tax shelters; Sarbanes-Oxley; Economic substance doctrine; Confidential transactions; Contingent fees; Significant purpose; Aggressive tax position (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reacre:v:21:y:2009:i:2:p:118-124

DOI: 10.1016/j.racreg.2009.06.006

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