As economic turmoil deepens in countries abroad, it may get even tougher for public companies to assert that their foreign earnings are permanently invested in overseas havens, safe from U.S. federal tax.
Securities and Exchange Commission staff members recently renewed their warning that they are scrutinizing claims by multinational companies about overseas earnings that are never brought back to the parent company's balance sheet.
During routine filing reviews, the staff is studying whether companies are complying with Accounting Standards Codification Topic 740, Accounting for Income Taxes, which requires companies to establish a deferred tax liability for foreign earnings that will eventually be subject to U.S. tax when repatriated, or brought onto the parent company's U.S. balance sheet. SEC staff discussed their latest concerns at a recent meeting of the Center for Audit Quality's SEC Regulations Committee.
According to U.S. tax rules, foreign... To get the full story, subscribe now.