Bill Calls For Public Companies To Divulge Tax Data

by Mike Godfrey, Tax-News.com, Washington

26 May 2006

A bill has been introduced into the House of Representatives that would require companies in the US to report income tax data in their annual filings with the Securities and Exchange Commission.

The 'Honest Income Disclosure Act of 2006,' sponsored by Rep. Paul Gillmor (R-Ohio), would require corporate income-tax data for the prior year to be included in a prominent location in the company's annual report.

According to Gillmor, some companies are using what he termed "funny math" to arrive at the income figure they report for tax purposes, and he is of the view that shareholders would benefit by being given an accurate picture of corporate tax payments.

He also claimed that the figures a company reports to the IRS may be "a more predictable indicator of a company's health" than the results contained in SEC reports.

However, the idea of side-by-side company reporting is hugely controversial and raises questions of taxpayer privacy. Currently, the US Tax Code prohibits the disclosure of taxpayer information, except in very limited circumstances.

Nonetheless, it is an idea that has recently been discussed by the country's most senior regulators. Earlier in the month, SEC chairman Christopher Cox revealed in an address to the National Press Club that he had talked about the idea of simultaneous tax and earnings reporting with IRS chief Mark W. Everson.

However, Cox was keen to stress that the discussion was nothing more than "intellectual R&D" and later told a Congressional committee that the idea is favored more by the IRS than the SEC.

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