The recent emphasis on tax risk adds to several other corporate governance and risk proposals put forth by the U.S. Congress and the U.S. Securities and Exchange Commission (SEC), indicating a continued focus on increased expectations for board oversight responsibility. While board oversight of tax management is not new, what is new is the implication by the commissioner of the IRS that the adequacy of the scrutiny afforded tax matters at the board level might influence decisions with respect to the resources that could be devoted to an IRS audit.

This KPMG LLP Public Policy Alert explores board oversight of tax management, specifically the need for boards in general, and audit committees in particular, to take immediate steps to incorporate tax oversight into the corporate governance process.

The issue of board engagement in tax matters has not typically been a high priority in U.S. business circles. Other countries have, however, been exploring this path for some time. Tax administrators around the world are implementing a vision articulated by the Forum on Tax Administration set up under the auspices of the Organisation for Economic Co-operation and Development (OECD).