Reckoning with Tax Risk

51 Pages Posted: 13 May 2023

See all articles by William E. Foster

William E. Foster

University of Arkansas - School of Law

Date Written: February 10, 2023

Abstract

Whether a business is engaging in a major transaction or simply conducting day-to-day operations, it must address tax questions and take positions based on available authority and its appetite for risk. With enough research, most tax questions are answerable at a high level of comfort, but many are not. This article looks at how businesses deal with the latter scenario. It examines how businesses manage tax risks, big and small, remote and imminent, and it reviews the evolving toolbox for those seeking to contain the downside potential when making judgment calls in the absence of direct authority. This article describes the traditional toolkit for addressing tax risk before examining the emerging market for tax insurance. It considers the benefits of growth in the tax insurance market while questioning whether the proliferation of private solutions like tax insurance could exacerbate uncertainty caused by a relative dearth of publicly available guidance and potentially undermine certain constraints on tax practitioners.

Keywords: Tax, insurance, risk, tax insurance, tax controversy, mergers and acquisitions

JEL Classification: k34, k22

Suggested Citation

Foster, William E., Reckoning with Tax Risk (February 10, 2023). Virginia Tax Review, Vol. 42, No. 473, 2023, Available at SSRN: https://ssrn.com/abstract=4444760

William E. Foster (Contact Author)

University of Arkansas - School of Law ( email )

260 Waterman Hall
Fayetteville, AR 72701
United States

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