Financial StatementsINTERNAL REVENUE SERVICE Notes to the Financial Statements For the Years Ended September 30, 2010 and 2009 21 Note 10.. Commitments and Contingencies The IRS is a p
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INTERNAL REVENUE SERVICE
Notes to the Financial Statements For the Years Ended September 30, 2010 and 2009
21
Note 10 Commitments and Contingencies
The IRS is a party to legal actions whose outcome, if unfavorable, could materially affect the financial
statements For some of these actions, management and legal counsel have determined the likelihood
of an unfavorable outcome is remote As of September 30, 2010 and 2009, there were no estimated
contingent liabilities arising from these actions
For some of the legal actions to which the IRS is a party, management and legal counsel cannot
determine the likelihood of an unfavorable outcome nor can any related loss be reasonably estimated
The IRS does not accrue for possible losses related to cases where the potential loss cannot be
estimated or the likelihood of an unfavorable outcome is less than probable As of September 30,
2010 and 2009, there were three cases and two cases, respectively, for which management and legal
counsel are unable to determine the likelihood of an unfavorable outcome or establish a range of
potential losses
The IRS has pending refund claims and lawsuits relating to whether the FICA tax is owed on stipends
paid to medical residents for their services prior to April 1, 2005 It is probable these claims and
lawsuits will result in a loss to the Federal government An estimate of the potential loss cannot be
made
As of September 30, 2010 and 2009, the IRS does not have contractual commitments for payments on
obligations related to canceled appropriations
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