On March 25, the FASB issued a revised proposal that would require businesses to provide more detailed income tax information. This project had been temporarily put on hold due to the sweeping tax law changes under the Tax Cuts and Jobs Act (TCJA).
With the first TCJA tax season nearing its climax, the FASB feels confident that its revised proposal will reflect all the changes the board has made since Proposed ASU No. 2016-270, Income Taxes (Topic 740): Disclosure Framework — Changes to the Disclosure Requirements for Income Taxes, was first issued.
This proposal requires businesses to separate domestic and foreign income tax data. At its February meeting, the FASB board opted to require companies to break down income tax expense or benefit and income taxes paid by federal, state and foreign amounts.
The FASB also agreed that both income tax expense and income taxes paid on foreign earnings that are imposed by the business’s country of domicile should be categorized as federal amounts, in order to minimize costs to preparers.
FASB Chairman Russell Golden agreed with the staff’s recommendations. He cited “a history of certain states taxing worldwide income of corporations headquartered in the state.… If you have foreign income tax expense and cash paid, [it] goes in the category of the jurisdiction that requires it, not where it is.”
The FASB is accepting comments until May 31, 2019. Comments may be submitted through the FASB website, by emailing firstname.lastname@example.org, or sending a letter to the address provided on the exposure draft.
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