The FASB on May 14 issued a proposed Accounting Standards Update—Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (the proposed ASU). This proposed ASU, part of the FASB’s overall Simplification Initiative, is intended to reduce costs and complexity in accounting for income taxes while improving the usefulness of the information provided to users of financial statements.
The FASB requests comments on the proposed ASU by June 28, 2019. The method of application of the ASU will vary, with some amendments applied on a retrospective (or modified retrospective) basis and others applied on a prospective basis. The effective date of the ASU will be determined after the FASB considers feedback from stakeholders.
Companies that apply US Generally Accepted Accounting Principles for financial reporting purposes may be impacted by the proposed ASU. The removal of certain exceptions to the existing principles in ASC 740 may require updates to tax processes and controls.
Companies should consider providing feedback to the FASB during the comment period, which ends on June 28, 2019, and should continue to monitor developments as the FASB receives feedback from stakeholders.
US Tax Accounting Market Leader, PwC US