IMA FRC comment letter response to proposed ASU on income tax disclosures

Tuesday, May 30, 2023

The IMA® (Institute of Management Accountants) Financial Reporting Committee (FRC or Committee) issued a comment letter in response to the Financial Accounting Standards Board (FASB or Board) Proposed Accounting Standards Update (ASU) No. 2023-ED100, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (Proposal or Exposure Draft).

The FASB issued the Proposal with the objective of responding to investor needs for increased transparency and improved disclosures related to income taxes.

In its response, the Committee states that the proposed guidance is, for the most part, clear and operable. However, the FRC also believes that the Proposal would be improved by refining certain aspects to enhance operability and yet retain the goal of increased transparency. These suggestions primarily focus on two issues:

  • Continuing the current guidance that permits the reporting of unrecognized tax benefits in the rate reconciliation as a total rather than disaggregation by jurisdiction.
  • Permitting entities to report annual taxes paid rather than adding an interim reporting requirement. 

In alignment with these views, the FRC provides detailed responses to the specific questions posed in the Exposure Draft.

Read the Letter