The GASB issued an exposure draft, Tax Abatement Disclosures, for public comment in October 2014. The period for public comment ended just a couple of weeks ago and now the Board will evaluate comments and may issue a new statement this August that will provide guidance on how governments should disclose tax abatements.
The proposed guidance will address tax abatements (reductions) that result from agreements entered into by the reporting government that reduce the tax revenue of the reporting entity.
Governments generally agree to abate, or reduce, the taxes of businesses or other taxpayers to promote economic development, job growth, redevelopment of blighted or underdeveloped areas, and other actions that are beneficial to the government or its citizens.
Specifically, the proposed tax abatement disclosure requirements would include:
- The tax being abated
- Criteria that must be met for the taxpayer to be eligible for the abatement
- Provisions for recapturing abated taxes
- The types of commitments made by tax abatement recipients
- Number of tax abatement agreements
- Dollar amount of taxes abated
- Other commitments made by a government, such as to build infrastructure assets.
If you would like more information on the proposed changes or other upcoming projects from GASB, you may visit their website at GASB.org
By Jeffrey Patterson, CPA, MBA