In a sense financial reporting and taxes are analogous to a sprinter and a marathon runner─Usain Bolt and Haile Gebrselassie, opposing branches of a single tree. Regulations on financial reporting exist to standardize the earnings reporting process, consciously acknowledging that companies possess a deep corporate desire for continuous and consistent financial growth. Tax regulation, housed on IRS pillars, however, is designed to battle a much different dilemma. Corporations, both domestic and abroad, spend heavily in an effort aimed at tax avoidance. The difference in intent is startling, and in the wake of the house tax reform proposal, financial reporting standards and tax regulation seem further apart than ever.
The tax reform proposal released on June 24, 2016 by the House Ways and Means Committee, “A Better Way Forward on Tax Reform” was designed to promote national growth across commercial and individual spectra. The details of the proposal and its potential tax impacts have been discussed ad nauseum, but the effects of the blueprint could extend far beyond the tax realm:
Reform on Our Doorsteps
Treasury Secretary Steven Mnuchin, in an interview with CNBC’s Becky Quick on February 22nd, 2017, stated "we want to get this done by the August recess" when asked about a target date for tax reform. It is welcomed news for many analysts who believe that U.S. corporate tax reform is long overdue, and that it will assist U.S. companies to compete on an equal playing field with their foreign competitors. However, like nearly all legislation, the aggregate effects often swim in murkier waters.
By: Todd Cheney, CPA, Accounting Policy and Practice Editor
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