U.S. Tax Reform Financial Reporting and Audit Considerations
On Wednesday December 20, 2017, the House and the Senate passed the tax reform legislation that had been referred to as the “Tax Cuts and Jobs Act”. The legislation passed contained three amendments from the previously published H.R. 1 bill agreed upon by the House and Senate conference committee. These amendments were required to ensure that the bill did not violate the Senate’s Byrd Rule. The bill’s short title was removed. That means the bill will not be known as the “Tax Cuts and Jobs Act” but rather as “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018”. The bill will now makes its way to the President for final review and signature.
The bill proposes significant legislative changes to the tax system, which includes substantial international tax reform. When enacted, this will be a major overhaul of the Internal Revenue Code (“IRC”) that will impact every taxpayer in the U.S. The implications are far reaching, and include considerable impacts on financial statement reporting.
There is not much time left to start planning and properly preparing to account for all the implications tax reform will have on financial statements. We have summarized in this alert the key considerations for financial reporting. A more detailed analysis is forthcoming.