FASB Income Tax Disclosure Rules Face First Annual Report Season Scrutiny: U.S. Chamber Urges SEC to Recommend Suspension or Withdrawal
The U.S. Chamber of Commerce recently wrote to the U.S. Securities and Exchange Commission (SEC), requesting that it recommend suspending or withdrawing the income tax disclosure rules (ASU 2023-09) issued by the Financial Accounting Standards Board (FASB) in 2023. The Chamber believes existing disclosures are sufficient, the new rules impose a heavy burden, and questions their political motivation. The rules took effect at the end of 2025, and companies will first fully apply them in their initial annual reports filed in early 2026.
Key Takeaways
- The U.S. Chamber of Commerce sent a letter to SEC Chairman Paul S. Atkins on December 15, asking the SEC to recommend suspending or withdrawing the new income tax disclosure rules issued by the FASB in 2023, which took effect at the end of 2025.
- The letter, signed by Mike Flood, Senior Vice President of the Center for Capital Markets Competitiveness, and Watson McLeish, Senior Vice President of Tax Policy, claims that companies already disclose "substantial income tax information" and that the additional requirements of ASU 2023-09 are "burdensome and costly."
- Companies are already working to comply, and the 2025 annual reports (i.e., the documents currently being prepared) will be the first 10-K filings under the new rules. The letter states: "We believe these deficiencies provide the Commission with ample reason to recommend suspending or withdrawing ASU 2023-09 before companies submit their first annual reports in early 2026."
Deep Dive
Spokespeople for the SEC and the FASB declined to comment on the request.
The new rules require companies to provide a more detailed breakdown of the income taxes they pay in their reports. For example, companies must report jurisdictions (such as countries or states) where their tax payments exceed 5% of their total tax payments.
The Chamber's suspension request comes about a month after the rule narrowly escaped another repeal attempt. Previously, a provision in a bill that threatened FASB funding—which would have required the SEC to suspend approval of the FASB's budget if the rule were not withdrawn—was not included in the final spending bill signed into law late last year that ended the federal government shutdown. CFO Dive previously reported on this.
The issue has brought the FASB's independence into focus. The letter states that the new income tax disclosure requirements were politically motivated.
"ASU 2023-09 does not stem from a pressing need, but rather reflects the intentions of political activists who seek to force companies to disclose information under the guise of GAAP and the pretense of providing useful information to investors, in order to name, shame, or discredit companies, influence tax policy, increase corporate tax burdens, and hinder investment," the letter states.
Last month, when asked whether there was a possibility of withdrawal if the standard faced significant pressure, FASB Chairman Richard Jones did not explicitly rule out the possibility but avoided the controversy and stood by the board's standard-setting process.
"I can't speculate; I can only tell you that we have issued the standard, it is effective, and companies will adopt it in their year-end financial statements this year," Jones said, noting that the standard-setting work on the project is complete, but the board is "always open" to discussing the standards it sets and the reasons for setting them.