Dive Brief:

• The U.S. Chamber of Commerce has asked the Securities and Exchange Commission to recommend the suspension or withdrawal of new tax accounting rules issued by the Financial and Accounting Standards Board in 2023 which went into effect late last year, according to a Dec.15 letter to SEC Chair Paul S. Akins.
• 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, asserts that companies already disclose “robust amounts of income tax information” and that the additional requirements under Accounting Standards Update 2023-09 are onerous and costly.
• Companies are already working to comply with the new rules, with the 2025 annual reports that are now in the works being the first 10-Ks assembled under the updated standards. “We believe these deficiencies provide a compelling case for the Commission to recommend the withdrawal or suspension of ASU 2023-09 before companies are required to file their first annual reports thereunder in early 2026,” the letter states. 

Dive Insight:

Spokespersons for the SEC and the FASB declined to comment on the request. 

The new rules require companies to break out much more information in their reports on the income taxes they pay. For example, firms will be required to report the jurisdictions — such as a country or state — that receive more than 5% of their total tax payments. 

The Chamber of Commerce’s plea for suspension of the new rules comes roughly a month after the new standards averted another bid to shut them down. A provision that threatened the FASB’s funding if the tax standards weren’t withdrawn was not included in the final version of the spending bill signed into law last month that ended the federal government shutdown, CFO Dive previously reported. The provision called for the SEC to hold back the approval of the FASB’s budget if the new rules weren’t revoked.

The issue has put the FASB’s independence in the spotlight and the letter asserts that the new tax disclosure requirements were politically motivated. 

“Instead of being driven by a compelling need, ASU 2023-09 reflects the efforts of politically driven activists in seeking to compel firms to disclose information — using GAAP under the guise of providing decision-useful information for investors — to name, shame, or otherwise vilify companies, influence tax policy, increase taxes on businesses, and deter investment,” the letter states.  

Asked last month if there’s any possibility that the standard would be withdrawn should it come under serious pressure, FASB Chair Richard Jones did not explicitly rule out such an action but side-stepped the controversy and held firm to the standard-setter’s rule-making process.

“I can’t speculate, I can tell you we have that standard, it’s out, it’s issued, it’s effective and companies will be adopting it in this year’s year-end financials,” Jones said, noting too that the standard setting on the project is done but that the board is “always happy” to talk about the standards it sets and the reasons it sets them.