Mirroring Taxpayers' Deferred Tax Accounting

by Stan Veliotis

Stan Veliotis’ article titled “Mirroring Taxpayers’ Deferred Tax Accounting” was published in the November 20, 2017, edition of Tax Notes. This special report  highlights that the failure of federal financial reporting to accrue future years’ tax-revenue effects of taxpayers’ temporary book-tax differences leads to the omission of trillions of dollars of net “federal deferred tax assets” and related distortion of true annual deficits. 

The report demonstrates that recent technological and regulatory developments have overcome standard-setters’ practicality concerns about full accrual accounting for tax revenue and argues that FDTA fits within the standard setters’ definition of “asset.” It also offers estimates of larger FDTA items and suggests how government can more precisely calculate FDTA.