GASB believes that adhering to the proposed rules would help interested parties understand how tax incentive programs affect the government’s future ability to raise resources and meet financial obligations. The public comment period ends January 30, 2015. Under the proposed rules, state and local governments would include the following information in the notes to their financial statements:
- descriptive information, including
- each tax abatement program’s purpose,
- the abated taxes,
- recipient or project eligibility criteria
- the mechanisms for abating the tax,
- the recipients’ commitments,
- and the conditions under which recipients must repay abated taxes (“clawbacks”);
- the number of abatement agreements the government has entered into; and
- the amount tax revenues that was forgone or were reduced under the abatement agreements.
GASB is an independent, nonprofit organization that develops standards of accounting and financial reporting for state and local governments. But its standards do not have the force of law, and GASB has no enforcement authority. Some states though have enacting laws incorporating GASB standards and enforce them through the audit process, when auditors render opinions on the fairness of financial statements.