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D18448 1 (2016-09-20)

handle is hein.gao/gaobadufu0001 and id is 1 raw text is: GAOU.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 September 20, 2016 Wendy M. Payne, Executive Director Federal Accounting Standards Advisory Board 441 G. Street, NW, Suite 6814 Mailstop 6H19 Washington, DC 20548 Federal Accounting Standards Advisory Board-Tax Expenditures: Management's Discussion and Analysis and Disclosure Requirements Exposure Draft Dear Ms. Payne: This letter provides the U.S. Government Accountability Office's (GAO) comments on the Federal Accounting Standards Advisory Board's exposure draft (ED) entitled Tax Expenditures: Management's Discussion and Analysis and Disclosure Requirements. Tax expenditures are reductions in a taxpayer's tax liability that are the result of special exemptions and exclusions from taxation, deductions, credits, deferrals of tax liability, or preferential tax rates. Similar to spending programs, tax expenditures represent a substantial federal commitment to a wide range of mission areas. The ED proposes standards that would require the consolidated financial report of the U.S. government (CFR) to include narrative disclosures and information regarding tax expenditures and alert readers to the availability of published information on tax expenditure estimates, such as those published annually by the Department of the Treasury's Office of Tax Policy. The proposed standards would also encourage presentation of a selection of the major tax expenditure estimates as other information (01) in the CFR. Since 1994, GAO has recommended greater scrutiny of tax expenditures. In 2006, we reported that it was important to understand the nature and extent of exposures in long- term fiscal planning for the federal government that were not reported in the CFR. We noted that tax expenditure amounts were not required to be disclosed, nor were they disclosed, in agency or the U.S. government's consolidated financial statements.1 We further stated that enhanced reporting on tax expenditures would ensure greater transparency and accountability for revenue forgone by the federal government and provide a more comprehensive picture of the federal government's policies and fiscal position. In fiscal year 2015, the aggregate sum of tax expenditures reported by the Department of the Treasury amounted to an estimated $1.23 trillion. The sum of tax expenditure estimates is useful for gauging the general size of revenue forgone, but 1GAO, Fiscal Year 2005 U.S. Government Financial Statements: Sustained Improvement in Federal Financial Management Is Crucial to Addressing Our Nation's Financial Condition and Long-term Fiscal Imbalance, GAO-06- 406T (Washington, D.C.: Mar. 1, 2006). Page 1

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