All entities (PBEs and non-PBEs) are required to disclose the year-to-date amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign for each annual period presented. Further, additional disaggregated information on income taxes paid (net of refunds received) to an individual jurisdiction equal to or greater than 5% of total income taxes paid (net of refunds received) is required to be disclosed. An entity may identify a country, state, or local territory as an individual jurisdiction.
The amount of income taxes paid required to be disclosed is the net amount paid or net refund received in the period, computed as total income taxes paid net of refunds received. When determining the individual jurisdictions for separate disclosure in accordance with ASC 740-10-50-23, an entity should apply the 5% quantitative threshold by comparing (1) the absolute value of the net payment or net refund in each jurisdiction with (2) the absolute value of total income taxes paid (net of refunds received).
Although disaggregation by jurisdiction is required for each annual period presented, comparative information by jurisdiction for all years presented is not required. For example, if an individual jurisdiction is over 5% for the current annual period but did not meet the quantitative threshold in the prior annual period, the income taxes paid for that jurisdiction in the prior annual period do not need to be disclosed currently. The same principle would apply for individual jurisdictions that met the quantitative threshold in the prior annual period but are under the threshold in the current annual period—only the amount related to the prior annual period needs to be presented. See Question FSP 16-5 for materiality considerations in the income taxes paid disclosure.
The Codification does not prescribe a specific location for the income taxes paid disclosures. Given the potential for the disclosure of income taxes paid disaggregated by jurisdiction to be voluminous, we would expect that entities may elect to include all of the supplemental disclosures of income taxes paid within the income tax footnote with the other income tax disclosures required under ASC 740.
Question FSP 16-5
What types of tax payments should be included in the disclosures of income taxes paid?
PwC response
Neither ASC 740 nor ASC 230 define what types of payments/refunds constitute “income taxes paid” for the supplemental disclosure requirement. We believe that this disclosure should generally include any cash payments for income taxes made directly to or received directly from the taxing authority. However, given the lack of explicit guidance, if payments other than those made or received directly from the taxing authority for income taxes are included in the supplemental disclosure (for example, sale or purchase of transferable credits), reporting entities should consider a transparently disclosing the amounts that are included.
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