BACKGROUND
Financial Accounting Standards Board Statement 109 "Accounting for Income Taxes" ("FAS 109") was issued over fifteen years ago in February 1992, and was recently supplemented by FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). One of the basic objectives of FIN 48 was to promote consistency and objectivity in accounting for an organization's income taxes. However, FAS 109 provides a definition of "income tax" that has been subject to varying interpretations regarding the application of FAS 109 (and FIN 48) to various specific state and local taxes. While the definition of "income tax" may be a non-issue at the federal level, such is not the case at the state or local level, where there are a myriad of taxes based on gross receipts, gross income, net worth, and combinations thereof.
For instance, is Michigan's Single Business Tax ("SBT") an income tax, a property tax, or a value-added tax for FAS 109 / FIN 48 purposes? It has been held by state courts to be something other than an income tax. Further, P.L. 86-272 has been held to be inapplicable to the SBT, and most jurisdictions that disallow a deduction for state income taxes allow the SBT as a deduction. Yet, many taxpayers and practitioners include the SBT in their FAS 109 / FIN 48 analysis. Whether or not taxes such as the Michigan SBT are deemed "income taxes" can significantly impact the scope of analysis required by companies attempting to implement FIN 48.
SURVEY
With the above background, we have created a short survey to sample how taxpayers and practitioners are addressing specific state taxes in an effort to shed some light not just on the inconsistencies associated with accounting for income taxes, but also the reasoning behind these inconsistencies. We are seeking your participation in this survey. We would like to clarify that the purpose of this survey is NOT to point out inconsistencies within any one particular group of taxpayers or practitioners, but rather to generate discussion between taxpayers and practitioners in an effort to promote consistency.
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