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Open Year Tax Disclosure Footnotes No Longer Needed

Published on: 13:55PM May 28, 2015

Many of our farm operations prepare financial statements with footnotes.  These are usually needed for their bank loans, but in many cases, the farm operation is large enough that they would like to provide good financial information to both their lenders and their owners (even if they are all family members).

One of the requirements of these footnote disclosures in the past was a listing of all of the open tax years that were in effect as of the balance sheet date.  For example, if we had a farmer prepare a set of financial statements as of December 31, 2014, the disclosures might list that the open tax years were 2011-2014, etc.

This requirement is no longer applicable.  The Center for Plain English Accounting (CPEA) successfully led an effort to eliminate this requirement and unless the company has a large uncertain tax position, they are no longer required to list those open years.  This should be welcome news to both farmers who prepare financial statements and accounting firms.  There was considerable confusion and controversy regarding this provision and now it should no longer apply.