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 (OI) in the CFR.
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