Tax Abatements under GASB Statement 77

Exploring the Effects of the New Disclosure Rules

B. Anthony Billings, PhD, Jeanette A. Boles, MST, and Kyungjin (KJ) Kim, MST

In BriefIn recent years, many state and local governmental units have entered into agreements with businesses that offered them tax incentives to establish new facilities (e.g., new branches, stores, headquarters, manufacturing facilities) in their jurisdictions. In exchange, the businesses contributed to economic development and job creation. In an effort to make information about such tax abatement agreements transparent, GASB released Statement 77, Tax Abatement Disclosures, in August 2015. This article discusses the definition of tax abatements, the disclosure requirements and scope of GASB Statement 77, and its consequences for state and local governmental units.