The New Jersey Division of Taxation has issued guidance for taxpayers employing International Financial Reporting Standards (IFRS) instead of U.S. Generally Accepted Accounting Principles (GAAP). Foreign entities commonly use IFRS, and it may form the basis for their taxable income on a global scale.
In cases where differences between U.S. GAAP and IFRS result in significant numerical variations, taxpayers are advised to document explanations in their records. The Division of Taxation emphasizes that taxpayers won’t face penalties solely due to these differences, recognizing the global nature of business operations.
This clarification, outlined in Technical Bulletin No. TB-101(R) on October 13, 2023, reflects New Jersey’s commitment to providing a practical framework for businesses navigating the complexities of international financial reporting standards. The state aims to foster transparency and cooperation between taxpayers and tax authorities in this evolving landscape.