Interim Tax Provisioning Overview

A tax rate is generated at the beginning of the year for summary periods, such as Quarterly or Yearly. An Administrator or Power User can also create interim tax periods, for example, monthly or non-year end, to estimate the current and deferred taxes for the interim period, based on the Annualized Estimated Effective Tax Rate (AEETR).

You must enable Interim Provision Total AEETR and Detailed AEETR in order to use the features. If you have not already enabled Interim Provision, enable the feature using one of the following methods:

In the Application Creation Wizard, when the Interim Provision feature is enabled, you can select either Total AEETR or Detailed AEETR or both. Selection of the AEETR calculation type is mandatory to enable Interim. Enabling this feature also creates the TRCS_Interim Forecast Scenario member, which will be used for forecasting in interim provision.

Before provisioning Interim Tax, the user must enter NIBT data in the Current Provision form. After you enable Annualized Estimated Effective Tax Rate, the estimated tax rate is automatically pulled from the TRCS_InterimForecast member in the Scenario dimension. TRCS_InterimForecast is used in the following forms:

  • Current Provision Forecast
  • Deferred Tax Forecast
  • Consolidated ETR Forecast

You also need to enter the tax rate for Current and Deferred taxes manually for the TRCS_InterimForecast scenario. The system calculates the taxes using effective tax rates.

You can select the way AEETR is calculated, based on which options are selected:

  • Total AEETR - Select this option to get the value of the Total Tax AEETR from the Consolidated Effective Tax Rate for the Forecast Scenario. You have the option to make an Adjustment at the Total AEETR.

    Total Tax AEETR(%) = Consolidated Effective Tax Rate for the Forecast Scenario

  • Detailed AEETR - Select this option to display Total Tax for the Forecast Scenario by adding Current Tax and Deferred Tax. You have the option to make Adjustments to Current and Deferred Tax.
    Calculations for Detailed AEETR

    You can select Total, Detailed, or both.

The Interim Tax Provision accounts from the Application Creation Wizard (ACW) or Enable features for Interim Provision are stored under the Account Dimension, as shown below:
Tax Interim Provision Members in the Account dimension.

Interim Tax Provisioning applies to both Tax Provision National and Regional. The Annualized Estimated Effective Tax Rate (AEETR) is taken from the Consolidated Rate Reconciliation, and takes into account the Regional Tax and Federal Benefit of Regional Taxes, where appropriate. All entities participate in the calculation.

You can enter additional discrete adjustments on a tax affected basis.

If required, you can exclude loss entities from participating in the calculation for Interim Provision. See Excluding Loss Entities from Interim Provision.

The Net of the calculated tax and discrete items is considered the interim provisioned tax amount. After all information has been entered, you run Consolidation for the Interim Provision form to calculate the Total Interim Tax Provision.

Generate the interim tax provision as outlined in Generating Interim Tax Provision.