Corporate Tax Rate Changes on the Horizon… Again! What Utilities Need to Know

As the 2024 election season gains momentum, regulated utilities are facing the prospect of significant policy shifts that could dramatically impact their financial landscapes. Vice President Kamala Harris has recently announced that if elected, she plans to raise the corporate tax rate to 28%. This proposal has raised alarms among tax leaders and CFOs within the utility sector, as the potential changes could lead to substantial adjustments in deferred tax liabilities.

A Potential Rate Increase: The Impact of a Harris Presidency

For utilities, the calculation and management of deferred taxes are already complex tasks that require meticulous attention. With the possibility of a corporate tax rate increase, the stakes are even higher. Regulators will undoubtedly start inquiring about how utilities plan to manage and recover deficient deferred taxes—a scenario that could mirror the regulatory responses following the Tax Cuts and Jobs Act (TCJA) of 2017.

Back in 2017, when the TCJA slashed the corporate tax rate from 35% to 21%, utilities were left scrambling to adjust their deferred tax balances. The sudden change required a rapid reassessment of existing tax positions, recalculation of deferred tax liabilities, and, in many cases, renegotiation with regulators to determine how the benefits of the tax cut would be passed on to consumers. The process was arduous, time-consuming, and fraught with challenges, but it provided valuable lessons that utilities can draw upon in the face of the upcoming election.

Modern Software with Elite Services

At Lucasys, we understand the critical importance of being prepared for such regulatory and tax shifts. Our advanced solution, Lucasys Tax, is specifically designed to help utilities navigate these complex challenges with ease and precision. Lucasys Tax offers comprehensive capabilities for calculating and managing deferred taxes, ensuring that your organization is not only compliant but also strategically positioned to respond to policy changes.

With Lucasys Tax, you can:

1. Accurately Calculate Deficient Deferred Taxes: Lucasys Tax automates the calculation of deferred tax liabilities, taking into account the potential impact of a corporate tax rate increase. This allows your team to quickly assess the financial implications and develop strategies for managing them.
2. Streamline Regulatory Reporting: As regulators begin to inquire about your plans for managing deferred taxes, Lucasys Tax provides the tools needed to generate accurate, timely reports that satisfy regulatory requirements.
3. Enhance Strategic Decision-Making: Lucasys Tax offers advanced analytics and reporting features that provide insights into the financial impact of tax policy changes. This empowers your leadership team to make informed decisions about how to adjust your tax strategy and communicate with regulators.

How Lucasys Can Help

As the election approaches, it's crucial for utilities to be proactive in preparing for potential policy changes. Lucasys Tax equips you with the tools and insights needed to navigate these changes with confidence, ensuring that your organization remains resilient and responsive in a rapidly evolving regulatory environment.

Whether looking for new software of trying to get the most value out of existing solutions, Lucasys can provide insights into the latest accounting and tax issues facing the utility industry. To learn more about how Lucasys can help visit https://www.lucasys.com/solutions.