The AICPA recommendations on tax policy and advocacy will deliver results in 2020

This year, AICPA’s tax advisory efforts have focused on helping the profession and taxpayers in various areas of tax administration and tax policy. As the coronavirus pandemic hit the world, the AICPA focused on issues that benefited tax professionals and taxpayers, while advancing the profession as a whole.

Tax Management, Payment, Penalty and E-Signature Facilitation During the COVID-19 Pandemic:

• Besides being successful advocating for postponing April 15 and other deadlines for filing taxes and payments to July 15, the AICPA also effectively urged the IRS to provide electronic signatures on key forms by the end of 2020, and served the state CPA companies in working together as a resource for their state tax authorities. As AICPA requested, the IRS recently extended electronic signature facilitation collection-related questions and further different 2020 forms until June 30th, 2021.
• The AICPA informed the IRS on the magnitude of the impact, the impact and the need for relief from the September 15 e-filing outage that some practitioners experienced, and successfully encouraged the IRS to do a clarifying statement explanatory timely filing relief for returns submitted by September 17th and immediate guidance for practitioners.
• AICPA helped facilitate state-level aid by sharing recommendations with CPA companies to support their strong advocacy with state tax authorities for tax filing and payment extension, e-signature exemption, and tax penal exemption.

Federal COVID-19 Aid Programs and Small Business Recovery Efforts:

• At the request of key members of the Congressional Committee, the AICPA offered dozens of ideas and suggestions for legislative options for government relief for businesses large and small.
• As the IRS issued Note 2020-32 for the tax treatment of expenses and forgiveness of the Paycheck Protection Program (PPP), the AICPA still has to press for the deductibility of PPP costs. Earlier this month, the AICPA and all 54 state and territorial corporations and more than 560 national and local business organizations pushed Congress immediately passes a bill to waive PPP costs. The AICPA also has the profile for that Requirement for sec. 501 (c) (6) Involvement of companies in the PPP, including working with state CPA societies to write to congressional delegations. The PPP cost deductibility was included in the $ 900 billion COVID-19 relief bill passed on December 21, 2020, enacted by President Donald Trump on December 27.
• Through letters and discussions with the IRS, the Treasury Department, and the US Small Business Administration, the AICPA developed relationships with government officials who have succeeded in issuing guidelines on the Employee Loyalty Credit, Sick leave and sick leave credit, and PPP lending.
• The IRS also provided installment relief for COVID-19, as requested by the AICPA in July Letter on penalties, and in the press release IR-2020-248, made it easier for the IRS to enter into payment arrangements and offered additional facilities for taxpayers struggling with tax debt.

Implementation of the Tax Cuts and Jobs Act (TCJA):

• The AICPA transmitted TCJA-related recommendations Proposed Regulations on Siloing Taxable Income of Independent Companies (UBTI) – the new rule that losses from a trade or business of a tax-exempt organization cannot be offset against income from a separate trade or business. the Final provisions This includes the introduction of a high-level two-digit code system of the North American Industrial Classification System (NAICS), which is in line with the recommendation of the AICPA and allows taxpayers to use the highest level of aggregation. The final regulations also remove the restriction on changing NAICS codes when the identification of a separate trade or business changes, which is also recommended by the AICPA. In addition, the AICPA made recommendations reinforcing the intention to treat the investment activities of an exempt organization as a single trade or business, which was also reflected in the final regulations.
• The AICPA provided Recommendations for Abroad-Derived Intangible Income (FDII), which can be found in the Final provisions. The regulations published on p. 250 in July 2020 discuss situations in which individuals have a Sec. 962 Choice of an amended declaration.
• AICPA recommendations on the university foundation excise tax were in the Final provisions, which excludes interest income and student loan rental income from the definition of gross investment income, and removes the proposed justification rule while eliminating the need to specify an increase in a partner’s share of the fundamentals of partnership assets.
• AICPA recommendations (from June 2020 and October 2018) on the excess deductions made by a beneficiary upon the dissolution of a trust or estate suggested and Final provisions as. The regulations allow §. 67 (e) Expenses that are deductible in calculating the Adjusted Gross Income (AGI) of the trust or estate are also deductible in calculating the AGI of the beneficiary subsequent to the assets of the trust or estate and the rules clarify the effective Date showing that Sec. 67 (g) applies to tax years beginning after December 31, 2017 and therefore does not apply to any tax year of an estate or trust beginning before that date.
• The Treasury Department and the IRS did the AICPA recommendations on food and entertainment costs in Final provisions which allow the deduction of 50% for meals if there is a separate invoice from the inadmissible deduction for entertainment.

Partnership audits: The AICPA worked with state CPA firms in successfully passing partnership review legislation, which generally follows the Multistate Tax Commission (MTC) Model Act 2020 in four states (Iowa, Kentucky, Missouri, and Virginia) and joins five other states that follow it previously enacted (California, Georgia). , Ohio, Oregon and West Virginia).

Tax capital statement: The IRS thanked the AICPA for their serious and thoughtful comments, and the IRS 2020 Form 1065, US income income from partnerships, Draft instruction Reflected AICPA’s recommendations on the new tax capital disclosure requirement in response to the IRS Note 2020-43. The 2020 draft Form 1065 requires the transactional approach to the tax base method to calculate opening balances.

Removed Language for Charitable Contributions from Qualifying Business Income (QBI) calculation: In one Comment letter The AICPA stated to the IRS that charitable contributions to Sec. 170 (c) Organizations are not business expenses within the meaning of Sec. 162 and QBI do not reduce. At the beginning of October, the IRS followed the recommendation of the AICPA and published Draft instructions for the 2020 form 8995, Simplified calculation of the qualified company income allowance, with a paragraph explaining how QBI is determined that no longer contains the reference to charitable donations.

In other advocacy news:

The letter from the Supreme Court includes a mention of the AICPA’s state tax guidelines: By doing Supreme Court letter of the defendant In the case of the New Hampshire versus Massachusetts, the AICPA’s State Tax Guidance Chart is cited for reference: “See American Institute of CPAs, State Tax Filing Guidance for Coronavirus Pandemic (last updated December 7, 2020), tinyurl.com/sz2e5rw (Collection of COVID-19 tax measures by states by date). “

–Nekose Wills is Manager – Advocacy Communications for the Association of International Certified Professional Accountants. To comment on this article or suggest an idea for another article, contact Ken Tysiac ([email protected]), the YofAthe editor-in-chief.