The Congressional and Political Affairs Team often assists the Tax Team with tax legislation and policy issues, and advocates about them to Members of Congress and other key policymakers on behalf of the profession. Below are several significant current tax issues that the AICPA recently followed. A complete list of all issues the AICPA is following can be found on the Tax Advocacy webpage.
The President signed legislation that repealed provisions requiring a significant expansion of Form 1099 reporting. Section 9006 of the "Patient Protection and Affordable Care Act" (P.L. 111-148) (“PPACA”) and section 2101 of the "Small Business Jobs Act of 2010" (P.L. 111-240) created an unjustified compliance burden on businesses and rental property owners, respectively. In general, if these these provisions had remained in effect, they would have significantly expanded information reporting requirements by: (1) requiring Form 1099-MISC to be sent to corporations; (2) including business payments for property (instead of just services, as required under current law); and (3) generally requiring individual taxpayers owning rental property to issue Forms 1099-MISC. Congress agreed that these provisions should be repealed because they imposed onerous information reporting requirements on businesses and individual taxpayers that provide limited utility to the government. H.R. 4, the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011,” was signed into law on April 14, 2011.
Tax Strategy Patents
Previous court decisions have allowed the patenting of "business methods," and as part of business method patents, the Patent and Trademark Office currently issues patents for tax strategies. Practitioners are concerned that they could find themselves having to check if someone owns a patent on tax planning strategies that they might want to suggest to a client. The AICPA is concerned, both from the standpoint of tax practitioners and taxpayers who should not be required to pay royalties or be subject to litigation for patent infringement for planning regarding their taxes. H.R. 1249, the Leahy-Smith America Invents Act, was signed into law on September 16, 2011. It includes a provision to stop the issuance of tax strategy patents.
In addition to the information on the Tax webpage, more can also be found on the Congressional Affairs Tax Strategy Patents webpage.
Effective January 1, 2010, Congress allowed the Federal Estate and Generation Skipping Tax to expire. Simultaneously the rules on step-up in basis expired and a rule requiring carryover basis for estates. However, effective January 1, 2011, the Federal Estate Tax and Generation Skipping Tax will be automatically reinstated but at their mandated rates and exemption levels as they existed in tax year 2000. The AICPA supports reinstating the Federal Estate Tax at the rates and exemption levels that were in place in 2009 until a permanent solution is found.
During the lame duck session of Congress in December 2010, a 2-year extension of the estate and gift tax was enacted. The estate tax has a $5 million exemption and a 35% rate.
Expiring Tax Provisions
Congress allowed many temporary tax provisions to expire at the end of 2009 without taking action. This list of expiring provisions includes several business and individual tax issues that are of significant concern to AICPA members and their clients as the impact of these expiring provisions will be that tax liabilities may be significantly changed. The AICPA supports Congressional action to reinstate specific issues on this list. They were extended for two years during Congress' December 2010 post-election session. A similar situation is expected to occur in 2012.
Copy of Legislation
A copy of all noted bills and laws are available on the Library of Congress's THOMAS website.
Peter M. Kravitz
Director, Congressional and Political Affairs