"Let's face it, the tax code is a nightmare."
Rep. David Camp, Chair, House Ways and Means Committee
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Despite technological advances, complying with the tax code remains a challenge for both businesses and individuals and the "tax gap" - the difference between what is owed and what is paid - continues to grow. Taxpayers spend an estimated 6 billion hours each year working on their taxes.
The move to reform the tax code is escalating - both Congress and the President have released comprehensive proposals and action could begin as early as this summer.
The AICPA created this page to keep you up to date on tax reform news and share our recommendations for cleaning up the code and sound tax policy
Check back regularly as we add resources and news. Don't miss the upcoming webcast Tax Reform: Thoughts, Predictions and Overall Analysis on July 24.
What is the AICPA Doing for Tax Reform?
The AICPA staff and volunteer task forces began early to educate congressional committees about the profession’s tax administration concerns - some of those concerns are now addressed in draft proposals. And we continue to offer guiding principles and technical expertise as lawmakers refine their proposals.
For example, we submitted testimony to the House Ways and Means Committee, offering
insights on small business tax proposals and expressing our concern over proposed limits on the cash method of accounting.
We aim to provide unbiased facts and analysis to foster informed discussion, and keep a vigilant eye on the end goal:
Emerging with a system that is perceived as balanced, fair to all, administrable, economically efficient, transparent, and neutral in its effect on economic activity.
AICPA Tax Executive Committee Chair Jeffrey Porter urges Congress to make it easier
for small businesses to comply with tax laws.
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Tax Reform & the Individual Taxpayer
What's Going On?
The Senate Finance Committee released a discussion draft geared toward families, individuals and businesses. Among the many proposals, the draft mentions:
- Repeal of the AMT, Pease and Personal Exemption Phaseout provisions
- Changing filing periods, venue appeals, and evidence rules to improve taxpayer access to courts
A key reform need for individuals is education tax incentives - taxpayers must sort among 14 different ones, which are outlined in AICPA's explanation and solutions - practitioners may find this chart useful!
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Tax Reform & the Small Business Taxpayer
What's Going On?
- The Senate Finance Committee released its business tax reform ideas that cite AICPA for some of its suggestions, such as a refundable research credit for small business.
- The House Ways and Means Committee Chair issued several proposals, such as a permanent Section 179 deduction. The House proposal supports a change in certain due dates (proposed by the AICPA) to simplify filing business returns.
- The White House Framework for Business Tax Reform offers changes to several business tax laws, including the corporate tax rate, expensing, and cash accounting.
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Spotlight on Tax Penalties
Civil tax penalties have soared in recent years and the trend toward strict liability makes it difficult for taxpayers to get relief. An automatic $10,000 penalty for failing to report a foreign asset is only one example.
"Many aspects of the civil tax penalty regime concern our members," the AICPA told Congress when it submitted a comprehensive set of recommendations that address several flaws in the penalty system, including:
- Inconsistent application of reasonable cause relief;
- Procedural due process erosion;
- Lack of clear standards; and
- Need to improve IRS training and education of taxpayers.
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Speaking Up for a Better Tax System
Most recently, the AICPA:
We have a longstanding tradition of advocating for sound tax policy and effective tax administration as part of our core mission. Read our Tax Reform Alternatives for the 21st Century to learn more.
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Tax Reform & Federal Budget Resources
You can quickly get up to speed on the last major tax reform effort in 1986 with our 2-page backgrounder. And below are links to government websites for additional information.
The soaring federal deficit is helping to stimulate tax reform action - find out what will happen to the budget if the laws stay the same:
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