The Bottom Line reports that while the U.S. government attempts the first major overhaul of its tax code since 1986, the American Institute of CPAs and several business organizations stand steadfastly opposed to a proposal that would require many businesses in the United States currently using the cash method of accounting for tax purposes to adopt accrual accounting.
Accrual accounting creates serious cash-flow issues, Diana Deem, a director of congressional and political affairs for the AICPA in Washington, told the Canadian publication. She predicted many CPA partners would be forced to take out personal loans to meet their tax liability if the accrual proposal becomes law. Deem also explained that simplification is a critical element of any tax reform. “This proposal does not simplify the U.S. tax code at all. It doesn't make it any easier to comply for taxpayers. It doesn't make it easier for the IRS to administer the [tax] code,” she remarked.