TEC Initiatives

Editor:
Thomas J. Purcell III, J.D., Ph.D., CPA
Associate Professor of Accounting and Professor of Law
Creighton University
Omaha, NE

Editor’s note: Prof. Purcell is Chair of the AICPA Tax Division’s Tax Executive Committee. DC Currents heightens awareness of the Tax Division’s activities and apprises readers of tax policy, technical issues and other practice support matters.
 

As a senior technical committee of the AICPA, the Tax Executive Committee (TEC) is authorized to speak for the Institute on tax matters and is also designated by governing Council as a standard-setting body. However, numerous other committees, technical resource panels (TRPs) and task forces initiate and develop proposed solutions to policy issues and technical and tax administration problems, for consideration and approval by the TEC. They also initiate proposals for valuable products and services for members in tax practice.

Since the last cut-off date for this column (March 7, 2004; see TTA, May 2005), the TEC met once (June 16–17, 2005) and exercised its review function on several projects. TEC actions taken after June 15, 2005 will be reported in a future column.

Administrative Issues

The TEC continues to monitor progress on the Tax Section’s Strategic Plan. The original strategic plan can be found online at www.aicpa.org/download/tax/tax_section_strat.pdf.

Self-Governance Activities

The Tax Practice Quality Control Task Force (chaired by Joe Scutellaro) presented proposed Statement on Standards for Tax Services No. 9, “Quality Control,” at the Spring Tax Division Meeting in San Francisco, June 15–16, 2005. The TEC continues to monitor this project and is coordinating with other groups within the AICPA, including the Private Companies Practice Section, before deciding whether to expose this statement for public comment. The TEC will consider this issue at its August 2005 meeting.

On June 6, 2005, in a letter jointly authored by the TEC and the Professional Ethics Executive Committee, the AICPA commended IRS Commissioner Mark W. Everson on his recent Congressional testimony, in which he indicated that taxpayers should be informed whenever a tax preparer outsources return preparation overseas; see www.cpa2biz.com/ResourceCenters/Tax/Tax+Practice/Outsourcing+Tax+Return.htm.

New AICPA ethical standards, effective July 1, 2005, apply to all independent contractors used by a CPA firm. They require AICPA members to inform clients (preferably in writing), prior to sharing confidential client information with third parties, that such parties may provide client services.

Technical Activities

General: At the June 2005 meeting in San Francisco, the TEC met with members of the California State Society of CPAs’ taxation committee, to provide outreach and improve communication.

The speakers at the June meeting included Mark Everson, Commissioner of the IRS, and Eileen J. O’Connor, Assistant Attorney General, Tax Division, U.S. Department of Justice. Commissioner Everson also spent some time with the TEC discussing issues of mutual concern to the IRS and CPAs in tax practice.

E-filing: On March 16, 2005, Debbie Pflieger, a past chair of the IRS Practice and Procedures Committee and a member of an informal working group reporting to that committee, testified before the IRS on the AICPA’s behalf on e-filing implementation issues. Her comments reinforced the concerns expressed previously on this topic (see TTA, May 2005).

Notice 2005-14 guidance: On March 31, 2005, the TEC submitted comments to the IRS on Notice 2005-14’s interim guidance, related to the domestic production activities deduction under new Sec. 199, asking for additional clarification. The comment letter, prepared by the Tax Accounting TRP (chaired by Barry Tovig), can be found at www.cpa2biz.com/ResourceCenters/Tax/Tax+Accounting/Domestic+Production.htm.

Tax simplification: On April 27, 2005, Ronald B. Hegt, CPA, a member of the TEC, testified on the AICPA’s behalf before the House Committee on Small Business. Among other comments on tax simplification, his testimony called for eliminating the alternative minimum tax; devising a more objective test to determine whether workers are employees or independent contractors; simplifying the capital gains rules; and rationalization of estimated tax safe harbors. The testimony can be found at www.cpa2biz.com/ResourceCenters/Tax/Legislative%2c+Administrative2c+Judicial/AICPA+Testifies+About+Tax+Law.htm .

Estates and gifts: On June 8, 2005, the TEC submitted comments on Rev. Proc. 2005-24, which provides guidance on spousal election rights and charitable remainder trusts (CRTs) under Sec. 664. The procedure requires, under certain circumstances, a grantor’s spouse to waive his or her right to claim a portion of a CRT as part of the spouse’s statutory share of the grantor’s estate. The comments, prepared by the Trust, Estate and Gift Tax TRP (chaired by Roby Sawyers), can be found at www.cpa2biz.com/ResourceCenters/Tax/Estate%2c+Gift%2c+Trust%2c+Fiduciary/Spousal+Election+Rights.htm.

Miscellaneous: On April 14, 2005, TEC chair Tom Purcell testified before the House’s Subcommittee on Oversight. His testimony, which was prepared in conjunction with the IRS Practice and Procedures Committee (chaired by Mark Van Deveer), focused on the tax filing season, the IRS’s budget for 2006 and tax administration issues. The AICPA supports the proposed budget on increasing staffing and resources in the enforcement area, and urged the IRS to balance enforcement with taxpayer service. The TEC again recommended delaying by at least a year the mandatory electronic filing program for large corporations and exempt organizations that the IRS intends to implement for the 2006 filing season. The testimony can be found at www.cpa2biz.com/ResourceCenters/Tax/Legislative%2c+Administrative%2c+Judicial/2005+Filing.htm.

On May 31, 2005, the TEC provided comments to the IRS and Treasury on the 2005–2006 IRS/Treasury Priority Guidance Plan. The comments provided were generated by all of the Tax Division’s committees and TRPs, and can be found at www.cpa2biz.com/ResourceCenters/Tax/Legislative%2c+Administrative2c+Judicial/guidance+priority+comments.htm.

Conclusion

Through its various task forces, TRPs and committees, the TEC continues to monitor numerous other projects. The Tax Division is committed to providing the best service possible to AICPA members. Leadership and membership appointments for committees, task forces and TRPs for the coming year will start in October 2005. Members who would like to volunteer to assist in Tax Division activities should contact Ed Karl at (202) 434-9228 or ekarl@aicpa.org. Members having suggestions for new services or products should contact Bill Stromsem at (202) 434-9227 or wstromsem@aicpa.org.