TEC Initiatives

Editor:

Thomas J. Purcell III
Begley Professor of Accounting
Creighton University
Omaha, NE

Editor's note: Professor Purcell is a member of the Tax Executive Committee. DC Currents is designed to heighten awareness of the Tax Division's work and keep readers apprised of Division activities involving tax policy, technical issues and other practice support matters.

Since this column last appeared ( ), the Tax Executive Committee (TEC) has met once and exercised its review function on several projects. TEC actions taken after Dec. 1, 2000 will be reported in a future column.

Leadership Change

The TEC changed leadership at its Nov. 5 meeting. After two years of dedicated and tireless efforts, David Lifson completed his term as the Committee's chair. During his term, the Tax Division and the TEC's role changed dramatically. His guidance was instrumental in shaping the TEC's organizational structure and processes, enabling it to continue to provide AICPA members with outstanding tax services. Lifson is succeeded by Pam Pecarich, who has been instrumental in representing CPAs' interests on behalf of the AICPA to the IRS on numerous occasions, most recently on the proposed legislative changes for corporate tax shelters.

Structural Change

At the November meeting, the TEC recommended formation of a new Tax Division committee to address professional issues that arise in tax practice. On Dec. 6, 2000, Kathy Eddy, Chair of the Board of Directors of the AICPA, approved the proposal. Named the "Tax Practice Responsibilities Committee" (TPRC), it will report to the TEC and is responsible for administering the Statements on Standards for Tax Services (SSTSs). The TPRC will evaluate and respond to comments from members and others about the new standards, educate members about the SSTSs and propose interpretations and potential new standards for TEC consideration. The new committee will also be responsible for relations with the IRS Director of Practice, Circular 230 issues and return preparer and tax adviser penalty issues. As needed, it will consult with the AICPA Professional Ethics Executive Committee as it enforces the SSTSs through Rules 201 and 202 of the AICPA Code of Professional Conduct.

Shifting of professional issues to the new TPRC enables the current Member Tax Practice Improvement Committee (MTPIC) (with whom those issues previously resided) to focus attention on developing tax products and services. By addressing e-filing opportunities, electronic tax administration and the pending launch of the Web portal (cpa2biz.com) (as well as traditional services, such as checklists and tax practice guides), the redesigned MTPIC will be better equipped to assist in fulfilling the Tax Division's commitment to providing outstanding service to its members.

Technical Activities

The TEC, through the efforts of its Tax Shelter Task Force, continues to monitor and comment on developments in the corporate tax shelter area. The so-called "tax shelter regulations" were issued as temporary regulations (in proposed form), but did not contain modifications reflecting certain AICPA concerns. The Tax Shelter Regulations Task Force developed a practice alert, including flowcharts and notes to assist members in responding to these regulations. The practice alert has been mailed to all Tax Division members, and can be found at www.aicpa.org/members/div/ tax/index.htm.

The TEC submitted comments to the Senate Finance Committee on the Small Business Review Panel Technical Amendments Act (HR 1882 and S 1156). The comments urged that the IRS be excluded from the list of agencies required by that legislation to convene small business advocacy review panels as part of the regulatory process. The Tax Division believes that including the IRS in this new process would delay the issuance of new guidance, and thus would have a deleterious impact on small business, rather than the intended reduction in burden from the Federal regulatory process that the legislation targets.

The Relations with the IRS Committee, chaired by Deborah Pflieger, also prepared comments on Announcement 2000-4, Test of Arbitration Procedure for Appeals. That announcement outlined procedures to be used on a test basis to assess the feasibility of nondocketed arbitration as a means of resolving tax disputes at the lowest possible levels. The TEC supports the IRS's efforts to assist taxpayers in obtaining closure on issues without increasing procedural complexity.

Members of the Corporations and Shareholders Taxation Technical Resource Panel (principally, Mark Schneider and Robert Mason) prepared comments for submission by the TEC on Prop. Regs. Sec. 1.368-2, dealing with mergers involving disregarded entities. The AICPA agrees with the regulatory position that a merger of a disregarded entity (i.e., an entity wholly owned and not treated as separate from its corporate owner) into an acquiring corporation is not a statutory merger, but disagrees with the regulation's conclusion that a merger of a target corporation into a disregarded entity is not a statutory merger under Sec. 368(a)(1)(A). The regulatory process has not yet been completed.

Conclusion

The TEC and other Tax Division committees are committed to providing the best service possible to AICPA members. Any member who has suggestions for services or products that they would like to be provided should contact Bill Stromsem at (202) 434-9227 or wstromsem@aicpa.org .