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TEC Initiatives
Editor: Editors note: Professor Purcell is Vice Chair of the AICPA Tax Divisions Tax Executive Committee. DC Currents heighten awareness of the Tax Divisions activities and keeps readers apprised of tax policy, technical issues and other practice support matters. As an AICPA senior technical committee, 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 (Dec. 1, 2003, see TTA, February 2004), the TEC met once (Jan. 2829, 2004) and exercised its review function on several projects. TEC actions taken after March 1, 2004 will be reported in a future column.
Tax Division Administrative Issues At its January 2004 meeting, the TEC organized a task force to monitor the Tax Sections strategic plan. The task force will be responsible for overseeing plan implementation and providing the TEC with regular updates on progress. It will be chaired in alternate years by the TECs vice chair (currently, Tom Purcell) or the immediate past chair. The strategic plan is available online at www.aicpa.org/download/tax/tax_section_strat.pdf. For a comprehensive discussion of the strategic plan, see Swingen, Tax Education, How Does the Tax Sections Strategic Plan Affect Tax Education?, this issue. When meeting outside Washington, DC, the TEC invites representatives of the local state CPA society to join in its deliberations. At its January 2004 meeting, it hosted representatives of the Florida Institute of CPAs and enjoyed a lively discussion of issues of mutual concern.
Self-Governance Activities At its August 2003 meeting, the TEC approved Proposed Interpre-tation 1-2, Tax Planning, of Statement on Standards for Tax Services No. 1, which can be found at www.aicpa.org/members/div/tax/sstsint.asp. The interpretation became enforceable on Dec. 31, 2003. On Jan. 28, 2004, the TEC approved the inclusion of the IRS Office of Professional Responsibility as an accepted governmental agency for purposes of the AICPAs new automatic sanctioning procedures (approved by the membership in fall 2003). The automatic process enables the Professional Ethics Executive Committee to act quickly, decisively and fairly when a member violates the professions code of ethics.
Technical Activities
IRS five-year strategic plan:
On Jan. 26, 2004, Mark Van Deveer, Chair of the AICPA Tax Divisions
IRS Practice and Procedures Committee, appeared before the IRS Public
Oversight Board regarding the IRSs strategic direction. In comments
approved by the TEC, the AICPA supported the directions the IRS has
taken in reorganizing its structure, modernizing information technology
and strengthening the tax systems integrity through enhanced
enforcement activities. The complete text is available at
www.cpa2biz.com/ResourceCenters/Tax/Tax+Practice/
Tax accounting:
On Jan. 27, 2004, the AICPA provided comments Tax shelters: The TEC continues to monitor tax shelter developments. On Feb. 12, 2004, it submitted comments to the IRS on REG-122379-02 (modifications to Circular 230). The comments, prepared by the Tax Practice Responsibilities Committee (chaired by Ed Swails), addressed the definition of a tax shelter and standards for tax practice. They restated the AICPAs concern that the proposed definition of a tax shelter (i.e., an entity, plan or arrangement, a significant purpose of which is the avoidance or evasion of Federal income tax) lacks clear definition, is overly broad and may result in inconsistent administration or enforcement of the regulations. The AICPA urged the IRS to consider amending the definition to ensure that enforcement focuses on clear violations of the tax law and regulations, thereby providing less opportunity for inappropriate assertions of the application of the law or penalties against practitioners. The comments also expressed concern that the proposed changes might unknowingly affect the civil malpractice environment, by creating unrealistic standards for practice before the IRS.
Although the AICPA supports Treasurys and the IRSs efforts to address
tax shelter opinions and to raise the bar on the quality and
professionalism of all written tax opinions, the proposed amendments
language is inconsistent and imprecise, or may be misunderstood. Thus,
the comments suggested changes in several areas. The complete comments
Partnerships:
On Feb. 25, 2004, the
TEC submitted a comment letter on the Safe, Accountable, Flexible, and
Efficient Transportation Equity Act of 2003 (SAFETEA) (S 1072) to the
Senate Finance Committee and the House Ways and Means Committee. The
SAFETEA contains a provision that would repeal Sec. 754 and make Secs.
734(b) and 743(b) mandatory, except for transfers due to a partners
death. The AICPA comments, prepared by the Partnership Taxation TRP
(Debbie Fields, vice chair), expressed concern about the negative effect
this proposal will have on partnerships of all sizes, and recommended
modifying the proposal to curtail abuse of current law without imposing
unnecessary costs and compliance burdens on taxpayers in nonabusive
circumstances. The comment letter is Sales and use tax: The Streamlined Sales Tax Project (SSTP) recently considered sourcing rules for the imposition of sales tax on services, under Section 310(A) of the Stream-lined Sales and Use Tax Agreement. Although the SSTP is not anticipated to act on this in the near future, due to difficulties in applying sourcing rules to the taxation of services, a number of states have introduced (or will soon be introducing) legislation to impose sales tax on services. In support of the many state societies that oppose such a tax, the State and Local Taxation TRP (chaired by Dan Peterson) developed a position paper. On Jan. 29, 2004, the TEC approved the paper, including the position opposing the imposition of sales or use tax on services. Subsequently, the AICPA Board of Directors ratified this position. Tax simplification: The TEC continues to collaborate with the American Bar Association and the Tax Executives Institute in fostering greater tax system simplicity. To that end, the groups agreed to submit a letter of support for the simplification measures contained in the Chairmans Mark of the Tax Administration Good Government Act of 2004. Future developments on those comments will be reported in this column. Administrations FY 2005 budget: President Bush released his Adminis-trations fiscal-year (FY) 2004 budget proposals on Feb. 2, 2004. The Tax Divisions committees and TRPs have begun a coordinated process to identify proposals that (1) require immediate attention by the Tax Division (likely to be very few, if any); (2) should be followed through legislative development by committees or TRPs and might require some attention after tax season; and (3) are not controversial or expected to need attention.
Conclusion Through its various task forces, TRPs and committees, the TEC continues to monitor numerous other projects. The TEC and other Tax Division committees are committed to providing the best service possible to AICPA members. Leadership and membership appointments for committees and TRPs for the current committee year (starting Oct. 19, 2004) are complete. However, members who would like to volunteer to assist in Tax Division activities (such as on task forces or a future appointed service) should contact Ed Karl at (202) 4349228 or ekarl@aicpa.org. Members having suggestions for new services or products should contact Bill Stromsem at (202) 4349227 or wstromsem@aicpa.org. |
