TEC Inititiatives

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

Author’s note: The significant contributions made by the Tax Division leadership and technical managers have been crucial to the success of the Tax Division. Vice President Gerry Padwe, Directors Ed Karl and Bill Stromsem, and Managers Jim Clark, Carol Ferguson, Benson Goldstein, Marc Hyman, Bonner Menking, Eileen Sherr, George White and Lisa Winton have collaborated with the many volunteers in vigorously representing the members and producing valuable products and services for them.

Since the last cut-off date for this column (June 15, 2002; see TTA, August 2002, p. 538), the Tax Executive Committee (TEC) met once (Aug. 5–6, 2002) and exercised its review function on several projects. TEC actions taken after Sept. 1, 2002 will be reported in a future column.

Administrative Issues

As reported in the May 2002 column, the Tax Executive Committee established the Scope of Services Task Force (chaired by Ron Katch) to monitor developments on proposed restrictions on members’ ability to provide tax services to audit clients. The task force is coordinating responses to the recently enacted Sarbanes-Oxley Act with other AICPA divisions. (See News Notes, "Sarbanes-Oxley Act," TTA, October 2002, p. 621.) Future developments will be reported in this column and in the Tax Division Newsletter.

Technical Activities

Inversion transactions. On June 28, the TEC submitted comments to Congress, the IRS and Treasury on corporate inversion issues. The comments (prepared by the International Tax Technical Resource Panel (TRP), chaired by Andy Mattson), encouraged Congress to focus not just on the prevention of inversion transactions, but also on the current U.S. tax disadvantages facing U.S.-based multinationals, as well as on U.S. tax advantages available to foreign-based multinationals. The TRP expressed concern that narrow legislation focused on preventing abuses fails to consider the broader policy issues that give rise to such transactions.

Tax shelters. The TEC continues to provide appropriate commentary on tax shelters. On July 2, 2002, it submitted comments (prepared by the Tax Shelter Regulations Task Force, chaired by Debbie Pflieger) on temporary and proposed regulations under Secs. 6011, 6111 and 6112. The comments addressed Treasury’s proposals to broaden and better align the rules and regulations on disclosure, registration and list-keeping in tax-avoidance transactions.

The TEC, the Tax Shelter Regulations Task Force and the AICPA anticipate that Congress will consider tax shelter legislation after the Labor Day recess. In anticipation, the Tax Division is disseminating tax-shelter information to members via the Tax Division Newsletter and through direct-mail notices sent to appointed members of the Tax Division. Further, additional technical and nontechnical comments are being prepared for submission to Congressional committees, members and staff.

Trust fund recovery penalties. On July 18, 2002, Pam Pecarich (TEC Chair) submitted a letter to the IRS on the TEC’s response to the Service’s proposal on trust fund recovery penalties. The comments (prepared by the Relations with the IRS Committee, chaired by Jim Dougherty) focused on the imposition of the penalty on nonowners (e.g., an employee with some responsibility for filing Form 941, Employer’s Quarterly Federal Tax Return), and such person’s procedural difficulty to build a case to avoid the penalty.

Transfer-pricing simplification. On July 24, 2002, the TEC provided comments (prepared by the International Tax TRP) on IR 2002-77, which announced a joint proposal of the IRS and the Pacific Association of Tax Administrators to simplify transfer-pricing documentation. The TEC strongly supported the proposed harmonization changes and encouraged the Service to open dialogues with other international governmental entities to expand simplification efforts.

General issues. On Aug. 1, 2002, the TEC submitted comments (prepared by the Relations with the IRS Committee) to the IRS Oversight Board on specific IRS programs (e.g., employer identification numbers, practitioner priority service, centralized authorization file, offers in compromise, Schedule K-1 matching and the National Research Program).

Partnership tax forms. On Aug. 30, 2002, the TEC submitted recommendations to the IRS for improving several tax forms frequently used by S corporations and partnerships. The recommendations (prepared by the S Corporation TRP, chaired by Kenneth Orbach) would facilitate taxpayer compliance and alleviate the IRS’s workload by reducing the volume of incorrectly issued failure-to-file notices and increasing the accuracy of service center taxpayer information databases.

Expatriate taxation. The Expatriation Tax Task Force (chaired by Evelyn Capassakis) continues to be active and communicate with Capitol Hill Democratic staff (House and Senate) on revisions to prior draft legislation on expatriate taxation. These activities continue the dialogue commenced in March 2002 when the TEC provided technical comments on previously proposed legislation.

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. Any member who would like to volunteer to assist in Tax Division activities or who has suggestions for new services or products should contact Bill Stromsem at (202) 434-9227 or wstromsem@aicpa.org .