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 propose solutions to policy issues, technical and tax administration problems, for consideration and approval by the TEC. They also initiate proposals for products and services for members in tax practice.

Since the last cut-off date for this column (June 15, 2004, see TTA, August 2004), the TEC met once (Aug. 2–3, 2004) and exercised its review function on several projects. TEC actions taken after Sept. 1, 2004 will be reported in a future column.

Administrative Issues

The TEC continues to monitor the Tax Section’s strategic plan; for the original plan, see www.aicpa.org/download/tax/tax_section_strat.pdf. In August 2004, the Tax Section Strategic Plan Implementation Task Force met to discuss performance metrics, timelines and delegation of responsibility for completing the strategic plan’s action plan components. It also addressed the results of having scanned the environment to determine whether to modify the plan, deciding that it should not change it for emerging external environmental trends. At its August 2004 meeting, the TEC considered the task force’s recommendations and modified several outcome measures. With the start of the new committee year in October 2004, Bob Zarzar, as immediate past TEC chair, will lead this task force.

Self-Governance Activities

Since the June 2004 meeting, the Statements on Standards for Tax Services (SSTS) Quality Control Task Force (chaired by Joe Scutellaro) has revised its preliminary report on SSTS Proposed Interpretation No. 3-1, “Tax Practice Quality Control,” based on the TEC’s feedback. The TEC will consider the revision at its November 2004 meeting, when it will decide whether to issue the interpretation for public comment.

Technical Activities

General: On June 28, 2004, Bob Zarzar, then TEC chair, responded by letter to a request made by Nina Olson, National Taxpayer Advocate, to identify serious problems encountered by taxpayers. The letter identified as most troublesome (1) compliance with Forms 1099-DIV, Dividends and Distributions; (2) fiscal-year flexibility for small businesses; and (3) the complexity in applying phaseout methods and definitions. It also offered possible solutions.

On July 13, 2004, the TEC commented on the proposal in S 882, the Tax Administration and Good Government Act of 2004, addressing the registration of Federal return preparers and refund anticipation loan providers. In a letter to the Senate Finance Committee and House Ways and Means Committee, the AICPA supported appropriate regulation of all tax preparers. The letter, which was prepared by the IRS Practice and Procedures Committee (chaired by Mark Van Deveer), generally backed the concepts behind the legislation, but identified several drafting provisions that appear problematic. The comments can be viewed at www.cpa2biz.com/ResourceCenters/Tax/Tax+Practice/Preparer
Registration.htm.

On July 22, 2004, the TEC commented extensively to the Senate Finance Committee on its charitable governance discussion draft. The comments, collaborated on by the Tax Division’s Exempt Organization Taxation TRP (chaired by Harvey Berger) and the Not-for-Profit Expert Panel (chaired by Stephen Kattell), strongly supported strengthening public oversight of tax-exempt organizations. The letter is available at www.cpa2biz.com/ResourceCenters/Tax/Exempt+Organization/
EO_Roundtable.htm.

International: On June 29, 2004, the TEC commented to the Senate Finance Committee and the House Ways and Means Committee on the provisions in S 1637, the Jumpstart Our Business Strength Act (JOBS Act), that would combine, for citizens living abroad, the foreign earned income and housing expense exclusion limits. The comments, which were prepared by the International Taxation TRP (chaired by Andy Mattson), urged Congress to reconsider these provisions. In the AICPA’s view, the provisions as drafted would reverse long-standing international tax policy and decrease American jobs and exports. The letter can be found at www.cpa2biz.com/ResourceCenters/Tax/International/ForeignIncome
Housing.htm.

Tax shelters: On June 30, 2004, the TEC submitted a letter to the Senate Finance Committee and the House Ways and Means Committee supporting the approach taken by HR 4520, the American Jobs Creation Act of 2004, to curtail tax shelters, over the Senate’s method in the JOBS Act. The AICPA’s opposition stems from two proposals in the JOBS Act: (1) the codification of the economic substance doctrine; and (2) the raising of the return standard to “more likely than not” for all return engagements. These proposals are not in the House bill. The letter can be found at www.cpa2biz.com/ResourceCenters/Tax/Legislative%2c+Administrative
%2c+Judicial/TaxShelterBills.htm .

Tax accounting: On Aug. 24, 2004, the TEC commented to the IRS on Rev. Proc. 2004-23—the intangible asset automatic consent procedure for taxpayers changing an accounting method under Regs. Sec. 1.263(a)-4. The comments, prepared by the Tax Accounting TRP (chaired by Barry Tovig), identified how Rev. Proc. 2004-23 significantly burdens small and medium-sized businesses and their accounting firms, chiefly due to the issuance of the procedure after the due date for calendar-year taxpayers. The TRP offered several suggestions to ease this burden. The comments are available at www.cpa2biz.com/ResourceCenters/Tax/Tax+Accounting/Automatic
Consent.htm.

Partnerships: On Sept. 3, 2004, the AICPA commented to Treasury and the IRS on Rev. Rul. 2004-43. Prepared by the Partnership Taxation TRP (chaired by Betsy Case), the comments addressed the ruling’s application of Secs. 704(c)(1)(B) and 737 to the distribution of partnership property following an assets-over partnership merger. The AICPA is concerned that the ruling conflicts with the plain language of Regs. Secs. 1.704-4(c)(4) and 1.737-2(b)(3). The comment letter can be accessed at www.cpa2biz.com/ResourceCenters/Tax/Partnership/AntiMixingBowl.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 and TRPs for the current committee year (which started on Oct. 19, 2004) have been completed. However, AICPA members who would like to volunteer for Tax Division activities (e.g., on task forces or for future appointed service) 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 wstrom sem@aicpa.org.