The American Institute of CPAs (AICPA) has made recommendations to the Internal Revenue Service (IRS) on the Service’s proposed regulations relating to annual country-by-country reporting by U.S. persons that are the ultimate parent of a multinational enterprise (MNE) group.
The AICPA offered a number of recommendations in its March 21 letter including allowing a voluntary opt-in for calendar year 2016 reporting and a robust National Security Exception for the information required to be reported. In addition, the AICPA requested clarification on several issues.
The AICPA’s six recommendations are:
- Allow U.S. MNE groups to elect on a voluntary basis to apply the proposed regulations for tax years beginning on or after January 1, 2016 and before the effective date of the final regulations;
- Clarify that a U.S. MNE group’s reporting is based solely upon its own annual accounting period and is not contingent on the timing of the annual accounting periods of its foreign constituent entities;
- Clarify the classification of certain assets as tangible, intangible or cash equivalents;
- Clarify issues related to the reporting of the number of full-time equivalent employees for each tax jurisdiction included on Form XXXX, Country-by-Country report;
- Confirm the status of U.S. possessions and territories and whether their treatment as foreign jurisdictions is correct; and
- Allow a National Security Exception for information contained in the required Country-by-Country reports.
The letter provided a detailed discussion of each of the six recommendations.