The American Institute of CPAs (AICPA) has urged the chairmen and ranking minority members of the tax committees in Congress to reintroduce the Tax Technical Corrections Act of 2016. The bill was previously introduced on December 6, 2016 on a bipartisan, bicameral basis.
AICPA Tax Executive Committee Chair Annette Nellen, CPA, CGMA, Esq. wrote in the AICPA’s March 22 letter that several of the provisions in the legislation “are of unusually high importance since failure to enact them has an immediate negative impact on both the IRS and taxpayers.” She particularly noted the provisions relating to Individual Taxpayer Identification Numbers (ITINs) and partnership audit rules.
Nellen explained that the procedures used by overseas taxpayers to obtain or renew their ITIN were changed by Congress so that overseas taxpayers could no longer use a community-based Certifying Acceptance Agent (CAA) to process their ITIN application. “This change has imposed an unduly harsh burden on taxpayers residing overseas who are attempting to fulfill their United States (U.S.) tax filing obligations,” Nellen stated. The situation is further exacerbated by a new requirement to renew all ITINs issued prior to January 1, 2013, which is resulting in a surge of ITIN holders located overseas requiring assistance, she wrote. The proposed technical correction would clarify that ITIN holders living abroad could use community-based CAAs.
The technical corrections relating to partnership audit rules would improve the IRS’s ability to fairly and equitably administer the new partnership audit regime and reduce the administrative burdens on the IRS and taxpayers, Nellen wrote. The technical corrections also would provide additional certainty to taxpayers regarding their obligations following an examination, while better assuring that the proper amount of tax is imposed on the appropriate taxpayer, she stated.
Nellen explained that the partnership audit rules proposed under a new “Centralized Partnership Audit Regime” by the U.S. Department of the Treasury and the Internal Revenue Service (IRS) on January 18, 2017 were withdrawn because they were not submitted to the Federal Register before the new administration’s regulatory freeze took effect. However, IRS and Treasury are expected to re-issue the proposed regulations. The withdrawn proposed regulations reference the possibility of the technical corrections provisions being enacted by Congress and the likely need to modify and re-issue portions of the regulations after the technical corrections are enacted. If Congress passed the technical corrections before the proposed regulations were re-issued, they could be modified before being re-issued and make the guidance process more efficient, as well as providing greater certainty to taxpayers, she wrote.
Nellen emphasized that, while the partnership audit rules generally are not effective until after 2017, there are significant actions partnerships and partners must deal with now. “The need for final regulatory guidance is crucial,” she stated.