The Honorable Eric Solomon The Honorable Donald L. Korb
Acting Assistant Secretary (Tax Policy) Chief Counsel
Department of the Treasury Internal Revenue Service
1500 Pennsylvania Avenue,NW 1111 Constitution Avenue, NW
Room 3120 Room 3026
Washington, DC20220 Washington, DC20224
Re: Recommendations for 2006-2007 Guidance Priority List (Notice 2006-36)
Dear Messrs. Solomon and Korb:
The AICPA is pleased to offer our suggestions regarding the 2006-2007 Guidance Priority List, which were prepared by the AICPA Tax Division’s committees and technical resource panels, and approved by our Tax Executive Committee.
The suggestions are listed under the AICPA working group that developed them, and we have indicated the priority order for our comments under each category of the attached document. For your convenience, contact information for each working group’s chair and AICPA staff liaison are listed. Please feel free to contact these individuals directly with your specific questions or concerns.
In addition, the AICPA again encourages Treasury and the IRS to continue pursuing tax simplification. We recognize – and very much appreciate – recent steps you have taken, including: (1) The issuance of temporary and proposed regulations addressing 10/50 company dividend open issues ( T.D. 9260 and REG-144784-02, released April 20, 2006) under Sections 861, 902, 904, and 964 were very helpful and well-received. These regulations pertain to the application under Section 904(d)(4) of separate foreign tax credit (FTC) limitations to dividends received from noncontrolled Section 902 corporations (10/50 corporations) and implement Section 403 of the American Jobs Creation Act; (2) The guidance issued under Notice 2006-16 which provides a safe harbor from the disclosure requirement otherwise imposed by § 1.6011-4 for taxpayers that have, solely as a result of their direct or indirect interest in a pass-through entity, participated in a transaction that is the same as or substantially similar to the transaction described in Notice 2002-35 (as clarified by section 3.01 of this notice); and (3) The development of global settlement initiatives, such as in the tax shelter area. These initiatives strive to resolve difficult tax cases through the release of clear guidance and settlement terms with respect to tax controversies involving large numbers of similarly situated taxpayers.
Although we recognize you must balance competing interests and concerns when drafting guidance, we urge you to consider the following as part of the process:
- Use the simplest approach to accomplish a policy goal;
- Provide safe harbor alternatives;
- Offer clear and consistent definitions;
- Use horizontal drafting (a rule placed in one Code section should apply in all other Code sections) to the greatest extent possible;
- Build on existing business and industry-standard record-keeping practices;
- Provide a balance between simple general rules and more complex detailed rules; and
- Match a rule’s complexity to the sophistication of the targeted taxpayers.
Thomas J. Purcell, III
Chair, Tax Executive Committee