This is my last note as your Tax Executive Committee (TEC) Chair. My two-and-a-half-year term ends May 21. Chris Hesse, long-time AICPA Tax Section volunteer, will be your next TEC chair. In addition, many other volunteers will complete their three-year term of service. Committee and technical resource panel (TRP) chairs, like me, will serve one more year as past chairs. I want to extend a big THANK YOU to all who are finishing up their service and welcome those members starting their committee or TRP service on May 21.
I have been fortunate to serve the AICPA during interesting times. The AICPA submitted comments and ideas regarding tax reform well before the final pieces were assembled in the fall of 2017. We continued to submit comments during the few weeks of final assembly and vote. These comments included a proposal to not limit the qualified business income (QBI) deduction (Sec. 199A) for accountants and pulling state and local income taxes (SALT) out of the new $10,000 SALT cap if attributable to business income reported on the Form 1040. This would mean these businesses would be treated similarly to C corporations.
Since the IRS first issued Tax Cuts and Jobs Act (TCJA) guidance in early 2018, the AICPA has submitted 36 letters to the IRS, the U.S. Treasury and the Joint Committee on Taxation on proposed regulations, pre-regulation guidance, identification of errors to fix and more.
And just like the IRS had to update many forms and create new ones, AICPA staff and volunteers had to review hundreds of tax resources to reflect changes due to the TCJA and create many new tools and education programs. New tools included an amazing Sec. 199A flowchart and client letters summarizing the changes.
During busy season alone, the AICPA issued 13 comment letters and in the past month, the AICPA issued these three:
- The Qualified Business Income Task Force submitted comments on the proposed Sec. 199A safe harbor revenue procedure and regulations. Thank you to task force members Bob Caplan, David Kirk, Chris Hesse, Irene Estrada, Jose Carrasco, Laura Ross, Robert Keller, Troy K. Lewis (Chair) and Amy Wang (AICPA staff) who drafted these comments during busy season to meet the IRS’s April 9 submission date.
- The Individual and Self-Employed Tax TRP drafted comments and discussed with IRS personnel an error in the Form 461 instructions that implies that the taxpayer must be actively involved for an activity to be a trade or business.
- The International Tax TRP drafted comments on the proposed foreign tax credit regulations.
I’m proud of all these important AICPA efforts using the incredible tax expertise of members and staff to help improve our tax system and assist members in their daily tax work.
One of my goals as TEC chair was to be sure we were proactive rather than reactive. We’ve always been proactive with various policy positions over the past many decades. I didn’t want our focus on dealing with tax reform implementation to cause us to overlook the need to also comment on legislative proposals — such as the recent legislation to reform the IRS — and to recommend any Tax Reform 2.0-type improvements.
In that vein, I’m very pleased to announce a new position paper released this month, drafted by the TEC with input and review by other AICPA tax committees and TRPs. This position paper, AICPA Recommendations for Tax Law Changes to Reflect How Small Businesses Operate in the Modern World, lists 13 changes needed to continue what the TCJA started. It also explains how technology and new business practices will require us to further update our tax system.
I hope you’ll take a look at all of these position papers and comment letters. Please also take advantage of the tremendous resources and tools tied to the TCJA and the many procedural and technical aspects of tax practice including penalty abatement letters, Kovel arrangements and more.
Again, it’s been an honor and privilege to serve as chair of the TEC. The Tax Section is well-served by amazing member volunteers and staff. I hope we all regularly reflect on what is involved in the many advocacy and technical resources and tools available for AICPA Tax Section members and see the value of membership. I also hope we’ll continue to work on another of my foci as chair — ensuring we all regularly reach out to young people to encourage, mentor and sponsor them entering and advancing their CPA tax careers and being involved in the tax community — particularly via the AICPA.
Annette Nellen, CPA, CGMA, Esq.
Tax Professor and Director of the MST Program at San José State University
Annette Nellen is the chair of the AICPA’s Tax Executive Committee and is an active member of the tax sections of the ABA and California State Bar. A recipient of the 2013 Arthur J. Dixon Memorial Award, the highest honor bestowed by the accounting profession in taxation, she is a frequent speaker and author on federal and state tax developments, tax policy and reform and taxation of the new economy.