AICPA Supports Provisions of Reconciliation, Submits Recommendations

Washington, D.C. (October 1, 2021) – As Congress considers the tax provisions in the reconciliation legislation recently passed by the House Ways and Means Committee, the American Institute of CPAs (AICPA) has submitted comments to the Congressional tax-writing committees' leadership on several tax provisions. The AICPA believes it is important that special care is given to transition rules and sufficient time and flexibility is provided to implement the transition rules and offer penalty relief as needed; the recommendations offered are designed to help ensure that the final reconciliation package is administrable, equitable and meets the needs of both taxpayers and tax practitioners.

The AICPA supports several tax provisions in the reconciliation bill, expresses concern with others, and has provided comments and suggestions for improvement:

AICPA Supported Provisions in the House Reconciliation Legislation:

1. Individual Tax Provisions

   1. Child Tax Credit Modifications

   2. Child and Dependent Care Tax Credit Changes

2. Employer-Provided Dependent Care Assistance Exclusion

3. Temporary Rule to Allow Certain S Corporations to Reorganize as Partnerships Tax-Free

4. Deferral of IRC Section 174 Amortization

5. International Tax Provisions

   1. Restoration of Former IRC Section 958(b)(4) Deduction of Foreign Source Portion of Dividends Limited to Controlled Foreign Corporations

   2. Modification to Base Erosion and Anti-Abuse Tax

   3. GILTI Changes to Carryforward Losses

   4. Modifications to Foreign Tax Credits

   5. Limiting Section 78 Gross-up to IRC Section 960(a) and (d) Taxes

AICPA Concerns with Certain Tax Provisions in the House Reconciliation Legislation:

1. IRC Section 199A – Deduction for Qualified Business Income

2. IRC Section 461(l) – Excess Business Losses

3. IRC Section 162(m) – Limitation on Deduction of Excess Employee Remuneration

4. Employee Benefits Tax Provisions

   1. Contribution Limit for Individual Retirement Plans of High-Income Taxpayers with Large Account Balances

   2. Tax Treatment of Rollovers to Roth IRAs and Accounts

   3. Prohibition on Certain IRA Investments

   4. Statute of Limitations with Respect to IRA Noncompliance

5. Trust and Estate Tax Provisions

   1. Valuation Concerns

   2. Grantor Trusts

   3. Estates

6. Modification to Treatment of Certain Losses under IRC Section 165(g)

7. Limitation on Certain Special Rules for IRC Section 1202 Gains

8. Modification of Procedural Requirements Relating to Assessment of Penalties

Additional Comments:

1. IRS Regulation of Paid Tax Return Preparers

2. Financial Account Reporting to Improve Tax Compliance

3. IRS Funding

4. Structural Changes to Subchapter K (Partnership Taxation)

5. Corporation Minimum Tax at 15 percent of a Corporation’s Book Income

6. Nonqualified Deferred Compensation

“This reconciliation package will have a significant impact on taxpayers and tax practitioners, and the AICPA is committed to ensuring that its principles of good tax policy and the interests of both are taken into account during this process,” said AICPA Vice President of Taxation Edward Karl, CPA, CGMA. “The recommendations that we’ve submitted highlight those issues that we believe are most impactful and we provide thoughtful and practical improvements that will benefit the tax administration process and those affected by this legislation.”

Contact: Veronica Vera
202-434-9215
Veronica.Vera@aicpa-cima.com