AICPA Makes Recommendations to IRS On Proposed Country-by-Country Reporting Regulations for Multinational Enterprises

March 22, 2016

Washington, D.C. (March 22, 2016) – 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 made 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:

  1. 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;

  2. 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;

  3. Clarify the classification of certain assets as tangible, intangible or cash equivalents;

  4. 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;

  5. Confirm the status of U.S. possessions and territories and whether their treatment as foreign jurisdictions is correct; and

  6. 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.