- Taxpayers need immediate guidance in order to comply with their 2017 tax obligations
Washington, D.C. (September 19, 2018) – The American Institute of CPAs (AICPA) has requested immediate guidance from the U.S. Department of the Treasury and the Internal Revenue Service (IRS) on transition tax reporting by individuals, trusts and estates under Internal Revenue Code section 965, which was mandated by the Tax Cuts and Jobs Act.
These taxpayers need clarity on section 965 reporting issues in order to comply with their 2017 tax obligations, the AICPA stated in its September 13 letter.
Specifically, the AICPA recommended that the Treasury Department and IRS provide the following:
- Automatic relief from penalties incurred by individuals, trusts or estates that have acted reasonably and made a good faith effort to properly report their section 965 tax liability on their 2017 tax returns.
- Clarification that trusts and estates report the section 965 tax in the same manner as individuals.
- Clarification that the person (including a trust or estate) that owes the section 965 tax is the person who can make the section 965(i) election or assume the liability.
- Guidance on the treatment of deferred foreign income upon transition to participation exemption system of taxation (section 965) for S corporation trust shareholders, what trust transactions are section 965 triggering events, and how a transferee of S corporation stock held in trust might assume the liability for the section 965 transition tax.