AICPA Issues Letter to IRS in Response to Proposed and Final BEAT Regulations

March 13, 2020

Washington, D.C. (March 13, 2020) – The American Institute of CPAs (AICPA) has submitted a letter to the Department of the Treasury and the Internal Revenue Service (IRS) in response to proposed rulemaking REG-112607-19 and final regulations T.D. 9885 related to section 59A of the Tax Cuts and Jobs Act (TCJA). Section 59A imposes on each applicable taxpayer a tax equal to the base erosion minimum tax amount for the taxable year (the base erosion and anti-abuse tax or BEAT).

The TCJA enacted section 59A, imposing a tax on certain corporate taxpayers in addition to any other regular tax liability. The liability for this additional tax is generally limited to taxpayers with substantial gross receipts and is determined, in part, by the extent to which the taxpayer has made deductible payments to foreign related parties.

Both the final and proposed regulations affect corporations with substantial gross receipts that make payments to foreign related parties. The final regulations also affect any reporting corporations required to furnish information relating to certain related-party transactions and information relating to a trade or business conducted within the U.S. by a foreign corporation.

The AICPA submits recommendations to address the following areas:

  • Change in Aggregate Group
  • Election to Waive Deductions
  • Request for Automatic Relief on 2018 Returns
  • Application of Qualified Derivative Payments

“The AICPA’s recommendations streamline some BEAT regulations, alleviate taxpayer burdens, and are an important step to ensuring compliance,” said Christopher Hesse, CPA, Chair, AICPA Tax Executive committee. “In addition, our proposals make it possible for taxpayers to take advantage of some rules that were not available at the time they filed their 2018 tax returns. We thank the Department of the Treasury and IRS for their efforts to assist taxpayers as they strive to comply with the TCJA.”