AICPA proposes changes to the Internal Revenue Code


A February letter signed by the chair of the AICPA Tax Executive Committee (Association of International Certified Professional Accountants) recommended 61 changes to the internal revenue code. The most notable overarching theme is a call to eliminate terms within the code that have duplicate meaning in order to simplify and streamline.

Currently, terms like “modified adjusted gross income” are used in several places throughout the code followed by varied definitions in each place. Other duplicated terms are “small business” and “net investment income” listed as the examples in the letter.

The full letter, which can be read HERE, illustrates in table format the various places throughout the code where terms are used seemingly interchangeably but followed by different definitions. The ambiguity creates confusion and doesn’t make a solid foundation for black and white tax laws.

Other notable provisions throughout the proposed changes:

  • Reduce and simplify the “number and complexity” of retirement planning vehicles
  • Simplify education-related tax provisions for individual income taxpayers
    “Equalize the tax treatment for health insurance deductions for self-employed individuals and employees
  • “Simplify tax treatment of Roth Individual retirement account contributions”
  • Permit the deduction of all state and local taxes, including income, sales and property taxes attributable to any trade or business
  • Allow a reasonable cause exception for penalties related to reportable transactions
  • Repeal the requirement to submit a 20% partial payment with a lump-sum offer in compromise.
  • Increase foreign tax credit limitation

Multiple other recommendations are made related to business return changes for all form types, partnerships, S Corporations and C Corporations as well as proposed changes for estate and trust provisions. There’s no doubt that the tax code has become exceedingly complicated over the last decade.

While tax preparers everywhere have a plethora of job security, the level of complexity is contributing to the current conundrum, that is, there are not enough preparers for the number of taxpayers who now need a professionally prepared return.

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