By Martha Waggoner
The AICPA has made recommendations to the IRS on its 2024–2025 Priority Guidance Plan, including on the corporate alternative minimum tax (AMT) and group exemption letters.
"As the IRS plans to prioritize providing additional guidance as stated in strategic initiative 1.7 in the IRS Inflation Reduction Act (IRA) Strategic Operating Plan, we encourage the IRS to issue guidance on the areas that we have suggested," says a letter to the IRS, dated May 17 and signed by Blake Vickers, CPA, CGMA, chair of the AICPA Tax Executive Committee (TEC).
The AICPA Tax Policy and Advocacy Division's committees and technical resource panels prepared the guidance, which the TEC approved.
In addition to the changes suggested for the plan, the letter recommends that Treasury and the IRS continue pursuing tax simplification, including using the simplest approach to accomplish a policy goal and offering clear, consistent definitions.
Highlights of the comments in the letter include, but are not limited to, recommendations that the IRS:
- Provide guidance about the key definitions and application of the Sec. 55 corporate AMT, including clarification of the definition of an "applicable corporation" under Sec. 59(k) and the definition of "adjusted financial statement income" under Sec. 56A.
- Provide further guidance on the expansion of the Employee Plans Compliance Resolution System under the SECURE 2.0 Act, Division T of the Consolidated Appropriations Act, 2023, P.L. 117-328.
- Provide an update on the potential revisions to Rev. Proc. 80-27 regarding group exemption letters as described in Notice 2020-36, published on May 18, 2020.
- Provide guidance on applying the state and local tax deduction cap under Sec. 164, including:
- Guidance on an S corporation's inability to specially allocate items and the single-class-
- of-stock requirement;
- Guidance on Notice 2020-75 for Sec. 461 accrual-basis taxpayers;
- Guidance on Notice 2020-75 and Secs. 469 and 163 regarding nonpassive versus passive income and interest expense tracing;
- Guidance on Sec. 111's application to state tax refunds at the individual level and ordering between passthrough entity income tax payments and nondeductible estimated payments and withholding.
- Issue proposed regulations addressing certain issues arising from the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, with respect to foreign corporations with previously taxed earnings and profits as described in Notice 2019-1, including the application of Secs. 959 and 961 to passthrough entities.
- Issue regulations regarding accuracy-related penalties under Secs. 6662, 6662A, and 6664. The regulations under Secs. 6662 and 6664 are outdated, not having been updated since before 1997, and there have been significant changes to the law since then that are not reflected in the regulations. As a result, outdated rules that are confusing and misrepresent current law are in the existing regulations.
- In addition, issue regulations under Sec. 6662A regarding the accuracy-related penalty on understatements with respect to reportable transactions, expanding on some of the provisions in Sec. 6662A, and address some of the interplay between Sec. 6662 (general accuracy-related penalty on underpayments) and Sec. 6662A. (Currently there are no regulations under Sec. 6662A.)
- Provide additional guidance on Regs. Sec. 1.6050K-1 and Form 8308, Report of a Sale or Exchange of Certain Partnership Interests, to address the timing under which a partnership must compute and provide to transferors their share of gain under Sec. 751. Guidance is needed for partnerships that will not have sufficient data to compute these amounts until all other computations required for Form 1065, U.S. Return of Partnership Income, are near completion.
- Issue proposed regulations pursuant to Notice 2020-75 and clarify the definition of "specified income tax payments." Additionally, provide guidance regarding whether the economic benefit discrepancies among shareholders of an S corporation related to specified income tax payments have the potential to create a second class of stock.
- Provide guidance on the specific types of assets that qualify as "qualified real property" under Sec. 179.
- Provide for the ability to e-file Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return; Form 706-NA, U.S. Estate (and Generation-Skipping Transfer) Tax Return — Estate of Nonresident Not a Citizen of the United States; and Form 709, U.S. Gift (and Generation-Skipping Transfer) Tax Return (and related separately filed forms). Treasury and the IRS should also provide taxpayers with the ability to electronically pay estate, gift, and generation-skipping transfer taxes.
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