Tax Lawyer's Blog

CPAs have joined lawyers in a bid to get the IRS to withdraw a proposed rule that would require companies with more than $10 million in total assets to disclose uncertain tax positions.

From WebCPA:

In comments submitted to the IRS on June 1, the AICPA said the new reporting requirements will fall heavily on taxpayers already stretched to meet current disclosure requirements.  The IRS should instead focus its resources on the information companies now disclose to the IRS, the AICPA said. 

If the IRS goes forward with implementing the uncertain tax position rules, the AICPA said it should do so as a pilot program. The IRS would then be able to evaluate the process and sunset the program if its costs outweigh its benefits. In addition, the AICPA said small businesses will be particularly hard hit, so any new disclosure rules should only cover taxpayers with both total assets in excess of $50 million and annual gross receipts in excess of $100 million.

“We understand that the UTP proposal does not change the underlying rules for financial reporting, but believe overlaying a tax disclosure construct on the financial reporting system introduces a dynamic which could work at cross purposes with the original and fundamental purpose of the financial reporting rules,” wrote AICPA Tax Executive Committee chair Alan Einhorn in his letter to IRS Commissioner Douglas Shulman. “The importance of reliable, transparent financial reporting should not be compromised as part of this IRS tax disclosure initiative.”

 Here’s what I said in my earlier blog post about the ABA‘s objection to the disclosure rules:

The objective behind the new rules is obvious: The IRS has limited resources and as a consequence can only select a very small percentage of tax returns for audit. But by compelling tax preparers to make in depth evaluations of the tax return positions taken by their clients and then disclose to the IRS those positions that are uncertain, the IRS is in effect outsourcing the audit function to tax preparers without compensating those preparers.

Related Posts:

• IRS Wants too Force Tax Preparers to Audit their Clients Returns Without Pay

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