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AICPA suggests review of six regulations to reduce tax regulatory burdens

As the USA Secretary of the Treasury looks at reviewing tax regulations to reduce regulatory burdens, the American Institute of CPAs (AICPA) has published a letter suggesting six regulatory items it feels should fall under that review.

In an executive order in April this year, USA President Trump has instructed the USA Secretary of the Treasury to conduct an immediate assessment of all tax regulations issued by the Department of the Treasury from January 2016 onwards with the view of identifying and reducing tax regulatory burdens.

The AICPA listed the following six regulations which they claim impose an undue burden on the USA tax payers, as well as adding an extra unnecessary complexity to federal tax laws;

  • The regulations on estates, gift, and generation-skipping transfer (GST) taxes and restrictions on liquidation of an interest. These, under internal revenue code section 2704, impose restrictions on interest liquidation and interest valuation in corporations and partnerships. According to the AICPA, these regulations are too broad and also the extent of section 2704 is not contemplated by the Congress.
  • onsistent basis reporting regulations between estate and person acquiring property from decedent. AICPA feels that the regulations on estate tax basis reporting move far beyond the statutory legislative on the zero basis rule and supplemental filings.
  • Regulations on treatment of certain transfers of property to foreign corporations. AICPA believes that these regulations lead to heavy uncertainty when they demand taxpayers to estimate the use of transferred property in the development and exploitation of other intangible property.
  • Regulations pertinent to various aspects of inversion and related transactions which, according to AICPA, raise the transactions scope affected by the inversion statue. This raises risks and resources burdens on taxpayers (including those of the foreign multinationals) who are involved in cross border mergers and acquisition activities.
  • The treatment of certain interests in corporations as stock or indebtedness are the final and temporary regulations issued under internal revenue code section 385. AICPA commented that these regulations’ complexity, with the potential outcomes regarding tax liability can dramatically raise the burdens on taxpayer resources.
  • Finally, regulations on transfers of certain property between USA persons to partnerships with related foreign partners. The AICPA stated that these impose undue complexity and extra burdens on taxpayers while trying to prevent limited targeted abuse which the IRS (internal revenue service) could deal with under the current anti-abuse regulations.

AICPA’s letter can be accessed here.

The Presidential executive order can be accessed here.

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