The American Institute of CPAs (AICPA) has urged the US Department of the Treasury and the Internal Revenue Service (IRS) to reduce documentation burdens in transition guidance tied to section 951(a)(2)(B) under H.R. 1.
In a letter responding to Notice 2025-75, which addresses taxable years of certain foreign corporations beginning before 1 January 2026, the AICPA outlined concerns over how the current transition rule operates in practice.
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The AICPA noted that the US taxpayers may face substantial hurdles in accessing detailed tax information required by the notice. The issue may particularly arise when transactions have already closed and there is no relationship with the buyer or contractual duty to provide post-closing tax certifications.
According to the letter, obliging taxpayers to obtain or reconstruct such information risks producing inconsistent results that are beyond their control.
The AICPA’s submission focuses on the notice’s ‘determine and document’ requirement, which compels taxpayers to show that specified dividends increased taxable income. It recommends that this obligation be removed or significantly scaled back.
As an alternative, it suggests a per se rule or safe harbour under which the ‘determine and document’ requirement would not apply to dividends received by certain US persons for whom inclusion in taxable income is mandatory under the Internal Revenue Code.
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By GlobalDataFor other situations, the AICPA urges Treasury and the IRS to clarify that general federal income tax principles should be applied. It also urges them to specify what forms of documentation are sufficient to demonstrate that a dividend has increased taxable income.
AICPA Tax Policy and Advocacy senior manager Reema Patel said: “This guidance does not explain what level of analysis, substantiation or third-party information is required to complying with the ‘determine and document’ requirement.
“In addition, many transactions to which the transition rules apply have already closed, making the AICPA’s recommendations even more essential.”
