The American Institute of CPAs (AICPA) has urged the Internal Revenue Service (IRS) to issue further guidance on the use of Form 8050 for directing funds linked to certain tax returns filed by exempt organisations.
In a letter to the IRS, the AICPA recommended updating Form 8050 to clarify that it should not be included in copies of tax returns made available for public inspection.
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The form, titled Direct Deposit of Tax Exempt or Government Entity Tax Refund, was introduced to support the implementation of Executive Order 14247, ‘Modernizing Payments To and From America’s Bank Accounts’.
The AICPA recommendation follows concerns that Form 8050 does not address a privacy issue affecting exempt organisations.
These organisations are generally required to make Form 990-PF, Form 990-T and other tax returns available for public inspection.
The institute said the current wording creates uncertainty over whether Form 8050 could unintentionally be included in publicly disclosed copies of those returns.
It has therefore requested the IRS to amend Form 8050 and its related instructions to state that exempt organisations do not need to include the form with copies of their filed tax returns that are subject to public inspection.
AICPA Tax Policy & Advocacy senior manager Scott Klein said: “Clarification would provide certainty to taxpayers and practitioners, facilitate compliance with the order’s requirements and address potential public inspection concerns associated with collecting banking information from exempt organisations.
“Creating this safeguard to protect taxpayer information helps safeguard sensitive direct deposit and banking information from unnecessary public access.”
In August, the AICPA called on the US Department of the Treasury and the IRS to clarify and simplify three CAMT notices.
