TEC initiatives.

As a senior technical committee of the AICPA, the Tax Executive Committee (TEC) is authorized to speak for the Institute on tax matters and is also designated by governing Council as a standard-setting body. However, numerous other committees, technical resource panels (TRPs) and task forces initiate and develop proposed solutions to policy issues and technical and tax administration problems, for consideration and approval by the TEC. They also initiate proposals for valuable products and services for members in tax practice.

Since the last cut-off date for this column (Dec. 1,2004; see TTA, February 2005, p. 113), the TEC met once (Jan. 19-20, 2005) and exercised its review function on several projects. TEC actions taken after March 7, 2005 will be reported in a future column.

Administrative Issues

The TEC continues to implement and monitor progress on the Tax Section's Strategic Plan. The original strategic plan is available at www.aicpa.org/ download/tax/tax_section_strat.pdf.

Self-Governance Activities

As reported in the February 2005 column (see DC Currents, TTA, February 2005, p. 115), the Tax Practice Quality Control Task Force (chaired by Joe Scutellaro) proposed an interpretation of Statements on Standards on Tax Services No. 3, "Certain Procedural Aspects of Preparing Returns" indicating that a member should have a system of quality control for his or her tax practice. After much discussion, it was decided that an interpretation was not appropriate; rather, a new standard covering this topic should be considered. The task force is in the process of recasting the current draft interpretation into a standard. The TEC will discuss the progress on this issue at its June 2005 meeting.

Technical Activities

General: At the January 2005 meeting in San Diego, the TEC met with members of the California State Society of CPAs taxation committee, to provide outreach and improve communication. It also discussed pending projects (many of which are discussed here), upcoming deadlines and the Tax Division's general business. The next meeting will be June 16-17, 2005, in San Francisco.

On Feb. 1, 2005, it was the column editor's honor to represent the AICPA Tax Section in testifying before the IRS Oversight Board. The text of that testimony, which was prepared in conjunction with the IRS Practice and Procedures Committee (chaired by MarkVan Deveer) can be found at www.cpa2biz.com/ ResourceCenters/Tax/Tax+Practice/ OversightTestimony.htm.

On Feb. 14, 2005, in a joint submission with the Center for Public Audit Firms and the Professional Ethics Executive Committee, the TEC provided comments to the Public Company Accounting Oversight Board on "Proposed Ethics and Independence Rules Concerning Independence, Tax Services and Contingent Fees" available at www.aicpa.org/cpcaf/download/ AICPA_Response_PCAOB_Docket _017_Comment_Letter.pdf.

E-filing: On Feb. 28, 2005, the TEC submitted comments (prepared by the IRS Practice and Procedures Committee) to IRS Commissioner Mark Everson on the temporary and proposed regulations to require large corporations and exempt organizations to file electronically. Although the AICPA supports the IRS's long-range goals for electronic tax administration in general and electronic filing in particular, the TEC expressed concern that mandatory e-filing, as provided for by REG-130671-04, would require tax advisers, the business community, exempt organizations and software developers to change their processes and technology significantly. To ensure a smooth transition to e-filing, the TEC recommended delaying the implementation of the regulations by at least one year, so that the many unresolved issues affecting the program could be resolved.

Tax-exempt organizations: On March 1, 2005, the TEC provided additional comments to the Senate Finance Committee's (SFC's) discussion document on proposed reforms and best practices for nonprofit organizations. As reported previously in this column, the TEC had provided the SFC with comments; see DC Currents, TTA, November 2004, p. 711; and www.cpa2biz.com/Resource Centers/Tax/Exempt+Organization/ EO_Roundtable.htm. The additional comments, prepared once again by the Exempt Organizations Taxation TRP (chaired by Harvey Berger), in collaboration with the Not-for-Profit Organizations Expert Panel (chaired by Stephen Kattell), focused on financial transparency, governance and compliance issues; for details, see News Notes "Nonprofit Organization Reform," p. 252, this issue.

Estates and gifts: On Feb. 9, 2005, the TEC submitted comments to Commissioner Everson on proposed regulations under Sec. 2642(a)(3) that addressed the qualified severance rules for generation-skipping transfer tax purposes. The TEC's submission, prepared by the Trust, Estate, and Gift Tax TRP (chaired by Roby Sawyers), requested clarification on whether certain severances described in Regs. Sec. 26.2654-1(b) would continue to be allowed. The letter is available at www.cpa2biz.com/Resource Centers/Tax/Estate%2c+Gift%2c+ Trust%2c+Fiduciary/GSTSeverence Regs.htm.

Partnerships: On March 2, 2005, the TEC requested Congress to address an urgent firing-season issue regarding the effective date of newly enacted Sec. 470. That provision, added by the American Jobs Creation Act of 2004, addressed abusive sale-leaseback transactions involving tax-exempt entities. According to the legislative language, partnerships with tax-exempt entity partners that also have disproportionate allocations are covered by the rules, even though they do not engage in such leasing transactions. The effective date could be interpreted to apply to the 2004 filing season. The letter, prepared by the Partnership Tax TRP (chaired by Debbie Fields), requested clarification as to Sec. 470's scope and a moratorium on enforcement until that time. For details, see News Notes, "SILO Legislation" p. 252, this issue.

Fundamental tax reform: On March 7, 2005, the TEC published its legislative study of Social Security reform, on the AICPA's Website; see www.aicpa.org/ members/socsec.htm. Prepared by a task force of the Tax Legislation and Policy Committee (Don Barnes, chair), the study analyzes the current state of Social Security, possible future trends and reform proposals. It is a comprehensive look at seven of the major proposals for reform that have been offered over the last few years. Every member of Congress and staff of tax committees received an electronic and hard copy version.

In reaction to President Bush's creation of a bipartisan panel to advise Treasury on options to reform the Code fundamentally to make it simpler, fairer and pro-growth, the TEC has formed a Fundamental Tax Reform Task Force (chaired by Pam Pecarich) to prepare a legislative study similar to the Social Security study. Current plans include completing the study before the President's panel completes its task.

Conclusion

Through its various task forces, TRPs and committees, the TEC continues to monitor numerous other projects. The Tax Division is committed to providing the best service possible to AICPA members. Leadership and membership appointments for committees and TRPs for the current committee year, which started on Oct. 19, 2004, are completed. However, members who would like to volunteer to assist in Tax Division activities (e.g., on task forces or for future appointed service) should contact Ed Karl at [phone] or [e-mail]. Members having suggestions for new services or products should contact Bill Stromsem at [phone] or [e-mail]

Editor's note: Prof. Purcell is Chair of the AICPA Tax Division's Tax Executive Committee. DC Currents heightens awareness of the Tax Division's activities and apprises readers of tax policy, technical issues and other practice support matters.

Thomas J. Purcell III, J.D., Ph.D., CPA

Associate Professor of Accounting and Professor of Law

Creighton University 

Omaha, NE