TEC initiatives.

Since the last cut-off date for this column (Sept. 15, 2005; see TTA, November 2005, p. 702), the AICPA Tax Division's Tax Executive Committee (TEC) met once (Oct. 31, 2005) and exercised its review function on several projects. TEC actions taken after Dec. 15, 2005 will be reported in a future column.

Tax Policy Advocacy

The TEC plays a major role on behalf of all 350,000+ AICPA members by interacting with tax policymakers. As a senior policymaking committee, its official positions are those of the AICPA, unless the Board of Directors overrides them. These positions cover a variety of forums, including detailed reactions to proposed legislation and other official regulatory guidance. All positions are developed by experts--the volunteer members of the Tax Division's various committees, technical resource panels (TRPs) and task forces, and AICPA staff. Proposed positions are extensively reviewed either by the TEC or a subset of its members, before they are approved as official positions. In contrast to some other professional groups, in which commentary usually represents the views of the individual members of a specific subgroup, the TRPs and committees cannot take official positions without the TEC's endorsement, thus ensuring that positions taken represent the AICPA's official policy.

Policy studies: The TEC has issued a series of tax policy studies, intended to provide a neutral context for analyzing a variety of tax proposals; see, e.g., Tax Policy Concept Statement 1: Guiding Principles of Good Tax Policy: A Framework for Evaluating Tax Proposals, available at http://tax.aicpa.org/NR/ rdonlyres/AC230E51-D650-4D65-B160-C7450A9381F4/0/2I_08a.pdf. It has also undertaken in-depth studies that address specific, broad, tax policy proposals. For example, in March 2005, it issued a Social Security reform study; see Understanding Social Security Reform: The Issues and Alternatives, available at www.aicpa.org/members/soc sec.htm. Last September, fundamental tax reform was tackled; see Understanding Tax Reform: A Guide to 21st Century Alternatives, available at http://tax.aicpa.org; see under "News and other Center Communications." The TEC also conducts joint studies with other professional groups. For example, the report, titled Reform of Federal Wealth Transfer Taxes, was the result of collaboration among the TEC, the American Bar Association, the American Bankers Association and estate planning professional groups. The report is available at http://tax.aicpa.org/Resources/Tax+ Advocacy+for+Members; click on "Trust and Estate and Gift."

Policy studies involve significant efforts by many people. They usually have their genesis in the Tax Division's Tax Legislation and Policy Committee (TLPC) (chaired by Don Barnes, and staffed by Carol Ferguson), although sometimes the TEC suggests topics to the TLPC. The TLPC will form one or more task forces for an in-depth look at a specific area. If necessary, it will turn to outside resources for expertise not readily available within the volunteer pool. For example, for the Social Security and fundamental tax reform studies, the TLPC engaged Marty Sullivan, an economist who specializes in tax policy analysis. This ensured the professional generation and presentation of the study's economic data. For other studies, it sought out professionals who specialize in generating revenue estimates of proposed legislative changes; see e.g.; the fiscal-year flexibility proposal, available at http://tax.aicpa.org/Resources/Tax +Advocacy+for+Members/AICPA+ Proposes+Fiscal+Year+Flexibility+for +Emerging+Small+Businesses.htm. This is done when it is critical to understand the revenue/fiscal implications of a specific proposed legislative change. This proposal has been reintroduced in the House (see HR 4006, the Small Business Tax Flexibility Act of 2005), and the TEC continues to monitor its status as it seeks co-sponsors and the Joint Committee on Taxation develops revenue estimates.

Major studies involve a significant commitment by the TEC, Tax Division members and AICPA staff. For example, before Social Security reform and fundamental tax reform were all the rage, the TEC had already identified them as emerging issues. Its task forces in these areas (both staffed by Carol Ferguson) reviewed the TEC's positions and identified the new efforts that would be needed to respond to changed environmental realities. Numerous conference calls, meetings and drafting sessions led to documents that needed to be reviewed by the TEC and others. The TEC's modifications to these drafts resulted in approved and published documents. The TEC held press conferences to announce their publication. It provided electronic copies to all members of Congress and their staffs. Further, Tom Ochsenschlager, Vice President of the Tax Division, and Carol Ferguson made personal calls to key staff and members of the House Ways and Means Committee and the Senate Finance Committee, and personally delivered hard copies.

Other proposals: Commentary on regulatory proposals is no less time-consuming, but it is often more compressed, due to the nature of the public comment process. Generally, the TEC's comments on regulations or other statutory guidance commences with the TRP or committee responsible for monitoring the specific Code section involved. Once the IRS or Treasury announces its intention to take regulatory action or issue administrative guidance that requires public comment, the appropriate group determines whether commentary is needed. The decision is then reviewed by senior AICPA tax staff and, when necessary, the TEC. Once comments are prepared, they are reviewed by either the TEC or a subset of its members in cases when the comments do not involve new positions, or by the full TEC membership when there are new positions. Regulatory comment letters generally are shorter than legislative studies, and require more technical analysis.

Other Activities and News

* On Oct. 31, 2005, the TEC voted to expose for comment Proposed Standard No. 9, Tax Practice Quality Control.

* On Nov. 2, 2005, the AICPA received the IRS Citation of Excellence for assisting the IRS in serving small business taxpayers; see the "News Center" at www.aicpa.org/ index.htm.

* On Nov. 28, 2005, the TEC sent a letter to the Multistate Tax Commission's (MTC's) Executive Committee, commenting on proposed MTC Model Uniform Statutes.

* On Nov. 30, 2005, the TEC sent a letter (with Barry Melancon) to IRS Commissioner Mark W. Everson, regarding the inclusion of average preparer fees in Form 1040 instructions; see the "News Center" at www.aicpa.org/index.htm.

* The TEC developed materials available to AICPA Tax Division members, to assist in understanding and implementing changes to Circular 230, Regulations Governing the Practice of Attorneys, Certified Public

Accountants, Enrolled Agents, Enrolled Actuaries, and Appraisers before the Internal Revenue Service; available at http://tax.aicpa.org, see under "News and other Center Communications"

* The TEC published the 2005 Tax Practice Guides and Checklists, available at http://tax.aicpa.org, under "Practice Support."

* The Tax Division continues to monitor issues such as charitable governance, tax shelters (including the statutory definition of economic substance), Circular 230 implementation, contingent fees, electronic filing by corporations and nonprofit organizations, pro-bono efforts (including assistance to the IRS for hurricane victims) and new partnership regulations. As these activities generate public reporting, commentary will be available online and mentioned in future columns,

Get Involved!

As a senior technical committee of the AICPA, the Tax Executive Committee (TEC) is authorized to speak for the AICPA on tax matters, and is also designated by governing Council as a standard-setting body. However, numerous other committees, 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, and administer the AICPA's tax ethics program (Statements an Standards for Tax Services).

Through its various task forces, TRPs and committees, the TEC continues la monitor numerous projects. The Tax Division is committed te providing the best service possible to AICPA members. Leadership and membership appointments for committees and TRPs for the current committee year, which started October 2005, have been completed. However, members who would like to volunteer to assist in Tax Division activities 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].

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.

Editor and Author: Thomas J. Purcell III, J.D., Ph.D., CPA Associate Professor of Accounting and Professor of Law Creighton University Omaha, NE