TEI, ABA, and AICPA joint project on simplification of the Tax Code.

On December 3, 1999, TEI's President Charles W. Shewbridge, III sent the following letter to Senator William V. Roth, chairman of the Senate Finance Committee, and Congressman Bill Archer, chairman of the House Ways and Means Committee, voicing the Institute's support for simplification of the Internal Revenue Code. The letter is the first step of a joint project the Institute is undertaking with the Section of Taxation of the American Bar Association and the American Institute of Certified Public Accountants.

As president of Tax Executives Institute, I am writing to express support for the efforts of two other professional organizations -- the Section on Taxation of the American Bar Association and the American Institute of Certified Public Accountants -- to simplify the tax laws. Recently, the ABA Tax Section and the AICPA have written you to express concern about the complexity of the tax law, specifically addressing proposals set forth in H.R. 2488, which was passed by Congress this summer but was subsequently vetoed by the President. Because many of the provisions in that vetoed bill may be considered in the future, the ABA and AICPA believe that their views will be helpful to Congress in crafting future legislation. For the reasons set forth below, TEI supports the thrust of their comments.

Tax Executives Institute is the preeminent association of corporate tax executives in North America. We represent a cross-section of the business community, and are dedicated to the development and effective implementation of sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike. Although our constituency and internal procedures prompt us to concern ourselves primarily with the provisions affecting business, we agree with the ABA and AICPA that the individual provisions of the Code need attention. TEI also agrees with the ABA and AICPA that complexity of the law -- including constant changes and amendments -- remains the primary impediment to the effective operation of the tax system and the efficient management of the Internal Revenue Service. Finally, we believe that the principles outlined by the ABA and AICPA will assist Congress in enacting future tax legislation, including legislation that will affect directly business taxpayers.

Some may fear that, like death and taxes, complexity will always be with us. At least in the case of large multinational corporations (such as those that employ TEI's members), that may well be true. But the complicated nature of today's economy should not be used as an excuse for not making the law simpler. Everyone -- Congress, the U.S. Department of Treasury, the IRS, tax professionals, and taxpayers -- bears responsibility for the current state of the law and for simplifying it.

Recent legislation requiring the IRS to provide an annual report to Congress on the sources of complexity in the administration of the Internal Revenue Code makes it more likely that the need for simplification will remain paramount in enacting legislation. Another step needed is consensus on ways to simplify current law. To this end, TEI is working jointly with the ABA and AICPA to compile a list of simplification recommendations for your consideration, which will be submitted early next year.

The year 2000 will bring new challenges for the tax system. Implementing several recommendations set forth in the recent interest and penalty study by the staff of the Joint Committee on Taxation (such as interest equalization) and stabilizing expiring legislation (such as the research and development credit) will provide some measure of relief. TEI strongly encourages you to re-double your simplification efforts for all taxpayers, and we pledge our cooperation and support.

If you have any questions, please do not hesitate to contact me, at [phone] or Timothy J. McCormally of the Institute's professional staff, at [phone].