Tax Executive Committee initiatives.

In 1999, the AICPA restructured to provide more cost-effective service to its constituents. As part of the restructuring, the Tax Executive Committee (TEC) continued its role of representing the membership in tax matters, but also expanded its responsibility as a liaison with outside organizations and now has standard-setting authority under the AICPA Code of Professional Conduct.

The TEC has spent significant time developing effective processes for implementing the restructuring changes. The restructure reduced the number of standing committees (other than the TEC) to three. The majority of the technical activities that committees previously provided is now the responsibility of newly created technical resource panels (TRPs) and task forces (TFs). The TRPs have broad areas of responsibility and their intention is to serve as overseers of a particular technical area. Because TRP membership is limited (averaging seven members), the responsibility for investigating and developing technical analyses of various aspects of the tax law will fall on the TFs. TF membership is not limited to TRP members, but is open to all AICPA members who might have an interest or expertise in a particular area of inquiry. (Members who wish to become involved in a task force should contact the Tax Division staff.)

The TEC oversees the work of the TRPs and TFs. Discussion and modification of the positions of either occurs before dissemination to appropriate public and governmental organizations. Once the TEC approves a position, it becomes the official position of the AICPA.

Important Issues Facing the Profession

Two of the most significant issues include the Code's penalty and interest provisions and the corporate tax shelter controversy.

The penalty and interest issue primarily involves proposals to increase the responsibility of taxpayers and their advisers in discerning the supportability of tax positions as a condition for avoiding understatement penalties. The Penalty and Interest Reform Task Force, the Relations with the IRS Committee and the TEC developed positions and wrote testimony on the issues other than the tax shelter provisions of the penalty and interest proposals, submitted to the Ways and Means Committee on Jan. 27, 2000. The TEC's primary position is that the Service should impose penalties to insure compliance, not raise revenue, and relate interest costs directly to the use of money and not disguise them as penalties.

The Corporate Tax Shelters Task Force and the TEC have spent much time in developing and refining positions on the tax shelter issue. Proposed legislation has been in reaction to the IRS's perception that some corporate tax benefits, rather than being legitimate business advantages, are driving too many transactions. The TEC's primary concern is to address the issue of abuse, without creating a "chilling" effect on legitimate tax planning. David Lifson, TEC Chair, testified before the Ways and Means Committee on Nov. 10, 1999.

Tax Simplification

In conjunction with the American Bar Association and the Tax Executives Institute, the TEC prepared joint comments on tax simplification. Not relating to specific proposed legislation, the comments addressed areas in which the tax law could be simplified; the alternative minimum tax, estimated tax payment safe harbors, phaseouts and various extender provisions were discussed. No attempt was made to determine a proposal's specific dollar effect on the amount of Federal taxes collected. The comments became public in a joint press conference on Feb. 25, 2000.

SSTSs

The TEC approved and exposed for comment the proposed Statements on Standards for Tax Services (SSTSs) that the Statements on Responsibilities in Tax Practice Enforceability Task Force and the Member Tax Practice Improvement Committee developed (see TTA, May 2000, p. 357). The public comment period expired on July 18, 2000. The TEC finalized the exposure draft at its meeting on July 31, 2000. The SSTSs will appear in the October issue of the Journal of Accountancy and become binding on members as of Oct. 31, 2000.

Other TD Initiatives

The TEC approved the work of the S Corporation TRP, the Trust, Estate and Gift TRP and the Electing Small Business Trust Working Group on Secs. 1361(e) and 641(c). Comments stating the position of the AICPA on these issues were submitted to the IRS on Dec. 21, 1999.

At its January 2000 meeting, the TEC supported repeal of the legislative prohibition on the use of the installment method by accrual-basis taxpayers, which was part of the 1999 legislative package. It is working with small business coalitions on a repeal. At the same meeting, the TEC approved a joint marketing program with the IRS to encourage electronic filing of tax returns.

On Feb. 16, 2000, the TEC submitted a letter, prepared by the Task Force on Estate Tax Repeal and approved with modifications by the TEC, to Senator Kyl, regarding S. 1128, the Estate Tax Repeal bill. The letter analyzed and critiqued the approach taken, without taking a position on the need for repeal of the estate tax in the manner proposed by the bill. On a related issue, the TEC has had discussions with California and Texas CPA society representatives on the impact of community property and separate property state laws on the estate tax.

At its June 1999 meeting, the TEC approved comments on selected revenue provisions contained in the President's Fiscal-Year 2001 Budget. Although the likelihood of passage of this bill (or in fact any bill) in an election year is problematic, because the issues raised in the proposal are likely to be included in future bills, the TEC felt it was important to take positions on many of these legislative areas.

The TEC and other Tax Division committees are committed to providing the best service possible to AICPA members. Any member that has suggestions for services or products that they would like to be provided should contact a member of the AICPA Taxation Team.

Editor's note: Professor Purcell is a member of the Tax Executive Committee.

DC Current is designed to heighten awareness of the Division's work and keep readers apprised of Tax Division activities involving tax policy, technical issues and other practice support matters.

For further information about this column, contact Professor Purcell at [e-mail]. Copies of the documents discussed can be found at the taxation link at the AICPA Website (www.aicpa.org).

Thomas J. Purcell III, Editor Begley Professor of Accounting Creighton University Omaha, NE