The American Institute of CPAs (AICPA) has called for the suspension and removal of recent Internal Revenue Service (IRS) regulations, which classify certain partnership transactions as reportable.
The final regulations, which the AICPA deems burdensome, cover routine transactions and set a low threshold for reporting.
The AICPA’s latest comment letter, to the Treasury and the IRS, highlights the administrative challenges of the final regulations.
Issued in June 2024, the regulations aim to prevent abuse of basis-adjustment provisions in subchapter K, affecting transactions between related parties and partnerships.
Despite the AICPA’s initial recommendations for refinement, the final rules are said to unduly burden taxpayers and advisors.
The regulations mandate that taxpayers file Form 8886, Reportable Transaction Disclosure Statement, within a 180-day window for transactions tied to previously filed tax returns, considering a six-year lookback period.
Furthermore, advisors face a 90-day extension beyond the standard deadline to submit Forms 8918, Material Advisor Disclosure Statement.
AICPA Tax Policy and Advocacy director Kristin Esposito said: “These final regulations continue to be overly broad, troublesome, and costly, which places an excessive hardship on taxpayers and advisors without a meaningful corresponding compliance benefit or other benefit to the government.
“These regulations exceed their intended scope, especially due to the retroactive nature.”
This pushback from the AICPA follows its earlier suggestions for updates to the Treasury Department Circular No. 230, which regulates the practice of accountants and other professionals before the IRS.
The proposals seek to clarify tax practitioners’ responsibilities and recommend revisions to keep the regulations up-to-date and relevant.
