The American Institute of CPAs advised the Treasury Department and the Internal Revenue Service to simplify the tax reporting requirements for partnerships and S corporations — or passthrough entities.
In a letter, the AICPA recommended ways to help alleviate time constraints that affect tax practitioners to prepare returns for PTEs. It suggested the Treasury and IRS implement a vetting approach to developing, revising and evaluating PTE reporting requirements.
"Our comments encourage the Treasury and the IRS to adopt a proactive vetting process that promotes transparency, simplification and coordination to ease the administrative burden of PTE reporting," Michelle Zou, senior manager for tax policy and advocacy with the AICPA, said in a statement. "While these improvements would benefit all areas of tax, they are especially critical for PTEs, where the administrative challenges are particularly detrimental."
Specifically, the AICPA recommends the Treasury and the IRS:
- Ensure that changes to PTE reporting requirements are published with sufficient advance notice and with a longer comment period in order to prioritize transparency and stakeholder input;
- Review all current PTE reporting requirements to simplify them, reduce their scope, or eliminate them where appropriate. Additionally, regularly assess existing reporting requirements to either improve or eliminate them;
- Introduce reporting requirements to a control group to understand the intricacies of the information to be reported;
- Collaborate with tax software providers and provide a longer reporting implementation period to allow for optimal coordination and troubleshooting;
- Ensure all forms and schedules are available for electronic filing at the time they are introduced; and,
- Enhance the paperwork burden analysis under the Paperwork Reduction Act of expected time and resourced commitments of new reporting requirements and their impact on the tax preparation industry.
