Washington (May 9, 2003) -- Of the 15 plus bills currently in congress having to do with some aspect of tax simplification, the American Institute of CPAs has come out strongly in favor of two of them.
The bills are H.R. 22, The Individual and Small Business Tax Simplification Act of 2003, and H.R. 285 The Fairness, Simplification and Competitiveness for American Business Act of 2003. Both were sponsored by New York Republican Amory Houghton.
H.R. 22 would simplify sections of the Internal Revenue Code affecting individuals and small businesses. In a letter to Houghton, AICPA Tax Executive committee chair Robert A. Zarzar commended H.R. 22's provision to increase the alternative minimum tax exemption amount and adjust it for inflation. He said that while "the AICPA supports outright repeal of the AMT," the proposed changes in H.R. 22 are "a reasonable compromise."
A separate provision of H.R. 22 would eliminate the S corporation filing category and allow eligible corporations that are not publicly traded to be treated as a partnership. Zarzar said that the AICPA opposes this part of the bill.
"There are a number of technical issues that could create havoc for small businesses and practitioners," said Zarzar. "Our primary concern is not with the idea in general, but the fact that it must be handled so carefully that we question whether it could be accomplished."
He noted that combining partnerships, LLCs, and S corporations would cause the vast majority of small businesses now operating as S corporations to need expensive, sophisticated tax advice that few of them could afford.
Zarzar cited provisions of H.R. 285 that would greatly increase compliance in the international arena, including repealing the controlled foreign corporation rules on foreign base company sales and services income; deleting overlapping provisions of Subpart F such as the foreign personal holding company and foreign investment company rules; and expanding de minimis rules for the tax treatment of income eatned between subsidiaries under Subpart F.
"As global trade increases," Zarzar wrote Houghton, "legislative changes, such as those in H.R. 285, are needed to allow U.S. businesses to react more nimbly and on a par with foreign competitors having less complex tax systems."
-- Roger Russell
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