The American Institute of CPAs (AICPA) has submitted recommendations to the Internal Revenue Service (IRS) regarding efforts to enhance the administrative adjustment request (AAR) process.
The proposed actions via the centralized partnership audit regime (CPAR) serve as a framework the AICPA has deemed Form AAR-EZ.
Executing minor adjustments to previously filed partnership returns, particularly those not relevant in determining partner tax liability, is unreasonably difficult because of current AAR procedures, according to the AICPA.
The recommendations include the implementation of short-term simplification measures via the present AAR process, including instruction changes, clarifications, and attachments; AAR simplification through the proposed Form AAR-EZ process; automatic extension requests via the return rules; and limited amended partnership returns in the event of retroactive changes.
The AAR-EZ proposal would yield short and long-term solutions correcting administrative errors occurring when partnership tax returns are completed. For example, a transposition error in a partner’s social security number or address on an issued Schedule K-1.
The AICPA, which noted its more than 428,000 domestic and global members represent varied areas of CPA practice, maintains Form AAR-EZ would address resource constraints while also streamlining the AAR process and bolstering compliance increases.