The American Institute of Certified Public Accountants (AICPA) is seeking guidance from the U.S. Department of the Treasury and the Internal Revenue Service (IRS) on recent tax reporting changes mandated by the Tax Cuts and Jobs Act.
In a letter to the Treasury and IRS, AICPA officials said taxpayers need clarity on section 965 reporting issues to comply with their 2017 tax obligations. This relates to transition tax reporting by individuals, trusts and estates under Internal Revenue Code section 965, which was mandated by the Tax Cuts and Jobs Act.
AICPA is asking the federal agencies to make some clarifications and enact some fixes caused by this mandate.
Specifically, AICPA is asking them to provide automatic relief from penalties incurred by individuals, trusts or estates that have acted reasonably and made a good faith effort to properly report their section 965 tax liability on their 2017 tax returns.
The institute is also seeking clarification that trusts and estates report the section 965 tax in the same manner as individuals. It would also like clarification that the person (including a trust or estate) that owes the section 965 tax is the person who can make the section 965(i) election or assume the liability.
Finally, AICPA is seeking guidance on the treatment of deferred foreign income upon transition to participation exemption system of taxation (section 965) for S corporation trust shareholders. Also, it would like guidance on what trust transactions are section 965 triggering events, and how a transferee of S corporation stock held in trust might assume the liability for the section 965 transition tax.