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Income Tax

AICPA Recommends Reforms to Business Income Taxes

The American Institute of Certified Public Accountants has sent a letter to the Senate Finance Committee Tax Reform Working Group on Business Income Tax that makes suggestions about how to simplify business income tax.

Mar. 31, 2015

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The American Institute of Certified Public Accountants has sent a letter to the Senate Finance Committee Tax Reform Working Group on Business Income Tax that makes suggestions about how to simplify business income tax.

The letter focuses on four key issues:

  • Cash Method of Accounting – The AICPA supports the expansion of the number of taxpayers that may use the cash method of accounting, which is simpler in application than the accrual method, has fewer compliance costs, and does not require taxpayers to pay tax before receiving the income.
  • Tax Return Due Date Simplification – The AICPA recommends establishing a logical set of due dates for the tax returns of partnerships, S corporations and C corporations that are focused on promoting a chronologically-correct flow of information between pass-through entities and their owners so that the problems created by the current inefficient flow of information would be resolved.
  • Alternative Minimum Tax Repeal – The AICPA supports repeal of the alternative minimum tax for corporations and individuals.
  • Pass-Through Business Income Taxation – The AICPA recommends 18 essential components to pass-through tax reform.  Some of the highlights include:
  • Allow subchapters K and S to remain as separate subchapters;
  • Retain the flexibility of the subchapter K model;
  • Retain the check-the-box rules; and
  • Obtain tax rate parity between pass-through business entities and C corporations.