AICPA Welcomes Senate Tax Reform Plan

“The Senate took an important step toward fundamental tax reform when Senate GOP leaders released the summary of the Senate Finance Committee’s tax reform bill,” Barry C. Melancon, CPA, CGMA, president and CEO of the American Institute of CPAs (AICPA), stated. “Congress is engaged in an ongoing process to achieve tax reform that we welcome.”

Melancon took the opportunity to call lawmakers’ attention to some of the accounting profession’s tax reform goals and concerns.

“First,” he explained, “we applaud expansion of the number of taxpayers who may use the cash method of accounting. Second, all passthrough entities should be treated similarly in any rate reduction. Third, Congress should allow owners of pass-through entities to deduct all of the state and local taxes paid in carrying on a trade or business.” Melancon also explained that partnerships are uniquely reliant on non-qualified deferred compensation arrangements. “Partnerships, generally unable to access public capital markets, must derive working capital from sources such as the unfunded, unsecured promise to pay retirement income to partners and employees after they retire,” he said. “Accordingly, partnerships rely on these arrangements as mandatory components of their partners’ and employees’ compensation packages to fulfill this need.”