In a letter submitted to the IRS on Jan. 27, the AICPA requested that the tax agency and the Treasury Department provide exemptions to, or streamlined reporting for, certain foreign filings required by tax-exempt organizations.
The tax forms mentioned in the AICPA letter were Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation; Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships; and Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations.
“Many EOs (aside from those with significant foreign operations and investments) have very small indirect ownership interests in corporations and partnerships overseas as part of their overall diversified investment portfolio,” the letter states. “Tax practitioners often advise EOs to take the conservative position of filing such forms due to uncertainty in the rules and form instructions, as well as the potential risks of significant penalties for failing to file a required form and indefinitely open tax years. Clear guidance and limited exceptions for EOs would be extremely beneficial to these organizations and their tax practitioners, thus freeing up valuable time and resources to be redirected toward mission-related activities and programs.”
The AICPA said its recommendations will:
- Simplify the filing process for tax-exempt organizations and tax practitioners;
- Reduce duplicative reporting of certain information;
- Eliminate unnecessary complexity and reduce the tax administrative burden for exempt organizations; and
- Reduce the administrative burden on the IRS related to collecting the required information.
“Gathering the relevant information, determining whether a filing is required, and then preparing and filing the forms is an administrative and compliance burden, both in terms of time spent and costs incurred,” Daniel Hauffe, senior manager of AICPA tax policy and advocacy, said in a statement. “This burden on tax-exempt organizations arguably outweighs any informational or tax dollar benefit the IRS and Treasury likely receive.”
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
