The American Institute of CPAs is reacting to Senate Republicans’ tax reform plan with its own set of priorities.
Republicans on the Senate Finance Committee is set to mark up their version of the Tax Cuts and Jobs Act, which differs in several important respects from the version that Republicans on the House Ways and Means Committee voted to approve last week, including the timing of corporate tax cuts and the deductibility of state and local property taxes (see Everything you need to know about the Senate GOP tax proposal).
“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,” said AICPA president and CEO Barry C. Melancon in a statement. “Congress is engaged in an ongoing process to achieve tax reform that we welcome.”
However, Melancon pointed to some of the AICPA’s tax reform goals and concerns. “First we applaud expansion of the number of taxpayers who may use the cash method of accounting,” he said. “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 noted that partnerships in particular rely 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.”
The tax reform plan that passed the House Ways and Means Committee does not allow professional services firms such as accounting firms as low a tax rate as corporations.
“We will be vigilantly monitoring key issues for the profession as Congress considers reform of the nation’s tax code, and we urge tax writers to keep our priorities top of mind as the debate continues,” said Melancon.
Melancon acknowledged the work of Senate Finance Chairman Orrin Hatch, R-Utah, and House Ways and Means Committee Chairman Kevin Brady, R-Tex., and their committees, and observed noted that in the past five years the AICPA has sent Congress more than 100 comment letters, position papers and statements for the record to aid the tax reform effort and advance various tax policies.
For more information, visit the AICPA’s Tax Reform Resource Center.