The American Institute of CPAs (AICPA), in a letter submitted to the Department of the Treasury and Internal Revenue Service (IRS), is recommending the immediate suspension and removal of final regulations which identify certain partnership related-party basis adjustment transactions as transactions of interest (TOI), a type of reportable transaction.
A guidance package was issued in June of 2024 targeted to related parties and partnerships using structured transactions to take advantage of the basis-adjustment provisions of subchapter K. At that time, the AICPA submitted recommendations urging a refinement of the rules. Final regulations were subsequently issued. As currently written, these final regulations will result in an undue burden to taxpayers and their advisors.
In its latest comment letter, the AICPA urges immediate suspension and removal of the final regulations due to the impractical provisions and administrative burdens it imposes.
The final regulations cover routine, non-abusive transactions, provide an unreasonably low threshold, and impose an unreasonably short 180-day deadline for taxpayers to file Form 8886, Reportable Transaction Disclosure Statement, for transactions related to previously filed tax returns due to the six-year lookback window. Additionally, advisors have only 90 additional days beyond the standard reporting deadline to file Forms 8918, Material Advisor Disclosure Statement.
“These final regulations continue to be overly broad, troublesome, and costly, which places an excessive hardship on taxpayers and advisors without a meaningful corresponding compliance benefit or other benefit to the government,” says Kristin Esposito, AICPA Director, Tax Policy & Advocacy. “These regulations exceed their intended scope, especially due to the retroactive nature.”
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Tags: Taxes
