AICPA News is a roundup of recent announcements from the American Institute of CPAs and the Chartered Institute of Management Accountants.
AICPA Expresses Strong Support for Bipartisan Bill to Improve IRS Administration
The American Institute of CPAs (AICPA) has signaled strong support for a bipartisan bill that contains 63 provisions designed to improve tax administration and reduce the burdens on taxpayers and their preparers. The Taxpayer Assistance and Service (TAS) Act, introduced by Senate Finance Committee Chairman Mike Crapo (R-ID) and Ranking Member Ron Wyden (D-OR), addresses important tax provisions that the AICPA has long-advocated for, including:
- Sec. 101. Digitization of Tax Returns and Correspondence.
- Sec. 102. Establishment of Dashboard to Inform Taxpayers of Backlogs and Wait Times.
- Sec. 103. Expansion of Electronic Access to Information about Returns and Refunds.
- Sec. 104. Expansion of Callback Technology.
- Sec. 105. Expansion of Online Accounts.
- Sec. 108. Individuals Facing Economic Hardships Informed of Collection Alternatives.
- Sec. 405. Operations to Assist Taxpayers Experiencing Hardships During Lapse in Appropriation.
- Sec. 504. Authority to Deny, Revoke, or Suspend Preparer Tax Identification Numbers.
- Sec. 902. Establishment of Failure-to-Pay Penalty Safe Harbor for Individuals.
- Sec. 903. Extension of Mailbox Rule to Electronic Submissions and Payments.
AICPA Requests IRS Issue Penalty Relief to Farmers Impacted by Form 8995 Changes
In a letter submitted to the Internal Revenue Service (IRS), the AICPA requested penalty relief for qualified farmers due to changes made to the instructions for Form 8995, Qualified Business Income Deduction Simplified Computation. The changes create a shortened filing window and may cause a disadvantage to some qualified farmers outside of their control.
Because of this change, Form 8995 had to be revised and reissued. In some cases, the updated form wasn’t made available until February 23, creating difficulties for farmers and fishers. These taxpayers avoid the January 15 estimated tax payment if they file their federal return by March 1 (March 2 in 2026). Filing by that date allows them to skip the estimated payment and pay all tax due with their return without facing underpayment penalties. The delayed availability of Form 8995 jeopardizes their ability to meet the March 2 deadline.
To address this hardship, the AICPA’s letter recommends that Treasury and IRS issue penalty relief, under section 6654(e)(3)(A), for underpayment of 2025 estimated taxes to qualified farmers who file their federal income tax return, including Form 8995 and pay the tax due by April 15, 2026.
Allowing only one week to finalize their returns imposes an unreasonable burden on qualified farmers and their tax preparers. Because the January 15 deadline to make estimated taxes has passed, qualified farmers have already made their decision either to submit an estimated tax payment on January 15 or file their return and pay any tax due by March 2. Those who chose the option to file their return by March 2 are left at a disadvantage and without administrative intervention will be subject to unfair penalties.
Economic Optimism Rebounds Upward and Company Confidence Strengthens, AICPA and CIMA Survey Finds
Business executives reported higher optimism about the U.S. economy this quarter, while confidence in their own companies’ prospects also improved, according to the first-quarter AICPA and CIMA Economic Outlook Survey. Executives continued to cite domestic economic conditions as their top concern, followed by employee and benefits costs and the costs of materials, supplies and equipment. Inflation concerns retracted during the quarter, although the survey concluded before the recent activity in the Middle East.
The AICPA and CIMA survey polls chief executive officers, chief financial officers, controllers and other CPAs in U.S. companies who hold executive and senior management accounting roles.
Thirty-nine percent of business executives said they were optimistic about the U.S. economy’s outlook over the next 12 months, rebounding from 28% in the past quarter. Domestic economic conditions remained in the top position, while employee and benefits costs and materials/supplies/equipment costs each rose two spots (No. 2 and No. 3) respectively. Inflation, the No. 2 top concern last quarter, slid to the middle of the list (No. 5).
Executives’ outlook for their own companies improved, rising six percentage points from 41% in Q4 to 47% in Q1. Plans for business expansion also increased, with 55% of executives expecting growth this quarter compared to 48% last quarter.
The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months. In comparison, the U.S. Department of Labor’s February employment report looks back on the previous month’s hiring trends.
Other key findings of the survey:
- The number of business executives who expect a recession by the end of 2026 decreased heavily from 52% to 36%.
- The overall hiring picture remains largely similar to last quarter — 56% (53% in Q4) of business executives saying they have the right number of employees and 31% (32% in Q4) noting too few.
- Entry-level hiring according to business executives also remained level at 57% showing no change. Only 19% noted an increase in entry-level hiring for the quarter with business growth and the need for AI skills as the primary drivers.
- Profit and revenue growth both rebounded slightly. Projected revenue growth for the next 12 months is now expected to be 2.9% (up from 2% in Q4) and profit expectations are now projected to be at 1.6% this quarter (up from 0.8% in Q4).
Sentiment on the global economy also turned more positive, rising from 22% to 25%, quarter over quarter.
AICPA Recommends IRS Expand and Adjust First-Time Abatement Program
The AICPA sent a letter to the Internal Revenue Service (IRS) recommending that the First Time Abatement (FTA) program be expanded to cover more types of tax and information return penalties. The letter also asks that taxpayers be allowed to reverse automatically applied FTA relief when taxpayers demonstrate reasonable cause, so they can save their one-time abatement for a future need. Expansion of and targeted refinements to the FTA program would reduce IRS administrative burdens, help taxpayers better understand available penalty relief options, and support voluntary compliance.
Currently, the IRS provides FTA relief based on numerous factors including whether the taxpayer can demonstrate clean compliance history and the type of penalty assessed; however, there are many additional penalties for which taxpayers could demonstrate clean compliance history. Expanded FTA relief allows taxpayers to overcome a speedbump, to continue otherwise compliant behavior, and to be more educated about our complex tax system. Additionally, eligibility for FTA relief has many nuanced exceptions that add complexity to tax administration and confuse taxpayers. Refinements to the existing FTA program would make tax administration clearer and less burdensome on taxpayers, their practitioners, and the IRS.
AICPA’s letter recommends the following actions:
- Expand FTA to section 6652 penalties and corresponding annual filings.
- Provide FTA relief for information return penalties.
- Expand FTA to estate and gift-tax related filings that can recur more than once.
- Allow FTA relief for the section 6656 penalty even in cases where Electronic Federal Tax Payment System (EFTPS) is required but not used.
- Automatic application of FTA relief and review of reasonable cause statements.
- Promote taxpayer awareness of FTA availability.
- FTA relief should be available for multiple periods if the failure stems from a single overall error.
Accounting Bodies for the United States, Canada, and Mexico Agree to Extend Mutual Recognition Agreement
Professional bodies representing the accounting profession in the United States, Canada and Mexico have signed a memorandum of understanding to extend their longstanding agreement to ease cross-border practice.
An extension of the tripartite Mutual Recognition Agreement (MRA) was signed last month by officials of the U.S. International Qualifications Appraisal Board (representing the American Institute of CPAs and National Association of State Boards of Accountancy), CPA Canada, and Mexico’s Instituto Mexicano de Contadores Públicos (IMCP) and Comité Mexicano para la Práctica Internacional de la Contaduría (CMPIC). The agreement extends the existing MRA through Dec. 31, 2028.
The Mutual Recognition Agreement creates a streamlined path for cross-border professionals to work internationally with fewer administrative hurdles. In general, CPAs in the United States and Canada, and CPCs in Mexico can obtain professional mobility to work across North America if they meet certain eligibility requirements and remain in good standing in their home jurisdictions.
AICPA Requests Guidance on the Paid Family and Medical Leave Credit
The American Institute of CPAs (AICPA) sent recommendations and asked for guidance from the Department of the Treasury and Internal Revenue Service (IRS) regarding section 45S of the Internal Revenue Code – the paid family and medical leave credit. Currently, there is no guidance on the changes to the credit made by the One Big Beautiful Bill Act (OBBBA).
The OBBBA changed section 45S, giving a broader group of employers access to the credit; however, due to the credit, employers must ensure that their written leave policies are compliant during the first full year that the amended section 45S changes are in effect (2026). Section 45S(c) defines “eligible employer” as an employer that has a written policy that meets the requirements to claim the Credit. In general, the written policy must provide a certain level and duration of coverage for all “qualifying employees.”
The AICPA’s letter requests guidance and offers recommendations to update existing guidance on section 45S in the following areas:
I. Calculating the Credit
- Allow employers to base the Credit on both wages paid and premiums paid
- Clarify the method of calculating the premium-based Credit
- Clarify how to determine the applicable percentage for an aggregated employer
- Provide a transition period regarding the effective date of employer-written paid family and medical leave policies
II. Employee Considerations
- Permit an eligible employer to choose to cover employees after six months of employment through applicable plan documents
- Allow use of safe harbors when determining an employee’s compensation
- Clarify how to determine if an employee is a qualifying employee if they worked for the employer for less than one year
- Clarify treatment of an employee’s prior service with regard to an employer’s written paid family and medical leave policy
- Permit exclusion of certain employees from an employer’s written paid family and medical leave policy
III. Eligible Employers
- Clarify eligible employer status when legally distinct entities have different industry classifications
- Clarify application of the Credit to employers aggregated with non-US employers
AICPA Reaffirms Strong Support for Fiscal State of the Nation Act
In a letter to Representatives Andy Barr (R-KY) and Scott Peters (D-CA), the AICPA reaffirmed its strong, long-standing support of H.R. 7026, the Fiscal State of the Nation Act, which would provide for an annual presentation by the Comptroller of the United States to budget committees from both chambers of Congress regarding the audited financial statement of the executive branch. This bipartisan legislation will promote greater fiscal transparency and help key policymakers focus on some of the most important aspects of the consolidated financial statements, including financial and sustainability measures.
A 2025 survey conducted by The Harris Poll on behalf of the AICPA demonstrated that Americans want Congress to have the best information when making important fiscal decisions for our country. According to the survey, 81 percent of Americans agree they would support an annual report to Congress provided by the U.S. Comptroller on the audited financial statements of the nation, with 38 percent indicated they strongly agree.
The AICPA is committed to promoting strong fiscal stewardship and ensuring that lawmakers have access to clear, reliable financial information. By advancing policies that strengthen transparency and education, we help support a more informed budget process and a more secure fiscal future for our nation.
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
Tags: Accounting, accounting news, AICPA, aicpa news, CIMA
