In a letter submitted to the U.S. Department of the Treasury and the Internal Revenue Service (IRS), the American Institute of CPAs (AICPA) requested the improvement of several tax forms used by estates and trusts, specifically:
- Form 1041, U.S. Income Tax Return for Estates and Trusts (2024);
- Instructions to Form 1041 and Schedules A, B, G, J, and K-1 (Rev. January 14, 2025); and
- Form 1041-A, U.S. Information Return Trust Accumulation of Charitable Amounts (Rev. September 2018).
Keeping in line with Executive Order 14247, which mandates that all federal tax payments and refunds be processed electronically, and the AICPA’s Guiding Principles of Good Tax Policy, the recommendations aim to:
- Make filing easier for taxpayers and tax professionals;
- Reduce mistakes and delays caused by unclear instructions or manual workarounds;
- Support electronic payments and filings, which are part of a broader government push to modernize how taxes are handled; and
- Protect sensitive information by allowing electronic delivery of tax forms instead of relying on physical mail, which can be lost or stolen.
The deadline for compliance with Executive Order 14247 is September 30, 2025.
The recommendations outlined in this letter are in addition to previously submitted comments on Form 1041 and Form 1041-A as well as an AICPA proposed Form 1041-NR, U.S. Income Tax Return for Foreign Estates and Trusts, and related proposed schedules that are still relevant. The AICPA’s comments include:
Request for information related to the executive order on “Modernizing Payments To and From America’s Bank Accounts”: Currently, Forms 1041 and 706 lack fields for direct deposit information. Other issues causing difficulty include refund amount limits, the inability to use IRS Direct Pay (EFTPS must be used) and bank account name mismatch preventing electronic refunds.
Permit electronic transmission of Schedules K-1 (Form 1041) to beneficiaries and Schedules K-1 (Form 1120-S, U.S. Income Tax Return for an S Corporation) to shareholders: An e-delivery option for Schedules K-1 for Form 1041 and Form 1120-S currently is not allowed. Most corporate fiduciaries (responsible for supplying millions of statements to beneficiaries/grantors of estates and trusts each year) have developed an electronic delivery option for their trust and estate beneficiaries and grantors but currently must also mail a duplicative paper version.
Provide suggested updates to Form 1041 to facilitate electronic filing, foreign tax credits and passive foreign investment companies: The form’s structure doesn’t lend itself to modern tax complexities, especially in international contexts. The outdated form leads to processing delays as IRS staff try to interpret taxpayers’ manual entries which can also prevent successful e-filing.
Provide a Form 1041-A filing exception for trusts with charitable deductions only from partnership contributions: For trusts that claim a charitable deduction under section 642(c), the contribution is made by partnerships in which the trust owns an interest and no contributions are made by the trust. In these situations, trusts should not be required to file Form 1041-A.
Consider AICPA Draft Form 1041-NR, U.S. Income Tax Return for Foreign Estates and Trusts, and relevant schedules: The AICPA feels that the issuance of a Form 1041-NR, specifically tailored to foreign trusts, is needed because there is no clear guidance as to how to properly complete Form 1040-NR for a foreign nongrantor trust earning U.S. source or effectively connected income.
“These outdated forms and paper filing should be revised as we suggested, particularly as they pertain to the filing of complex tax issues like foreign investments and charitable deductions,” said Eileen Sherr, AICPA Director of Tax Policy and Advocacy. “These recommendations will simplify filing for taxpayers and practitioners and will help reduce the administrative burden on the IRS while also improving processing efficiency.”
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Tags: AICPA, Taxes, Treasury Department
