The AICPA’s tax policy and advocacy work: 2023 highlights

While plenty of federal tax bills were introduced in both congressional legislative chambers and debated at the committee level this year, federal tax policy was caught in a “hurry up and wait” situation as the major political parties eye the 2024 elections and decide how to address the tax changes in the law known as the Tax Cuts and Jobs Act, P.L. 115-97, set to expire in 2025.

As a result, the majority of the AICPA’s tax advocacy successes this year were at the regulatory level. These include helping to shape priority guidance for provisions of the Inflation Reduction Act, P.L. 117-169; successfully advocating for the indefinite continuance of electronic signatures by the IRS; and being among the first groups to publicly draw attention to and have the IRS recognize the potential fraud in the employee retention credit (ERC) program associated with unscrupulous ERC mills.

On the legislative front, a slew of popular AICPA-endorsed bills that would increase the Form 1099-K, Payment Card and Third Party Network Transactions, threshold from $600 contributed to the IRS’s decision to postpone (again) the lower reporting threshold.

Before we enter 2024, which figures to be the start of a frantic two-year period in federal tax policy, let’s take a closer look at some of the AICPA’s tax advocacy successes in 2023:

66 comments to government

The AICPA continued to be busy this year, providing much input and feedback through 66 comment submissions and many discussions with Treasury and IRS officials on needed and proposed tax guidance and with congressional staffers on tax legislative proposals.

One of the more substantial efforts involved all the AICPA Tax Division tax advocacy committees and technical resource panels that developed and updated our 2023 AICPA Compendium of Tax Legislative Proposals, which contained 61 tax simplification and technical proposals submitted to this Congress to consider enacting. One proposal is to expand the personal casualty loss deduction as part of disaster tax relief. This proposal was included in H.R. 5863, the Federal Disaster Tax Relief Act of 2023, which the House Ways and Means Committee passed this year.

The tax advocacy committees and technical resource panels also developed, updated, and sent to Treasury and the IRS AICPA comments on the 2023–2024 IRS Priority Guidance Plan, which contained 182 issues needing IRS guidance that we suggested Treasury and IRS consider addressing during the upcoming year. We are aware of at least two items in our comments that Treasury and IRS added to their priority guidance plan based on our suggestions: (1) updating Rev. Proc. 2015-13 to provide procedures and rules for automatic and nonautomatic changes in method of accounting and (2) regulations under Sec. 645 pertaining to the duration of an election to treat certain revocable trusts as part of an estate.

Form 1099-K relief

When the American Rescue Plan Act of 2021, P.L. 117-2, passed, including a surprise change in the de minimis reporting threshold for third-party network transactions (e.g., Venmo and PayPal) from $20,000 and 200 transactions to $600, we immediately recognized the administrative challenge and taxpayer confusion this change would cause and began forcefully advocating for an increase in the threshold.

The AICPA endorsed several related bills and was pleased to see the IRS’s announcement just before Thanksgiving 2023 that delayed the $600 threshold for 2023 and provided a transition year in 2024 at a $5,000 threshold. As the AICPA provides members with an updated snapshot and a Q&A on the issue, we will continue to advocate for a legislative permanent increase from the $600 threshold.

Extension of e-signatures

An issue important to many practitioners, taxpayers, and the AICPA, e-signatures provide an efficient way for submission of returns and documents to the IRS. During the COVID-19 pandemic, the IRS instituted a temporary policy allowing taxpayers to electronically sign and email many documents.

We advocated for an extension and expansion of that policy, as the ability to e-sign certain forms and filings was scheduled to expire on Oct. 31, 2023. The IRS’s Oct. 17, 2023, update to the Internal Revenue Manual to indefinitely extend the pandemic-era relief was welcome news, and we will continue to advocate for a broad expansion of this relief so it covers more forms.

Education on ERC mills

Our yearslong education campaign on possible fraud in the ERC program was instrumental in the IRS’s recent decision to delay ERC refund processing and provide ERC withdrawal and settlement programs. It also led to the AICPA’s being selected by the IRS to present on the ERC at the 2023 IRS Nationwide Tax Forums. Though we understand the frustration that some business owners feel as they continue to wait on legitimate ERC claims, CPAs were equally frustrated with dishonest credit mills’ attempts to mislead their clients on ERC eligibility.

Our advocacy in this area was driven by the genuine concern that our members felt for unsuspecting small businesses, and we are particularly proud of how our membership leveraged our timely resources to help their clients manage the misinformation surrounding the pandemic tax credit.

Introduction of the Simplify Automatic Filing Extensions Act

In spring 2023, we secured the introduction of a bipartisan bill that AICPA Tax Division volunteers and staff developed as part of an initiative to make the filing season easier for practitioners. H.R. 3566, the Simplify Automatic Filing Extensions (SAFE) Act, would allow individual taxpayers filing for a federal tax filing extension to calculate and rely on a safe harbor of 125% of the prior year’s tax to be paid in by the original due date to avoid penalties.

This proposal would reduce the time and cost associated with filing tax extensions, as practitioners would no longer need to prepare current-year estimates for extensions. Reps. Judy Chu, D-Calif., and Mike Carey, R-Ohio, the co-leads, both sit on the House Ways and Means Committee, and five of the remaining 10 cosponsors (12 cosponsors total) are Ways and Means Committee members. We will continue to advocate for this bill in 2024 and grow cosponsorship numbers.

Endorsement of the Electronic Communication Uniformity Act

Sponsored by Sen. Catherine Cortez Masto, D-Nev., and Sen. Marsha Blackburn, R-Tenn., S. 1338, the Electronic Communication Uniformity Act would give the IRS the authority to treat electronically submitted tax payments and documents as submitted on the day they are transmitted, even if the IRS processes them at a later date. As most practitioners are aware, this practice — known as the “mailbox rule” — already applies to payments and documents sent to the IRS through traditional mail. The IRS national taxpayer advocate originally recommended this change as a legislative solution, and the AICPA endorsed the bill and is working to gather more cosponsors.

Shaped Inflation Reduction Act implementation guidance

With the IRS prioritizing guidance on the recently enacted Inflation Reduction Act, the AICPA formed task forces and immediately provided input to ensure practitioner concerns and suggestions were considered in the implementation guidance and regulations. At the request of Treasury and the IRS, the AICPA Corporate Alternative Minimum Tax Task Force met and discussed various issues with them to help shape the tax’s implementation guidance and then submitted prerelease recommendations and comments on two IRS notices as well. The AICPA will continue to keep members informed and will comment on the implementation guidance as more guidance and regulations are released.

Secured timely IRS clarifications on disaster relief

In coordination with various state CPA societies, the AICPA was instrumental in getting the IRS to provide timely clarifications on its disaster relief covering certain disaster areas in California as well as U.S. taxpayers directly affected by the latest Israel-Hamas war.

Looking ahead to 2024, the AICPA’s tax and congressional advocacy teams, working closely with AICPA members, will continue to advocate on important tax regulatory and legislative matters. These include the continued implementation of enacted legislation, such as the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, P.L. 116-94; the SECURE 2.0 Act, enacted as part of the Consolidated Appropriations Act, 2023, P.L. 117-328; the corporate alternative minimum tax; and energy tax credits, as well as proposed tax legislation, regulations, and guidance. Our efforts will also extend to tax administrative issues, such as IRS service and modernization. We will continue to keep members informed of issues, developments, and our continuing tax advocacy efforts.

— Eileen Reichenberg Sherr, CPA, CGMA, MT, is director–Tax Policy & Advocacy, and Lauren Pfingstag Vahey is director–Congressional & Political Affairs, with AICPA & CIMA, together as the Association of International Certified Professional Accountants. To comment on this article or to suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.