PTEs need more notice of changes, more time to respond, AICPA says

The AICPA is seeking changes to tax reporting requirements for partnerships and S corporations, collectively known as passthrough entities (PTEs), including more notice for changes to those requirements and more time to respond.

The recommendations, made in a letter sent Thursday, encourage Treasury and the IRS “to adopt a proactive vetting process that promotes transparency, simplification, and coordination to ease the administrative burden of PTE reporting,” Michelle Zou, the AICPA’s senior manager–Tax Policy & Advocacy, said in a news release. “While these improvements would benefit all areas of tax, they are especially critical for PTEs, where the administrative challenges are particularly detrimental.”

Specific recommendations include:

• Prioritizing transparency and stakeholder input by ensuring that changes to PTE reporting requirements, whether introduced through forms, instructions, frequently asked questions, or other guidance, are published with sufficient advance notice and accompanied by a longer comment period.
• Simplifying and regularly assessing current requirements by revisiting all current PTE reporting requirements to simplify, reduce their scope, or eliminate them where appropriate. The AICPA also recommended that existing reporting requirements be assessed regularly to either improve or eliminate them.
• Enhancing reporting requirement implementation processes by:
  • Introducing reporting requirements to a control group to understand the intricacies of the information to be reported.
  • Ensuring that all forms and schedules are available for electronic filing at the time they are introduced.
  • Collaborating with tax software providers, including providing a longer reporting implementation period, to allow for optimal coordination and troubleshooting.
• Enhancing the paperwork burden analysis under the Paperwork Reduction Act of expected time and resource commitments of new reporting requirements and their impact on the tax preparation industry.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.