AICPA submits nearly 200 recommendations for IRS guidance plan

The AICPA submitted almost 200 comments to the IRS this week regarding its 2026–2027 Priority Guidance Plan, encouraging the agency to concentrate on 10 areas and to continue pursuing tax simplification.

In Notice 2026-23, the IRS sought recommendations for its plan, which it uses each year “to identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance.”

“The recommendations ensure that the IRS guidance reflects practical, real-world application for taxpayers and practitioners,” Kristin Esposito, director–Tax Policy & Advocacy at the AICPA, said in a news release issued Friday. “Given that our recommendations are ranked by priority within each area, we encourage a focus on the highest-priority items.”

The AICPA also made seven recommendations to achieve tax simplification:

• Use the simplest approach to accomplish a policy goal.
• Provide safe-harbor alternatives.
• Offer clear and consistent definitions.
• Use horizontal drafting as much as possible so that a rule in one Internal Revenue Code section applies in all other Code sections.
• Build on existing business and industry standard recordkeeping practices.
• Provide a balance between simple general rules and more-complex detailed rules.
• Match a rule’s complexity to the sophistication of the targeted taxpayers.

The 193 recommendations from the AICPA’s 10 technical panels for the IRS Priority Guidance Plan, sent in a letter dated May 13, cover the following areas: corporations and shareholders; employee benefits; exempt organizations; individual and self-employed; international; IRS advocacy and relations; partnerships; S corporations; tax methods and periods; and trust, estate, and gift tax.

Each panel’s top priority is listed below:

Corporations and shareholders tax

Provide final guidance related to the key definitions and application of the corporate alternative minimum tax under Sec. 55 including regarding mergers-and-acquisitions issues and clarification of the definition of an applicable corporation under Sec. 59(k) and the definition of adjusted financial statement income under Sec. 56A.

Employee benefits tax

Provide a revenue procedure related to Section 305 of the SECURE 2.0 Act of 2022 (Division T of the Consolidated Appropriations Act, 2023, P.L. 117-328), signed into law on Dec. 29, 2022, addressing expansion of the Employee Plans Compliance Resolution System.

Exempt organizations tax

Provide guidance for the application of Sec. 4960, including transition relief for fiscal-year filers; extension of the limited hours exception, the nonexempt funds exception, and the limited services exception; and provide a regulatory exception for unpaid public volunteers from being treated as “covered employees.”

Individual and self-employed tax

Provide guidance on the application of the state and local tax deduction cap under Sec. 164, including on:

• An S corporation’s inability to specially allocate items and the single-class-of-stock requirement.

• Notice 2020-75 and Sec. 461 accrual-basis taxpayers.

• Notice 2020-75 and Sec. 469 and Sec. 163 on nonpassive vs. passive income and interest expense tracing.

• The Sec. 111 application to state tax refunds at the individual level and ordering between pass-through entity income tax payments and nondeductible estimated payments and withholding.

International tax

Provide international tax guidance on items with 2026 effective dates in H.R. 1, P.L. 119-21, commonly known as the One Big Beautiful Bill Act.

IRS advocacy and relations

Issue regulations regarding accuracy-related penalties under Sec. 6662, Sec. 6662A, and Sec. 6664, including dealing with regulations in the first two sections that have not been updated since before 1997.

Partnership tax

Finalize proposed regulations (REG-108921-25) pursuant to Notice 2025-23 to withdraw Regs. Sec. 1.6011-18 (basis-shifting transaction-of-interest) from the income tax regulations (26 C.F.R. Part 1).

S corporation tax

Issue a revenue procedure modifying the eligibility of any currently effective automatic relief for an inadvertent termination or an inadvertent invalid S corporation election such that a taxpayer may rely upon multiple revenue procedures to obtain relief for multiple matters affecting S corporation status.

Tax methods and periods tax

Provide guidance under Sec. 179 for the specific types of assets that qualify as “qualified real property.”

Trust, estate, and gift tax

• Domestic issues: Provide guidance on estates’ and trusts’ limitation on itemized deductions regarding the income distribution deduction.

• Foreign issues: Expand the types of non-U.S. trusts eligible for relief and exemption from information-reporting requirements and penalty-abatement procedures in Rev. Proc. 2020-17.

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