As the national organization for CPAs, the AICPA assists members on many fronts, including legislative and regulatory developments, technical issues, professional concerns and workplace matters. In addition, the AICPA works to sustain the profession's supply of high-quality CPAs as well as inform Americans about the value of CPAs and share their expertise. Following is a review of a broad range of initiatives to serve members while upholding the public's trust.
Advocating for the Profession
Tax Strategy Patents
* Thanks in part to the AICPA's exhaustive efforts, the House of Representatives passed legislation that would prohibit granting of tax strategy patents. The Institute has also called for passage of a similar bill introduced in the Senate recently. The AICPA believes the use of patents may be misleading and unfair to taxpayers and may complicate tax professionals' ability to offer clients the best advice.
Tax Preparer Reporting Standards
* Potential conflicts of interest between taxpayers and tax practitioners because of different tax reporting standards may be averted with proposed legislation. The AICPA applauded the introduction of legislation in Dee. to reduce the "more likely than not" tax return reporting standard for return preparers stemming from a law passed in May 2007. The new standard is higher than the "substantial authority" level that taxpayers must meet. Meanwhile, the IRS delayed implementation of the law and on Dec. 31, along with the U.S. Treasury Department, issued interim guidance for tax preparers that will provide temporary relief from potential penalties under the law.
Alternative Minimum Tax
* In a step advocated by the AICPA, President Bush signed a bill authorizing a one-year alternative minimum tax "patch" that will prevent 19 million individual taxpayers from being subject to the AMT and reduce some of the burden on the 4.2 million who would still pay the AMT for 2007.
Financial Services in Rural America
* Small CPA firms that provide accounting and tax services to small businesses in rural America will be glad to hear the House of Representatives removed a provision in the Farm Bill Extension Act of 2007 that would have given broader lending authority to the Farm Credit System and resulted in unfair competition for them. A Senate bill did not contain the provision. A conference committee this year will work out differences between the House and the Senate bills.
* In good news for small firm practitioners and their business clients, the Small Business and Work Opportunity Tax Act of 2007 contains several improvements to S corporation provisions that the AICPA has long advocated. For example, capital gains from the sale of securities, including S corporation stock, are no longer passive investment income and selling a partial interest in a QSub will now trigger tax on only the percentage of assets sold to an unrelated party.
Interstate Practice Privilege
* Significant steps toward helping CPAs serve clients across state lines were achieved as a result of efforts among the AICPA, state CPA societies, state boards, the National Association of State Boards of Accountancy, and the Accountants Coalition. Many states have adopted revisions to the Uniform Accountancy Act that removed the notification requirement from the substantial equivalency provision. The AICPA will continue to pursue this initiative in all jurisdictions.
Nonresident Income Tax
* The AICPA endorsed legislation that would create a uniform national standard for state withholding of nonresident income tax Companies and CPA firms that do business across state lines are negatively affected by nonresident income tax withholding laws.
* In a 5-3 decision, the U.S. Supreme Court on Jan. 15 rejected a broad theory of liability and ruled investors cannot sue third parties who do not make affirmative statements or commit acts that are directly relied upon by investors. The ruling upheld the court's 1994 decision in the Central Bank case that "aiding and abetting" does not give rise to a private cause of action under U.S. securities laws. AICPA General Counsel Richard I. Miller had submitted an amicus brief on the profession's behalf in the case, Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc. and Motorola, Inc. The AICPA was pleased the court upheld the prior interpretation of the securities laws' antifraud provisions. For more information, go to www.aicpa.org/download/members/legal_issues/Stoneridge.pdf.
Accounting and Auditing Developments
Studying the Audit Profession
* AICPA President and CEO Barry Melancon is representing the profession on the U.S. Treasury Department's Advisory Committee on the Auditing Profession. The committee will study and make recommendations on the...