AICPA speaks out on proposed tax rules.

Requiring business taxpayers to report to the IRS payments over $600 that are made to corporations would be "extremely burdensome" and would result in millions of additional 1099 Forms being filed that are of "little value to the IRS," the AICPA told the U.S. Department of the Treasury. Small businesses would be especially hard hit by this requirement, the Institute said.

The AICPA made its recommendations in a comment letter to the Treasury Department regarding administrative tax provisions in the Obama administration's fiscal year 2010 budget.

In its other comments, the AICPA noted that while it believed abusive transactions should be eradicated, it could not support the administration's fiscal 2010 budget proposal to codify the economic substance doctrine because of "the immense difficulty in crafting workable statutory language that adequately delineates economic substance." And while the Institute favored an increase in the threshold amount for information reporting penalties, it cautioned against a hike in the calendar year maximum for small filers, as this could cause them cash flow problems, especially in a tough economy. The AICPA also generally supported a proposed extension of the electronic filing requirement to all corporations and partnerships required to file Schedule M-3 and a proposed revision in offer-in-compromise application rules.

The administration proposes to expand electronic filing by amending section 6011(e) of the Internal Revenue Code. First, the proposal would permit the IRS to issue regulations which require tax return preparers to electronically file tax returns if they file more than 100 tax returns in a calendar year; in contrast to the statutory threshold of 250, which would remain unchanged. Second, the proposal would permit the IRS to issue regulations requiring tax return preparers who file more than 100 returns to electronically file individual, estate and trust tax returns. With respect to the proposed preparer mandate, the AICPA recommended inclusion of a taxpayer "opt-out" and for the mandate to be phased-in over several filing seasons.

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