The role of the AICPA in the development of tax policy.

• Author: Ferguson, Carol B.
• Position: American Institute of Certified Public Accountants

What is the "proper" tax treatment for capital gains? How could the social security retirement system be improved? Does the double tax on corporate earnings reduce the incentive for equity investment in U.S corporations? These questions and others like them are often asked of members of the accounting profession. As the representative of the profession, the AICPA is viewed by many as a valuable adviser in the design and reform of the tax system.

To better serve in this role, the Institute, through its Tax Division, has an established program for the development of Statements of Tax Policy (STPs). STPs are major statements of the AICPA on broad tax policy issues. These statements present the Institute's position on tax matters of general interest in a series of well-researched, clearly written documents. The development of STPs is the responsibility of the Tax Policy and Planning Committee working under the direction of the Tax Executive Committee. The Tax Executive Committee has the authority to speak for the AICPA on tax matters.

Because of their importance, the Tax Division has established elaborate procedures for STPs to assure quality and to protect minority viewpoints. On average, a statement will take two to three years to be researched, written, released as an exposure draft, revised and approved. Because of the lengthy development period, the Tax Division must anticipate the areas of the tax law that will receive scrutiny, or identify areas in need of significant reform, and begin work well before the issue comes to the forefront of public debate.

A recent example of this is the release of Statement of Tax policy 10, Integration of the Corporate and Shareholder Tax System (see The Tax Adviser, Feb. 1993, at 129). Double taxation of corporate earnings has been an issue for a long time. In fact, STP 10 replaced STP 3, originally issued in 1976.

However, new attention has been focused on corporate integration with the release in December 1992 of the Treasury Department paper, Restructuring the U.S. Tax System for the 21st Century, and the January 1994 creation of a Presidential Commission on Entitlement Reform. In addition to examining long-term budget savings from entitlement reform, the commission is charged with investigating the feasibility of moving to an alternative tax system. STP 10 took over two years to complete, but was finalized in plenty of time to allow the Institute to participate in the current debate.

Once a policy...