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Tax Reform Fatigue Got You Down?

Tax reform_stressed taxpayerFINALLY! This is the year that we get tax reform done. More than 26 years since the last tax reform, the stars are finally aligned: the Democrats and Republicans in Congress and the Administration all agree the tax code is too complex and needs to be fixed. Oh wait, that was 2012, and surprisingly (not) tax reform did not happen, but Washington will get it done in 2013. No, of course that did not happen either. Clearly tax reform would not happen in 2014 because it was a mid-term election year, but just wait until 2015, that will be the year for comprehensive tax reform, because after all, we now have one party leading both houses of Congress. OK, maybe not comprehensive reform in 2015, but you just wait until 2017…that will be the year!

Are you getting tired of the tax reform discussion? Do you have “Tax Reform Fatigue (TRF)?” Do you believe tax reform will ever happen? Each year, Congress forms working groups, holds hearings, puts out discussion drafts, maybe even produces a bill to reform the tax code. Taxpayers, stakeholders and other affected parties spring into action to fight for their favorite position or defend any change to “their” deduction. Congress and the Administration find that comprehensive tax reform decisions are hard and, therefore, nothing happens. Then we move to the next year and repeat the process. Yes, I believe I have Tax Reform Fatigue.

However, I do believe that comprehensive tax reform will eventually happen. Why? Because it is just too important not to happen. We all know the reasons: the current tax code is too complex; makes our businesses  less competitive internationally; picks winners and losers among taxpayers; creates enforcement challenges for the IRS and, quite frankly, is becoming (or already is) unmanageable. Fourteen different education incentives? And don’t get me started on the AMT!

The AICPA has consistently supported tax reform simplification efforts because we are convinced such changes will significantly reduce taxpayers’ compliance costs and encourage voluntary compliance through a better understanding of the rules. We also urge conformity with our Principles of Good Tax Policy and the evolution of a tax system that is balanced, fair to all, administrable, economically efficient, transparent and neutral in its effect on economic activity.

With those principles in mind, the AICPA has testified at congressional hearings; met informally with members of Congress and staff to discuss ideas; provided written comments on improvements needed for information returns, identity theft prevention, and tax penalties, as well as reform of  bewildering tax rules for education, small business and pass-through tax benefits. We also constantly monitor tax reform activity to better position the AICPA to advocate for these principles.

So, despite the repeated ups and downs, the AICPA is committed to remaining engaged in the process, offering unbiased facts and analysis and proposals that reflect the principles we uphold.

For example, we recently submitted technical recommendations to the Senate Finance Committee Tax Reform Working Groups that called for, among many others, proposals to provide:

  • a simplified income tax rate structure;
  • permanent disaster relief;
  • tax return due date simplification;
  • AMT repeal;
  • retirement plan simplification; and
  • expansion of the cash method of accounting

In addition, our volunteer tax experts developed a Compendium of Legislative Proposals that contains over 30 non-controversial ways Congress can improve simplicity and fairness in the Internal Revenue Code.

While many of us suffer from TRF, the issue is too important to give up on. We are hanging tough to make sure the profession’s voice is heard when reform truly takes off. So take two aspirin and wait until next year…that will be the year! And if any of you have other prescriptions to overcome the fatigue, please share. 

Jeffrey Porter, CPA, is the founder and owner of Porter & Associates in Huntington, W.Va. He is also immediate past chair of the AICPA Tax Executive Committee and chair of the AICPA Tax Reform Task Force. He has testified several times before Congress and the IRS on tax administration and reform issues.

Stressed taxpayer courtesy of iStock.

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