May 25, 2004
The Honorable Gregory F. Jenner
Acting Assistant Secretary (Tax Policy)
Department of the Treasury
1500 Pennsylvania Avenue, NW
Room 3120
Washington, D.C. 20220
The Honorable Donald L. Korb
Chief Counsel
Internal Revenue Service
1111 Constitution Avenue, NW
Room 3026
Washington, D.C. 20224
Re: Suggestions for the 2004-2005 IRS/Treasury Priority Guidance Plan
Dear Messrs. Jenner and Korb:
The AICPA is pleased to offer our suggestions regarding the 2004-2005 IRS/Treasury Priority Guidance Plan, which were prepared by the AICPA Tax Division's committees, technical resource panels, and task forces, and approved by our Tax Executive Committee.
The attached suggestions are listed under the AICPA working group that developed them, and are not prioritized within each heading. For your convenience, contact information for each working group's chair and AICPA staff liaison are listed. Please feel free to contact these individuals with your specific questions or concerns.
In addition, the AICPA again encourages Treasury and the IRS to continue pursuing tax simplification. We recognize—and very much appreciate—recent steps you have taken, including: (1) simplifying reporting for Canadian registered retirement savings plans and registered retirement income funds (Notice 2003-75); (2) making consistent the determination of age attainment under sections 21, 23, 24, 32, 129, 131, 137, and 151 (Rev. Rul. 2003-72); (3) removing the "discovery test" from the research and experimentation credit regulations; and (4) significantly simplifying the new intangibles regulations by, for example, addressing employee compensation, de minimus costs, and the election to capitalize in conformity with financial statements.
Although you must balance competing interests and concerns when drafting guidance, we urge you to consider the following as part of the process:
· Use the simplest approach to accomplish a policy goal;
· Provide safe harbor alternatives;
· Offer clear and consistent definitions;
· Use horizontal drafting (a rule placed in one Code section should apply in all other Code sections) to the greatest extent possible;
· Build on existing business and industry-standard record-keeping practices;
· Provide a balance between simple general rules and more complex detailed rules; and
· Match a rule's complexity to the sophistication of the targeted taxpayers.