AICPA Urges IRS to Modify Accounting Method Rules for Foreign Corporations

Jack Humphrey, Regulatory journalist
August 07, 2012 /

The American Institute of CPAs has urged the Internal Revenue Service to make changes to its rules governing how foreign corporations with United States income tax filing responsibilities can voluntarily comply with proper U.S. tax accounting principles.

The AICPA said too often the definition of “issue under consideration” as it applies to foreign corporations works at cross purposes with the IRS examination process of the corporations’ earnings and profits and prevents the corporations from applying for accounting method changes that would bring them into compliance.

In its July 30 letter, the AICPA said that the definition of “issue under consideration” is “inappropriate” and forces many multinational corporations to either remain on impermissible accounting methods or make unauthorized method changes.

This is contrary to the general tax policy of voluntary compliance with proper tax accounting principles and draws distinctions between domestic and foreign corporations in situations where Congress has consistently indicated that they should be treated similarly.

In order to correct the problem, the AICPA recommended that IRS delete sections of Revenue Procedure 2011-14 and Revenue Procedure 97-27 concerning the definition of “issue under consideration” for foreign corporations and instead make the narrower definitions of the term in the revenue procedures that are applicable to domestic corporations applicable to all taxpayers, including foreign corporations.


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