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Tax News
IRS opens compliance assurance process to new corporate applicants.
For the first time in four years, the IRS is accepting new corporate applicants for the Compliance Assurance Process (CAP). The IRS launched CAP in 2005 to improve federal tax compliance by large corporate taxpayers. In CAP, the IRS and the taxpayer work together to achieve tax compliance before the taxpayer files its return. According to the IRS, CAP allows it to substantially shorten the length of a postfiling examination, as many issues are worked out before the taxpayer files its return. To be eligible for CAP, new applicants must have assets of $10 million or more; be a U.S. publicly traded corporation with a legal requirement to prepare and submit SEC Forms 10-K, 10-Q, and 8-K; not be under investigation by, or in litigation with, any government agency that would limit the IRS’s access to current tax records; and, if currently under examination, not have more than one filed return and one unfiled return open on the first day of the applicant’s CAP year. The application period runs from September 16 to October 31, 2019. Applicants will receive notice of whether they have been accepted into the program around January 31, 2020.
IRS: Relief available for certain former citizens.
The IRS has announced new procedures under which persons who have relinquished (or who intend to relinquish) their U.S. citizenship, have not filed U.S. tax returns as U.S. citizens or residents, and have relatively small amounts of unpaid tax liability may come into compliance with their U.S. filing obligations and receive relief for back taxes. Under what the IRS is calling Relief Procedures for Certain Former Citizens, persons who meet the criteria described below will be deemed compliant with their U.S. tax and filing obligations, will not be “covered expatriates” under Internal Revenue Code section 877A, and will receive relief for prior-year tax liabilities. The IRS will host a webinar in the near future providing additional information and practical tips for making a submission under these procedures.
FASB News
FASB votes to finalize proposal simplifying income tax accounting rules.
On September 4, FASB voted unanimously to finalize its proposed rules that would simplify income tax accounting requirements in approximately 12 unrelated areas that companies had said were costly and complex. The changes will be effective for public companies’ fiscal years beginning on or after December 15, 2020; for all other companies, they will be effective on or after December 15, 2021. Early adoption will be permitted. The decision means Proposed Accounting Standards Update (ASU) 2019-700, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which was issued in May, will be finalized with some narrow clarifications. The board said it received 24 comment letter responses on the proposed changes, 10 of which came from auditors. Respondents generally agreed the changes would simplify Topic 740 while maintaining or improving the usefulness of information provided to financial statement users, FASB staff accountants said. Most respondents said the changes would be operable and auditable and would not impose significant costs.
AICPA News
Proposal would incorporate audit reporting changes to specialized financial statements.
On August 28, the AICPA’s Auditing Standards Board (ASB) issued a proposal that would incorporate recent auditor reporting changes to audits of certain types of financial statements, such as those prepared according to a financial reporting framework that does not use GAAP. The proposal is part of the ASB’s effort to converge its standards with those issued by the International Auditing and Assurance Standards Board (IAASB). “As we continue to enhance the transparency of auditor reporting, we have extended the provisions of SAS No. 134 as they relate to providing insight into the basis for the auditor’s opinion,” AICPA Chief Auditor Robert Dohrer said in a statement. “Disclosure of the responsibilities of both entity management and auditors in these unique reporting circumstances is also important.” Comments are due by October 28.
