Joint Committee on Taxation Options to Close the Tax Gap  January 5, 2007 The Honorable Max Baucus Chairman Senate Finance Committee 219 Senate Dirksen Office Building Washington, D.C. 20515 Fax: 202-228-0554
The Honorable Charles E. Grassley Ranking Member Senate Finance Committee 219 Senate Dirksen Office Building Washington, D.C. 20515 Fax: 202-228-0554
RE: Joint Committee on Taxation Options to Close the Tax Gap Dear Chairman Baucus and Ranking Member Grassley: The American Institute of Certified Public Accountants supports the Senate Finance Committee’s efforts to identify constructive ways to close the tax gap, particularly in light of the current estimate of about $345 billion in lost revenues for the U.S Treasury. You can be assured we are strongly interested in providing the Finance Committee with continuing, thoughtful input as your committee’s investigation of this critical tax administration matter moves forward. Therefore, we are pleased to respond to the Finance Committee’s October 19, 2006 press release which requests comments on certain tax gap initiatives that are taken from the August 3, 2006 Joint Committee on Taxation staff report, Additional Options to Improve Compliance. Our comments address the proposals that call for: (1) imposing basis reporting requirements for publicly-traded securities; (2) expanding the reporting requirements for (a) real estate taxes, (b) the proceeds of auction sales, (c) mortgage interest, and (d) individuals with an interest in offshore bank accounts and offshore trusts; and (3) denying deductions and credits with respect to untimely returns of nonresident aliens and foreign corporations. We anticipate soon sending the Senate Finance Committee a separate letter with respect to the JCT option involving the self-employment tax for partners and S corporation shareholders of personal service companies. The AICPA is the national, professional association of CPAs, with approximately 350,000 members, including CPAs in business and industry, public practice, government, and education; student affiliates; and international associates. Our members advise on federal, state, and international tax matters and prepare income and other tax returns for millions of taxpayers. They provide services to individuals, not-for-profit organizations, small and medium-sized businesses, as well as America’s largest businesses. It is from this broad perspective that we offer our thoughts today. We appreciate the opportunity to comment on the above tax gap proposals contained in the Joint Committee staff report. We would be pleased to discuss the content of these comments with you or your staff at any time. If you have any questions, please contact me at (212) 773-2858, or jeffrey.hoops@ey.com; James E. Brennan, Chair of the AICPA IRS Practice and Procedures Committee, at (212) 773-3209, or james.brennan@ey.com; or Benson Goldstein, AICPA Technical Manager, at (202) 434-9279, or bgoldstein@aicpa.org. Sincerely, Jeffrey R. Hoops Chair, Tax Executive Committee
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