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[August 09, 2014]
Nearly Half of U.S. Senators Sign Letter Expressing Concern About Accrual Accounting Proposal
(Targeted News Service Via Acquire Media NewsEdge) WASHINGTON, Aug. 7 -- The American Institute of Certified Public Accountants issued the following news release: Nearly half of the U.S. Senate has signed a letter (
) to the chairman and ranking member of the Senate Finance Committee urging the preservation of the cash method of accounting for tax purposes.
An August 6 letter to Senate Finance Committee Chairman Ron Wyden (D-Ore.) and Ranking Member Orrin Hatch (R-Utah) bears the signatures of 46 Senators.
"As the Finance Committee develops its comprehensive tax reform package, we ask that you consider the negative impact that this proposal would have on the professional services sector as well as farming and ranching businesses," the Senators wrote. "We believe that such a change has not been fully vetted and many of the concerns raised by these businesses have not been addressed." The American Institute of CPAs (AICPA) is a leading opponent of tax reform proposals to mandate the use of accrual accounting for businesses and individuals who exceed $10 million in annual gross receipts. The AICPA has partnered with state CPA societies and CPA firms to voice the profession's concerns about the accrual accounting requirement.
Senators pointed to the impact of having to convert to the accrual basis for previously exempt businesses, including CPA, medical, dental, architectural, engineering and law firms. "[T]he acceleration of the business' tax liability combined with the inability to match revenues with expenses would force businesses to borrow money to meet their tax liability. The basic tenet of taxation is 'ability to pay.' Forcing businesses to recognize income before they receive payment violates this basic tenet." The Senators' letter goes on to explain that the proposal "would cause numerous adverse unintended consequences and as a result is opposed by many members of both parties. Therefore, we strongly encourage you to maintain the current ability of pass-through entities, personal services corporations, and farming and ranching businesses to use the cash basis for tax purposes irrespective of annual gross receipts." The AICPA commends Senators Sherrod Brown (D-Ohio), Pat Roberts (R-Kan.), Angus King (I-Maine) and Ron Johnson (R-Wis.) for leading the effort.
The letter is attached (
[Category: Accounting] TNS 24KuanRap-140809 30FurigayJof-4824895 30FurigayJof (c) 2014 Targeted News Service
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