In a February 19 letter sent to the top tax legislators in Congress, the American Institute of CPAs (AICPA) outlined a set of proposals that would simplify or make technical corrections to the nation’s tax code.
The thirty-two legislative proposals promote tax simplicity and fairness, according to the AICPA, and would improve tax administration. The proposals cover a range of tax issues affecting individuals, businesses, trusts and estates, and exempt organizations.
In the letter – which was sent to new Senate Finance Committee Chairman Ron Wyden (D-OR), Senate Finance Committee Ranking Member Orrin Hatch (R-UT), House Ways and Means Committee Chairman Dave Camp (R-MI), and House Ways and Means Committee Ranking Member Sander Levin (D-MI) – the AICPA said the focus of the proposals is “on provisions in the Internal Revenue Code that are not unduly controversial, are technical in nature, and perhaps can be more readily resolved.”
The letter was sent ahead of Camp’s expected unveiling of his comprehensive tax reform plan this week. Camp said his plan would simplify the tax code for both employers and families, and give a spark to the economic recovery, according to a recent article by The Hill.
In the letter sent to Camp and the other three legislators, the AICPA emphasized that the provisions listed are not what the organization believes should be added back or removed from the reformed tax code, but rather “are focused on improving tax administration, making the tax code fairer, and effectively promoting important policy objectives.”
For example, one of the proposals is to standardize the allowable mileage rates for business expense, medical expense, moving expense, and charitable contribution purposes.
For 2014, the IRS allows taxpayers a standard mileage allowance of 56 cents per mile related to business travel, 23.5 cents per mile for purposes of medical and moving expense deductions, and 14 cents per mile for charitable contribution deductions.
The AICPA recommended the IRS set and regularly adjust two mileage rates: one for business expenses and another for all nonbusiness purposes. The rate for nonbusiness expenses, such as charitable and medical/moving, would be set by the IRS at a percentage of the business rate, rounded to the nearest half cent, according to the proposal. The business rate would be adjusted annually and possibly semiannually in certain circumstances. The AICPA noted the starting point would be the business rate in effect at the time of enactment.
“Currently, taxpayers often need to apply at least two and sometimes three different mileage rates on a single return,” the AICPA stated. “The proposal would reduce these numbers to one and occasionally two rates per return. Allowing the IRS to set a fair rate for charitable contribution mileage would recognize the vital role volunteers play in our society. Linking all mileage rate allowances to a single standard and adjusting those rates at least annually would bring transparency, fairness, and equity to the process. In addition, the IRS’s annual calculation of these rates would be simplified.”