Approximately 600 CPAs are gathered in Washington, D.C., this week to get the latest on tax reforms and the potential impact of the mid-term elections at the 35th annual National Tax Conference sponsored by the American Institute of Certified Public Accountants (AICPA). Managing Editor Gail Perry reports.
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The conference kicked off with a legislative update presented by Donald Longano of the National Tax Service of PricewaterhouseCoopers (pwc) and former Democratic chief tax counsel to the House Ways and Means Committee.
Longano summarized the major tax-related legislation that has been enacted as well as the pending legislation still on the table. He discussed the rapidity with which legislation has been passed in recent months, and noted that, "We would hope that our legislative process would be more deliberative in the future."
When discussing forthcoming small business legislation, Longano discussed the possibility of extending the bonus depreciation beyond this year. "Don't bet on it," he said. "Tell your clients it's there, you can use it this year, but don't count on it being available in the future."
He also speculated that there is a good chance that the Bush tax cuts will be extended for one more year; however he expects the new Congress to suspend those cuts, at least the cuts that affect taxpayers with income over $250,000 ($200,000 for single taxpayers), next year.
"No one holds out any hope that there will be a permanent extension of the Bush tax cuts," Longano said. The cost to extend the cuts for just one more year, however, is minimal by government spending standards (approximately $202.3 billion for the middle-income taxpayers, and another $38.8 billion for the high-income taxpayers – over a 10-year spread). Longano noted that the issue is, "What will the American voter stand?"
Longano predicts there will be one tax bill passed, around December16-18. "Congress is likely to hold their nose and do a one year extension of the whole enchilada, and then come back with a new Congress and have more deliberative discussions [after the New Year]."
Accountants have a role here, too. Longano explained that the challenge for members of the AICPA is to be a voice for individuals.
"The corporate community will be all over [new legislation], but there aren't voices for individuals. It's so complicated, so confusing. It's an opportunity for us," Longano said. In particular, he stressed the need to step up and be a voice for reform in areas of education-related tax credits and deductions and the Earned Income Tax Credit.
Longano concluded his presentation with a speculation that a VAT tax will become a reality in the near future. Whether it replaces or augments corporate income tax as we know it remains to be seen, but the majority of countries have a VAT and Longano seemed confident that the United States will join those ranks in the near future.