By Jim DeLuccia, PICPA communications manager
On Nov. 28, 2017, the Senate Budget Committee passed sweeping tax reform. Supporters hope to have the full Senate approve the measure by Dec. 1. President Donald Trump’s promise that new tax legislation would be in place by the end of 2017 is a step closer to reality.
Amid all the activity on Capitol Hill, we asked PICPA members in mid-November for their input in a brief poll, “Year-End Tax Tips and Tax Reform.” Almost all of the 234 respondents were active-licensed CPAs with at least five years of professional experience in accounting. The purpose of this poll was to see what our members were thinking regarding these issues, compile the results, and share them with the media to position CPAs as impartial tax experts on year-end tips and reform.
The first question – "What is the most common year-end tax tip you are providing to clients this year?" – yielded somewhat predictable results, though perhaps with a slight twist. Just more than 50 percent of respondents are advising clients to defer income, while almost 18 percent are recommending making charitable contributions. Ranking third was advice to sell off losing investments or depreciated securities. There was an “Other” choice as well, and the most common submission among these was advising clients to project their 2017 state and local income/earned income tax liability, and have it paid by Dec. 31, 2017. That way, 100 percent of the tax is deductible on their 2017 federal tax return. If they only pay, for example, 90 percent of their 2017 tax, then the 10 percent that is paid in 2018 might not be deductible the following year if the current versions of the House and Senate bills pass.
The poll’s second question pertained to the Guiding Principles of Good Tax Policy: A Framework for Evaluating Tax Proposals, a document developed cooperatively between the PICPA and AICPA that is often shared with legislators to assist them when drafting laws on financial issues. The 10 principles are equity and fairness; certainty; convenience of payment; economy of collection; simplicity; neutrality; economic growth and efficiency; transparency and visibility; minimum tax gap; and appropriate government revenues. We asked each respondent to identify the top three principles that they think federal lawmakers should focus on when modifying the tax code. The top three were equity and fairness – similarly situated taxpayers should be taxed similarly; economic growth and efficiency – the tax system should not impede or reduce the productive capacity of the economy; and simplicity – the tax law should be simple so that taxpayers understand the rules and can comply with them correctly and in a cost-effective manner.
The PICPA is working to inform its members and the public of the impact of tax reform on individuals and business owners. The PICPA created www.picpa.org/taxreform, which features PICPA and AICPA resources as well as blogs written by members of PICPA’s Federal Taxation Committee. The committee will blog frequently on this issue throughout the coming weeks and months. Additionally, this page features a video from PICPA President Joseph E. Seibert, CPA, on why it’s critical for Pennsylvania CPAs to weigh in on the need for tax reform. The PICPA has a sample letter for use in contacting Pennsylvania members of the U.S. Congress.
Members: You have the knowledge and expertise – make your voice heard.