The corporate minimum tax included in the budget reconciliation bill would create undue complexity and alter financial accounting decision making, according to an October 28 letter from the AICPA to lead congressional tax writers.
The corporate minimum tax proposal in the budget bill would impose a 15% alternative minimum tax on large corporations’ income as reported in their financial statements, with some adjustments. As written, it would only apply to companies reporting more than USD 1 billion in profits.
AICPA said that this type of tax has been tried before, with the business untaxed reported profits provision in 1986. However, the measure was quickly repealed, because companies responded by changing their financial accounting choices to reduce income. AICPA contends that financial accounting should not be in a position where it’s apt to be manipulated to alter the determination of taxable income. Its focus should be solely on providing valuable information to investors.
Should Congress proceed with the corporate minimum tax regardless of these concerns, AICPA suggests some clarifications are needed. It identifies several specific provisions that it considers would add “a level of complexity and expense that is not reasonable,” are “confusing,” or represent “an insurmountable degree of complexity and cost of compliance.”
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