AICPA wants more clarity on Sec. 465 reporting relief for S corps

The American Institute of CPAs has written a letter to the Internal Revenue Service and the Treasury Department asking them to issue a notice clarifying that reporting relief on certain reporting under Section 465 will also apply to S corporations.

Last month, the IRS and the Treasury released Notice 2019-66, which delays some of the reporting requirements under Section 465 of the Tax Code for at-risk activities until the taxpayer’s 2020 taxable year. The AICPA noted that some of the recently released draft forms and instructions for partnerships and S corporations have increased the level of reporting expected for tax year 2019 at a time when taxpayers are still expected to deal with all the voluminous guidance released by the Treasury and the IRS over the past two years related to the Tax Cuts and Jobs Act of 2017.

Notice 2019-66 offers temporary reporting relief for some items that were considered the most burdensome requirements for partnerships, and the AICPA thinks the extra time for partnerships to comply with such provisions will result in better overall compliance.

The AICPA suggested that the IRS and the Treasury clarify that the part of the notice that provides reporting relief for Section 465 at-risk activities also applies to S corporations; and that they issue more guidance on Section 465 reporting.