AICPA Makes Recommendations to IRS on Proposed Country-by-Country Reporting Regulations for Multinational Enterprises

March 30, 2016

The American Institute of CPAs (AICPA) has made recommendations to the Internal Revenue Service (IRS) on the Service’s proposed regulations relating to annual country-by-country reporting by U.S. persons that are the ultimate parent of a multinational enterprise (MNE) group.

The AICPA offered a number of recommendations in its March 21 letter including allowing a voluntary opt-in for calendar year 2016 reporting and a robust National Security Exception for the information required to be reported.  In addition, the AICPA requested clarification on several issues.  

The AICPA’s six recommendations are:

  1. Allow U.S. MNE groups to elect on a voluntary basis to apply the proposed regulations for tax years beginning on or after January 1, 2016 and before the effective date of the final regulations;
  2. Clarify that a U.S. MNE group’s reporting is based solely upon its own annual accounting period and is not contingent on the timing of the annual accounting periods of its foreign constituent entities;
  3. Clarify the classification of certain assets as tangible, intangible or cash equivalents;
  4. Clarify issues related to the reporting of the number of full-time equivalent employees for each tax jurisdiction included on Form XXXX, Country-by-Country report;
  5. Confirm the status of U.S. possessions and territories and whether their treatment as foreign jurisdictions is correct; and
  6. Allow a National Security Exception for information contained in the required Country-by-Country reports.

The letter provided a detailed discussion of each of the six recommendations.