AICPA Calls on Treasury to Extend Comment Period for Proposed Rules to Treat Certain Debt Instruments as Equity

The American Institute of CPAs (AICPA) has requested that the U.S. Department of the Treasury extend the comment period for the proposed regulations the Department issued that would allow them to re-characterize certain debt instruments as equity.  Comments are currently due July 7 on the proposed regulations that were issued in April; the AICPA requested that the comment deadline be extended for at least 90 more days until October 5. 

In the June 7 letter, Troy K. Lewis, CPA, CGMA, chair of the AICPA Tax Executive Committee, wrote that the “AICPA believes the proposed regulations will have a much broader application and will have a significant and possibly disruptive impact on normal and critical operations of a large number of United States business entities.  In addition, the changes proposed by the regulations are extensive, make changes to existing case law and will require a substantial amount of study and review in order to provide comprehensive and meaningful comments.”

Furthermore, Lewis stated, “The AICPA also believes that the proposed regulations may result in significant unintended consequences that will impact non-abusive activities.  For example, the AICPA is concerned about the possible effect of the regulations on a broad range of business transactions, including, but not limited to, standard cash-management techniques.  As we further analyze the proposed regulations, we expect that we will uncover additional ordinary business transactions that are potentially impacted by them.”

Lewis urged Treasury to extend the comment period due to the significant changes proposed by the regulations and the significant impact to businesses.