Treasury Department Adopts AICPA Recommendations in Final Country-by-Country Reporting Rule

The U.S. Department of the Treasury adopted four of the six changes recommended by the American Institute of CPAs (AICPA) in its final rule governing businesses’ reporting by country of their financial information. 

The regulations are part of a larger project to increase transparency and tax compliance.  The reporting structure varies widely from the current one and will have a significant impact on affected companies. 

The most important AICPA recommendation adopted by the Treasury Department permits companies to voluntarily opt-in for tax year 2016.  The other three AICPA recommendations incorporated into the final regulations clarify definitions and terms.  For details about the AICPA’s recommendations, see the storyin the March issue of The CPA Advocate.

The Treasury Department did not provide a national security exception for the information required to be reported and did not clarify issues related to the reporting of the number of full-time equivalent employees for each tax jurisdiction on the reporting form, as the AICPA recommended.  In the final regulations, the Treasury Department stated it had consulted with the Department of Defense, which “concluded that such information reporting generally does not pose a national security concern.”  Regarding the number of full-time equivalent employees, the final regulations allow for the determination of the number of employees of constituent entities on a full-time equivalent basis “using any reasonable approach that is consistently applied.”