AICPA requests clarity on Section 465 reporting relief

February 13, 2020

The American Institute of CPAs is requesting the Department of the Treasury and the Internal Revenue Service (IRS) issue a notice clarifying that reporting relief on certain reporting under section 465 will also apply to S corporations.

On December 9, 2019, Treasury and the IRS issued Notice 2019-66 to provide – among other relief – a delay in certain reporting under section 465 at-risk activities until the taxpayer’s 2020 taxable year. Recently released draft forms and instructions for partnerships and S corporations have increased the level of reporting expected for the 2019 taxable year at a time when such taxpayers are still expected to address volumes of additional guidance from Treasury and IRS specific to the Tax Cuts and Jobs Act (TCJA).

Notice 2019-66 provides temporary reporting relief for certain items that were considered the most burdensome to partnerships. The AICPA believes that the additional time for partnerships to comply with such provisions will result in better overall compliance.

In a January 8 comment letter, the AICPA recommended that the Treasury and the IRS:

  1. Clarify that the portion of the Notice that provides reporting relief regarding section 465 at-risk activities also applies to S corporations; and
  2. Issue additional guidance under section 465 reporting.