The American Institute of CPAs is urging the Treasury Department and the Internal Revenue Service to suspend and remove their recently issued final regulations labeling some partnership related-party transactions as “transactions of interest” that need to be reported.

The Treasury and the IRS issued the final regulations in January during the closing days of the Biden administration. 

The regulations identify certain partnership related-party “basis shifting” transactions as “transactions of interest” subject to the rules for reportable transactions. They apply to related partners and partnerships that participated in the transactions through distributions of partnership property or the transfer of an interest in the partnership by a related partner to a related transferee. Taxpayers and their material advisors would be subject to the disclosure requirements for reportable transactions. 

Last June, the Treasury and the IRS issued guidance to related parties and partnerships that were using such structured transactions to take advantage of the basis-adjustment provisions of subchapter K. Last October, the AICPA sent a comment letter urging them to refine the rules. Now that the final regulations have been issued, the AICPA is again warning they would result in an undue burden to taxpayers and their advisors.

In a new comment letter on Feb. 21, the AICPA asked the Treasury and the IRS for immediate suspension and removal of the final regulations due to the impractical provisions and administrative burdens it imposes. 

“These final regulations continue to be overly broad, troublesome, and costly, which places an excessive hardship on taxpayers and advisors without a meaningful corresponding compliance benefit or other benefit to the government,” said Kristin Esposito, the AICPA’s director of tax policy and advocacy, in a statement Monday. “These regulations exceed their intended scope, especially due to the retroactive nature.”

The AICPA contends that the final regulations cover routine, non-abusive transactions, provide an unreasonably low threshold, and impose an unreasonably short 180-day deadline for taxpayers to file Form 8886, Reportable Transaction Disclosure Statement, for transactions related to previously filed tax returns due to the six-year lookback window. It pointed out that under the new rules, advisors would have only 90 additional days beyond the standard reporting deadline to file Forms 8918, Material Advisor Disclosure Statement.

The Internal Revenue Service made some improvements to its IRS Individual Online Account for taxpayers, adding W-2 and 1095 information returns for 2023 and 2024, but reports circulated about cutbacks to the agency, with layoffs and closures of taxpayer assistance centers scheduled.

The first information returns to be added online for taxpayers are Form W-2, Wage and Tax Statement and Form 1095-A, Health Insurance Marketplace Statement. The forms will be available for tax years 2023 and 2024 under the Records and Status tab in the taxpayer’s Individual Online Account. 

In the months ahead, the IRS plans to add more information return documents to the Individual Online Account. 

Only information return documents issued in the taxpayer’s name will be available in their Online Account. The taxpayer’s spouse needs to log into their own Online Account to retrieve their information return documents. That’s true whether they file a joint or separate return. State and local tax information, including state and local tax information on the Form W-2, won’t be available on Individual Online Account. The IRS said filers should continue to keep the records mailed to them by the original reporter. 

The IRS had been adding more technology tools, including Business Tax Accounts and Tax Pro Accounts, in recent years thanks to the extra funding from the Inflation Reduction Act of 2022. However, layoffs of between 6,000 and 7,000 employees and hiring freezes at the IRS in the midst of tax season threaten to stall such improvements, according to a group of former IRS commissioners. Both IRS commissioner Danny Werfel and acting commissioner Douglas O’Donnell have stepped down in recent weeks. Over the weekend, dismissal notices went out to 18F, a federal agency that helped develop the IRS’s Direct File program and other tools like the Login.gov authentication service. The Trump administration and the Elon Musk-led Department of Government Efficiency have reportedly made plans to shut down at least 113 of the IRS’s in-person Taxpayer Assistance Centers around the country after tax season, according to the Washington Post, either terminating their leases or letting them expire. Werfel had been using the funds from the Inflation Reduction Act to expand the number of Taxpayer Assistance Centers, opening or reopening more than 50 of them for a total of 360 nationwide.

A group of Democrats on Congress’s tax-writing committee criticized the move to close the centers. “Ask any congressional district office and you’ll hear about the challenges constituents face during filing season, which is why Democrats ushered in a once-in-a-generation investment in modernizing the IRS and delivering the customer service the people deserve,” said House Ways and Means Committee ranking member Richard Neal, D-Massachusetts, Tax Subcommittee ranking member Mike Thompson, D-Califonia, and Oversight Subcommittee ranking member Terri Sewell, D-Aabama, in a statement last week. “This administration is hellbent on destroying our progress. It wasn’t enough for them to fire nearly 7,000 IRS employees in the middle of filing season, but now, they are skirting federal mandatory notice procedures and reportedly shuttering over 100 offices that offer taxpayer assistance — an absolute nightmare for taxpayers. As required by the Taxpayer First Act, a 90-day notice must be given to both the public and the Congress before closing any Taxpayer Assistance Centers. We need answers now. We are demanding the Administration provide a list of the centers they plan to close — it’s the least the ‘most transparent Administration’ can do.”

Lawmakers are also concerned about reports of immigration officials pushing the IRS to disclose the home address of 700,000 people suspected of living in the U.S. illegally. According to the Washington Post, the IRS had initially rejected the request from the Department of Homeland Security, but with the departure of O’Donnell last week, the new acting commissioner, Melanie Krause, has indicated she is open to exploring how to comply with the request. However, that move could violate taxpayer data privacy laws, one Senate Democrat warned

“The Trump administration is attempting to illegally weaponize our tax system against people it deems undesirable, and if anybody believes this abuse will begin and end with immigrants, they’re dead wrong,” said Senate Finance Committee ranking member Ron Wyden, D-Oregon, in a statement. “Trump doesn’t care about taxpayer privacy laws and has likely promised to pardon staff who help him violate them, but those individuals would be wise to remember that Trump can’t pardon them out from under the heavy civil damages they’re risking with the choices they make in the coming days, weeks and months.”

KPMG elected Tim Walsh as its next U.S. chair and CEO, and Atif Zaim as its next U.S. deputy chair.

Walsh will succeed Paul Knopp, and Zaim will succeed Laura Newinski, for five-year terms that begin on July 1. Knopp and Newinski’s five-year terms end June 30.

“Tim Walsh and Atif Zaim’s vision, integrity, strategic acumen and dedication to our clients will propel us forward as we compete and win in the market,” Knopp said in a statement. “This team is committed to innovation, anticipating client needs and delivering above and beyond what the market demands of KPMG.” 

Walsh has spent over 33 years at KPMG and is currently national managing partner of U.S. audit operations. He previously served as New York metro audit partner-in-charge, industry sector leader for the consumer products and retail businesses in the New York metro area, and lead partner-in-charge of the venture capital practice in New York. Walsh was also a reviewing partner for the firm’s matters relating to the Securities and Exchange Commission.

“Our driving priority is ensuring that we’re ready for that future — more agile, more strategic and more accountable than ever before,” Walsh said in a statement to employees today. “This is our moment — to be the best at what we do, to offer the most exciting opportunities and most meaningful client work, and to invest in our collective growth.”

“We will prioritize ensuring access to opportunity, offering enriching and career-defining experiences and lifelong learning, supporting your individual career journey, and fostering authentic connections and friendships,” he added.

Zaim is currently KPMG’s U.S. consulting leader and former national managing principal of the advisory practice. Previously, he was the national managing principal of the advisory practice and led the U.S. customer and operations service line for the firm’s consulting practice. He joined KPMG in 1994 in London, moved to New York in 1998 and became a partner in 2003.

“We will be bold and agile in this moment of change,” Zaim said in a statement. “KPMG will continue to offer clients access to the best people and services, and the new and necessary solutions to accelerate transformation. Tim and I are dedicated to engaging the C-suite to remain at the forefront of innovation, while continuing to foster a high-performance culture that supports all our people.”

“This is the right team for this incredible moment for the firm,” Newinski said in a statement. “Tim and Atif’s commitment to culture and people, combined with their understanding of the market, has shaped a powerful vision for our firm that’s truly exciting.”