AICPA Comments on Corporate Alternative Minimum Tax Proposed Regulations
Washington, D.C. (January 23, 2025) – In a letter submitted to the U.S. Department of the Treasury and the Internal Revenue Service (IRS), the American Institute of CPAs (AICPA) provided comments to recently proposed regulations of the application of the Corporate Alternative Minimum Tax (CAMT). The proposed regulations expand on interim guidance by providing rules and examples on computing an entity’s adjusted financial statement income, identifying applicable corporations that are subject to CAMT and other rules for controlled foreign corporations, foreign-parented multinational groups and partnerships with corporate partners.
The AICPA’s comments focus on various aspects of the proposed regulations, including general concepts and methods and periods, international tax, passthrough, and mergers and acquisitions issues. The comments follow previously submitted letters to Congress in 2021 and 2022 requesting immediate guidance on the CAMT rules as well as letters submitted to Treasury and the IRS on interim guidance issued on CAMT in 2023 and 2024.
In particular, the Treasury Department’s press release announcing the issuance of the proposed CAMT regulations indicates that approximately 100 companies are anticipated to pay the CAMT annually, with an average effective federal tax rate of 2.6 percent. The AICPA is recommending Treasury and the IRS to solicit feedback regarding potential approaches to reduce the compliance burden while maintaining the necessary level of precision in the determination of the CAMT liability for the targeted taxpayers (i.e., taxpayers with low effective federal tax rates).
Examples from the AICPA letter include:
Increasing the $500 million safe harbor for purposes of determining applicable corporation status.
A simplified methodology available to non-applicable corporations and/or applicable corporations with high effective federal tax rates.
An irrevocable election to use pretax book income as adjusted applicable financial statement income (AFSI) for CAMT liability purposes.
“The proposed regulations impose a massive compliance burden on all U.S. taxpayers that do not meet the $500 million AFSI safe harbor while only a small group, approximately 100 of those taxpayers, will pay the CAMT liability,” says Reema Patel, Senior Manager, AICPA Tax Policy & Advocacy. “The AICPA’s comment letter provides a non-exhaustive list of items in the proposed regulations with a high compliance burden for the taxpayers.”
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with 400,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. AICPA sets ethical standards for its members and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives continuing education to advance the vitality, relevance and quality of the profession.
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BACKGROUND:
October 28, 2021 - Corporate Profits Minimum Tax in Reconciliation Being Considered
June 21, 2022 - AICPA Comments on the Corporate Profits Minimum Tax in Reconciliation Being Considered
October 14, 2022 - AICPA Comments on the Corporate Alternative Minimum Tax Needed Immediate Guidance
March 27, 2023 – AICPA Comments on Notice 2023-7 on Corporate Alternative Minimum Tax
December 14, 2023 – AICPA Comments to Treasury and IRS on Additional CAMT Guidance for Notice 2023-64
Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com