September 1998 Issue

CONGRESS PASSES IRS REFORM LEGISLATION

On Thursday, July 9, the U.S. Senate completed congressional action on the IRS Restructuring and Reform Bill of 1998. The Senate vote was 98-2; the House of Representatives had earlier voted its approval with a similar show of support, 402-8. The President signed the legislation on July 22.

One important provision for CPAs and their clients is the granting of a confidentiality privilege to CPAs' clients, not unlike that enjoyed by attorneys' clients. The provision would preclude the IRS from obtaining taxpayer information from CPAs concerning their client's civil tax matters; this privilege will not extend to criminal matters. A second major item was the last-minute inclusion of the elimination of the 18-month capital gains holding period effective January 1, 1998.

Other key features of the bill are the creation of a corporate-styled board to oversee the IRS, a strengthening of the Taxpayer Advocate, a mandate to move to electronic filing of tax returns over the next decade, a shifting of the burden of proof in certain civil tax matters, a major reformation of the innocent spouse rule, and a prohibition against financial status (or economic reality) auditing.

Upcoming issues of The CPA Journal will feature articles on the bill as a whole and the CPA-client privilege in particular. The text and other key information about the bill can be obtained online via thomas.loc.gov. *

The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

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