Securities Basis Reporting Aired

Requiring securities brokers to report basis on their customers’ transactions has received renewed attention in Congress as a way to help bridge the “tax gap.” Senate Finance Committee Chairman Max Baucus, D-Mont., and ranking minority member Chuck Grassley, R-Iowa, presented draft legislation in late May. Bills also have been introduced in both houses (S 601 and HR 878). The Treasury Department has estimated that a Bush administration version of the measure could raise $6.7 billion over 10 years.

In January, the AICPA submitted written comments to Baucus and Grassley on securities basis reporting and other tax measures. The letter signed by Jeffrey Hoops, chairman of the AICPA’s Tax Executive Committee, said the AICPA supports the concept, but it urged holding off implementation until the IRS is able to clear technical hurdles of processing and utilizing the information. Without the ability by the IRS to match the data to income tax returns, reporting could impose a burden on taxpayers outweighing its enforcement benefit, Hoops wrote.