New Tax Reform-Related Regs May Appear Soon
A top Senate tax writer has said additional proposed regulations for the new tax code are expected to be released soon. Treasury Secretary Steven Mnuchin provided Republican senators with an update on tax reform-related rules in a meeting at the U.S. Capitol on December 6.
Treasury appears to be “about done” with tax reform-related regulations, Sen. Chuck Grassley, R-Iowa, told reporters after meeting with Mnuchin, adding that the regulations could surface as early as December 10. Grassley is expected to chair the Senate Finance Committee (SFC) next year when current SFC Chairman Orrin G. Hatch, R-Utah, retires.
The Tax Cuts and Jobs Act (TCJA) ( P.L. 115-97), enacted last December, will significantly impact next year’s tax filing season. Treasury and the IRS are currently working to stay on track with the anticipated timeline of all TCJA proposed regulations being issued in 2018, as originally estimated by former acting IRS Commissioner David Kautter. Kautter, who currently serves as assistant Treasury secretary for tax policy, also attended the meeting with Mnuchin and Republicans senators.
TCJA Technical Corrections
Mnuchin and the lawmakers also reportedly discussed various corrections needed to the new tax law. To that end, Grassley told reporters after the meeting that the TCJA’s new 21-percent tax for nonprofit organizations on unrelated business income was a topic of discussion. The TCJA provision has garnered significant criticism, seemingly sparking the recent effort by House Ways and Means Committee Chairman Kevin Brady, R-Tex., to repeal the tax.
Brady introduced a manger’s amendment, which would repeal the tax for nonprofits, to the sweeping, catch-all tax package he introduced late November. Additionally, the measure consists of a mix of partisan and bipartisan priorities, which include tax extenders, IRS reform, and TCJA technical corrections, among other things.
Although the nearly 300-page tax and IRS oversight package, an amendment to HR 88, was scheduled for a House floor vote on November 30, leadership pulled the measure from the floor late on November 29 because it reportedly lacked requisite GOP support. Moreover, adding to the package’s dwindling chances of legislative success this year is the need for at least nine Democratic votes in the Senate.
Additionally, there is talk on Capitol Hill that Treasury may try to administratively remedy some needed technical corrections to the new tax law. Although some fixes will undoubtedly need legislative correction, Hatch told reporters that he “thinks” that some corrections could come by way of Treasury.
Government Shutdown Averted … for Two Weeks
In related news, Congress avoided a possible government shutdown on December 7 at midnight by approving a two-week stopgap spending bill. The measure was signed by President Donald Trump. The stopgap spending bill keeps the government and federal agencies including the IRS open through December 21.
Republican tax writers appear to have not yet given up hope on addressing some tax provisions in a more long-term, year-end government funding bill that Congress is currently ironing out. It is expected on Capitol Hill that the next spending bill may be used as a legislative vehicle for some tax measures. In particular, IRS reform and tax extenders for certain expired tax breaks are seen as measures carrying higher odds of success, both of which are considered bipartisan proposals.