Congress Addresses Tax Law Issues

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Republicans in Congress recently focused on implementing the Tax Cuts and Jobs Act (TCJA), advancing "Tax Reform 2.0," and clarifying some of the Act's incorrect or ambiguous language.

 

Hatch Pushes to Implement TCJA

Earlier this month, Senate Finance Committee (SFC) Chairman Orrin G. Hatch (R-UT) said "now that pro-growth tax reform is on the books, it's essential that the Treasury Department and IRS are fully staffed and ready to roll out the new tax code." SFC approved two nominees for top IRS and Treasury provisions who will play a major role in this implementation.

 

Brady Unveils Tax Reform 2.0 Framework

Late in July, House Ways and Means Committee Chairman Kevin Brady (R-TX) released "Tax Cuts 2.0," a framework outlining three areas of focus for the next round of tax reform:

 

  • Making permanent the individual tax cuts enacted under TCJA. They currently expire after 2025.
  • Streamlining retirement savings accounts and creating a new Universal Savings Account.
  • Spurring business innovation by allowing new companies to write off more start-up costs.

 

The Tax Foundation, a conservative think tank, called the Republican's framework "a good start," but it was criticized by many Democratic lawmakers. House Ways and Means Committee ranking member Richard Neal (D-MA) said it was "more of the same - it rewards the well-off and well-connected."  The measure will probably not clear the Senate in its entirety due to the upper chamber's 60-vote "supermajority" rule. Specific provisions, however, may be supported by Democrats.

 

Senate Republicans Clarify TCJA Provisions

On Thursday, SFC Republicans sent a letter to Treasury and IRS officials calling on them to issue tax reform guidance in three areas where last December's hastily enacted TCJA legislation was poorly written. The senators also intend to introduce a technical corrections bill addressing other needed clarifications in the TCJA, separate from the House's Tax Reform 2.0 efforts.

 

One issue discussed in the letter involves the depreciation of qualified improvement property. TCJA tax writers intended these assets to qualify for bonus depreciation and a 15-year life, but due to a drafting error they are now depreciated over 39 years with no bonus. Other areas include an incorrect effective date for net operating loss changes and the denial of attorney fee deductions relating to sexual harassment cases.

 

At LM Cohen we will stay on top of tax developments in Washington and keep you informed of important changes. All of our prior Tax Cuts and Jobs Act Alerts are available for you to view on the Updates page of our website.

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