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TCJA Guidance Report from Treasury Inspector General For Tax Administration



Annette Nellen Regarding Treasury Inspector General Report

On May 14, TIGTA released a report, Status of the Office of Chief Counsel’s Issuance of TCJA Guidance. It reviewed the process for issuing guidance on the 100+ provisions of the Tax Cuts and Jobs Act (P.L. 115-97; 12/22/17). It also lists the guidance issued through the end of March (83 items) and what is expected from that date (95 items). A good amount of this includes Treasury Decisions, meaning final regs of the numerous proposed regs issued so far. Here is the detail of what they still plan to issue:

44 Treasury Decisions
35 NPRMs
4 Revenue Rulings
6 Revenue Procedures
4 Notice
1 Announcement
1 Undetermined

Appendices to the report list the specific topics of the guidance.

This is a lot of guidance. Practitioners and taxpayers are likely to raise issues on some of the items, as they have with earlier guidance. That could lead to further changes.

Will it all be done by time 2019 tax returns are due?  Probably not and new issues will arise. It’s a difficult process as many of the TCJA items are complex such as the international provisions, the business interest expense limitation and the changes for tax-exempt entities. Some of the regulations issued are over 100 pages long! There are many new definitions, limitations, safe harbors, special rules and more.

To get a sense of how long guidance can take, consider that we still have some temporary regulations from the Tax Reform Act of 1986, such as Reg. 1.163-8T and 1.469-5T (issued before 11/20/88 so not subject to the 3-year expiration date of section 7805). Also, on March 26, 2019, proposed regulations were issued under sections 301, 356, 368 and 902. The explanation of these regulations states that they are needed to “update existing regulations under section 301 to reflect statutory changes made by the Technical and Miscellaneous Revenue Act of 1988”! [REG-121694-16 (3/26/19)]

Is there an easier way so we don’t have to wait so long and have uncertainty as to how some provisions work or have taxpayers taking differing positions, unfortunately with little risk given the low audit rates? I think much of the complexity could have been avoided. For example, for the qualified business income deduction of section 199A, don’t include the limitation for “specified service trades or businesses” as it isn’t needed and only affects high income individuals. Don’t have so many loss and deduction limitations. Instead, see if just one can work.

What do you think? Annette Nellen
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Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.

Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.

Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.

Prior to joining SJSU, Annette was with Ernst & Young and the IRS.

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