Staffers on Congress’s Joint Committee on Taxation have been preparing a set of technical corrections to the tax reform bill and hope to have it in legislative form by the end of this congressional session, which ends this year. But that doesn’t mean it’s going to pass anytime soon.
Thomas Barthold, chief of staff of the Joint Committee on Taxation, told attendees at the 18th Annual NYU / KPMG Tax Lecture at New York University on Wednesday that his staffers have been working on the technical corrections even before the legislation was enacted. They are also hard at work on a so-called “Blue Book” that will provide more details on the tax overhaul.
Barthold referred to the tax reform bill as “Public Law 115-97,” formerly known as the Tax Cuts and Jobs Act. Democrats challenged the name of the bill with the Senate parliamentarian shortly before it was passed last December by Republicans, and forced it to be changed to “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.”
Republican lawmakers rushed the bill through Congress in order to be able to use a budget reconciliation procedure to avoid a filibuster by Senate Democrats, and inconsistencies emerged in the hastily drafted legislation. Barthold was usually the only person testifying at the few congressional hearings that were conducted as the bill sped through Congress late last year.
“The process of identifying technical corrections actually began before the legislation was signed,” said Barthold. “We noticed that there were some errors, a conflict between what the members had directed in terms of the conference agreement and the way it worked out in the statutory language. Those were the consequences of the somewhat compressed time period to pull everything together.”
He said the Joint Committee on Taxation is continuing to receive input on any corrections needed.
“The process is our phone lines, our email lines are open,” he added. “We will solicit anybody’s views if they think there are technical errors.”
Groups such as the American Institute of CPAs have already been asking for clarification, but Barthold noted that his committee can’t do anything about changing matters pertaining to policy.
“The technical corrections are not something that benefits one taxpayer,” he said. “The technical corrections from our perspective are: what is the member’s intent in the legislation? If the member’s intent was clear, and it’s not clearly reflected or clearly effectuated in the legislation, then perhaps a technical correction is required.”
The staff of Congress’s two tax-writing committees, the House Ways and Means Committee and the Senate Finance Committee, are working on the technical corrections and the Blue Book within the Joint Committee.
“We try to do it on a bipartisan basis,” said Barthold. “That’s a little bit different this time than in the case of other legislation because of the whole partisan nature of crafting the bill. Along with the technicals process, the Joint Committee staff is planning on producing a Blue Book to explain and pull together the different pieces of legislative history all in one place. We’ll use the Blue Book to identify some areas where we think technical corrections might be needed. We hope to write better some of the explanations of some of the provisions, perhaps with a few more examples. But the Blue Book is not a matter of trying to expand the policy or change the policy in any way.”
He noted that the timing of the Blue Book and the technical corrections bill is driven by the members of Congress. “They have other things they want us to do, so it somewhat depends on what else is going on in Congress,” said Barthold. “As far as the technical corrections, my colleagues on staff, we coordinate the technical corrections process. We hope to develop at least an initial list of technical corrections that are agreed to by all parties.”
It will then be up to the chairmen of the House Ways and Means Committee and the Senate Finance Committee — Rep. Kevin Brady, R-Texas, and Sen. Orrin Hatch, R-Utah — to introduce the legislation. But passing it could take years, especially after the partisan acrimony that accompanied last year’s tax overhaul.
“This legislation typically has not been passed rapidly,” said Barthold. “The technical corrections that we developed after the passage of the PATH Act of 2015 were first introduced in December of 2016, and were only passed into law six weeks ago. The technical corrections to the ’86 Tax Reform Act, which was passed in October of 1986, the first technical corrections were passed in October of 1988, and there were some introduced before the end of the first session in 1998. So we hope to have some technical corrections in legislative language that members will be willing to introduce at the end of this session. No hard deadlines.”
Marc Gerson, a former majority tax counsel to the House Ways and Means Committee and currently chair of the Washington, D.C.-based law firm Miller & Chevalier, said many taxpayers are awaiting guidance from the Treasury Department and the Internal Revenue Service while a technical corrections bill is being prepared.
His firm recently surveyed a group of tax executives and found 73 percent of the respondents plan to seek regulatory or other administrative guidance with respect to the Tax Cuts and Jobs Act, and 61 percent will seek technical corrections to the law. However, 43 percent of respondents are concerned that Congress won’t be able to effectively enact the technical corrections in a timely manner, and another 23 percent are worried about the TCJA’s ability to endure following the 2018 and 2020 elections.
“Folks are enthusiastic about the tax reform bill and the benefits to their business, but at the same time, there’s a need for a lot more information, certainty and clarity about how the law applies to their businesses, so there really is an emphasis on looking for guidance from Treasury and the IRS,” he told Accounting Today. “I think that’s where people are initially focusing their efforts to try to gain certainty. They’re working the administrative guidance process, and if that process doesn’t give them the certainty they’re looking for, they’ll be looking for technical corrections or other substantive legislation.”
Tax executives are nearly equally divided between wanting guidance on the global intangible low-taxed income (GILTI) rules (17 percent), the base erosion and anti-abuse tax (BEAT) (16 percent), the pass-through deduction for qualified business income (16 percent), and the limitation on the deduction of business interest expense (15 percent), according to the survey.
Gerson sees the technical corrections bill as a work in progress that will depend on bipartisan cooperation among lawmakers. “They’re certainly in the process of assembling provisions to introduce a technical corrections bill, but there is a lot of uncertainty about when such a bill could be enacted because it has to be done on a bipartisan basis,” he said. “My impression at this point is that the process of identifying technical corrections is still underway because folks are still waiting to see the results of the administrative guidance process to see what issues can be resolved there before turning to technical corrections.”
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