May 2018
The IRS is already working on implementing tax reform, according to
IRS Acting Commissioner David Kautter. Speaking at a Tax Executives
Institute event in Washington, D.C., Kautter discussed current IRS
efforts toward implementing tax law changes under the Tax Cuts and Jobs
Act (TCJA) ( P.L. 115-97).
"The Tax Cuts and Jobs Act represents the most sweeping change to
U.S. tax law since 1986," Kautter said according to his prepared
remarks, which were provided to Wolters Kluwer by the IRS. He added that
the new law will "involve creating or changing a large number of forms
and publications, updating scores of tax processing systems, retraining
our workforce and educating the taxpaying public about the changes."
TRIO
The IRS in January created the Tax Reform
Implementation Office (TRIO). The TRIO is responsible for establishing
and monitoring implementation action plans and ensuring communication
with external and internal stakeholders, among other things, according
to Kautter. "The TRIO is our tax reform linchpin," he said.
IRS Funding
The IRS was provided $320 million
specifically for the implementation of tax reform in the omnibus
government spending package that President Trump signed on March 23
( P.L. 115-141). According to Kautter, more than 70 percent of the IRS
funding for tax reform will go toward reprogramming IRS IT systems.
Additionally, new forms will need to be developed at a cost of
approximately $75,000 per form, and the IRS estimates about 450 products
(including forms, instructions and publications) need to be revised.
Most of these products need to be updated by the 2019 filing season,
which is a "tall order," Kautter said. Additionally, over 1,000 new
employees will need to be hired for taxpayer services and for tax reform
implementation across the Service, including within the Office of Chief
Counsel.
Outreach
The IRS cannot wait for taxpayers to
call about the new tax law’s requirements, according to Kautter. "The
IRS also needs to be proactive, and provide education and outreach to
help taxpayers, tax professionals and other industry partners understand
how the law applies to them, and prepare them for the 2019 tax filing
season," Kautter said.
The IRS’s Communications and Liaison operation is preparing to start
education outreach to increase public awareness of the new tax law’s
provisions.
The IRS will be conducting events across the country for
both taxpayers and tax professionals, according to Kautter. "This
summer, the IRS will again be conducting its Nationwide Tax Forums for
tax professionals in five cities around the country, where the new tax
law will take center stage," he said.
Section 199A
Formal published guidance such as
regulations and notices, as well as "soft guidance"including press
releases and frequently asked questions, will need to be issued to
explain various tax provisions under the new law, according to Kautter. A
particular area in "critical"need for guidance is the Code Sec.
199A deduction for qualified business income of pass-through entities,
Kautter said, calling it a "challenging" area. While Kautter could not
provide a specific time frame for when to expect the guidance, he said
the IRS is working to develop the guidance as "quickly and expeditiously
as possible."