From Daily Tax Report®
February 15, 2018
The House Ways and Means Committee is gathering feedback from tax professionals to help develop a list of new tax law provisions that need to be fixed administratively or by Congress, Chairman Kevin Brady (R-Texas) said.
The committee is in “receive mode,” he said Feb. 15 at a Tax Council Policy Institute event.
The path to a technical corrections bill for the 2017 tax act remains unclear, but Brady said he expected to work closely with the Senate and with Democrats on such a measure. Some provisions need to be dealt with as quickly as possible, Brady said, such as the one that gives agricultural growers a bigger deduction for selling to cooperatives rather than to corporations.
Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) has also said he wanted to find a way to fix the issue for farmers. The fix could be included in a spending bill that lawmakers are aiming to pass by March 23.
Another provision that is up to Congress to fix is a drafting error that could require restaurant operators and retailers to depreciate property over 39 years instead of 15. Treasury officials, including Secretary Steven Mnuchin, have noted that lawmakers have to fix that error since it is a mistake in the statute.
The committee might also have a technical corrections bill to deal with some “pre-tax-reform” issues, Brady told reporters.
“We keep calling them technicals but really what we’re talking about are substantive changes and some technicals as well,” said Kara Getz, chief tax counsel for Democrats on the Ways and Means Committee.
“Technical correction” is a specific term that means a bicameral, bipartisan agreement for a provision that doesn’t have any revenue impact, said Tiffany Smith, chief tax counsel for Democrats on the Senate Finance Committee. A good example is a typographical fix, she said.
“In this case, some of these are going to be policy decisions. They’re going to be fixes that actually have an impact on revenue,” Smith said. Democratic members will have to decide when they feel comfortable making those changes, and it’s difficult to do that without knowing the intent behind the provisions, so many would like to see hearings on any proposed fixes, she said.
Barbara Angus, chief tax counsel for Republicans on the Ways and Means Committee, agreed that there’s a difference between technical corrections and further refinements to enacted legislation, but both are common and important after passing something as significant as the new tax law.
Republican tax leaders in Congress are continuing their push to have a major say in how the new tax law is implemented. Brady said he wants to make sure that the tax code is implemented “in a way that is fair, efficient, and effective.”
Brady also said that it was time to look at the temporary tax provisions called extenders in a new light. There would be a higher test for what could end up in a future extenders package, he said. Congress retroactively extended the temporary tax breaks in a budget agreement that passed Feb. 9.
Ways and Means ranking member Richard E. Neal (D-Mass.) said he wants to have hearings on each proposed correction before he could support moving forward with any changes. Democrats also would like to see some of their priorities ride along with these changes, he said.
“If they’re going to open this up, we have a series of provisions we’d like to include for the discussion too,” Neal said, adding that Democrats are still working to formalize that list.
Among priorities Neal would like to push is a way to prop up insolvent multiemployer pension plans. Neal was concerned about ironworkers, truck drivers, and autoworkers, who have seen their planned retirement benefits taken away from them.
“We agree that there are significant issues here,” Mnuchin said Feb. 15 as he was testifying before the Ways and Means Committee. Mnuchin said the department is willing to work on a bipartisan plan, and provide technical expertise and lawmakers work to find a solution.
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