written on behalf of Feigenbaum Law
We’ve previously discussed one of the largest overhauls of the U.S. tax code, which are set to have an impact on Americans and Canadians living on both sides of the border.
Since then, both the Internal Revenue Service and the Treasury Department have been notably quiet about regulations that the government plans to issue stemming from the legislative changes. The reluctance to provide information comes at a time when tax lawyers and accountants are trying to prepare to address the tax changes.
“We Understand the Issue and are Working on Regulations”
The new legislation is a $1.5 trillion overhaul that will introduce the first widespread changes to the U.S. tax code in more than 30 years. It took effect on January 1, 2018. Regulations that will accompany the new code are still being ironed out. Tax experts and others have been calling for clarity on what may be coming down the pipeline.
However, at recent tax conferences, including the American Bar Association’s tax section meeting earlier this month, IRS officials who attended stuck to the same response: “[w]e understand the issue and are working on regulations.”
A lawyer who attended the recent ABA conference noted that while it is not unusual for government speakers to be limited in what they can say about pending changes, their message was so consistent that it would be hard to believe that it was not a coordinate effort.
A different attendee noted that another factor that may be contributing to the unwillingness of the IRS and Treasury to openly discuss pending changes may be the new review powers that the Office of Management and Budget will have over the new legislation.
An agency official who requested anonymity told Bloomberg News that IRS officials have been instructed to be “exceptionally reserved” when addressing tax reform. Indeed, officials have historically been more willing to speak about pending changes as well as their opinions on such changes. The official further noted that government officials, especially career public servants who are not appointed by the administration are “trying to make sure that they do not draw attention to themselves”. Recent departures by high level officials have made this more of a concern. For instance, former Treasury official Dana Trier abruptly left his post as deputy assistant secretary for tax policy after publicly commenting (and criticizing) certain aspects of the tax reform at the ABA tax section meeting earlier this year.
States Scrambling to Address Unintended Effects of New Tax Law
The uncertainty with respect to what new regulations may be coming arises at a time when governors and state legislators are attempting to address an unintended effect of the tax overhaul: an increase in the state-tax in every jurisdiction that has a state income tax. Lawmakers in affected states are seeking to adjust their own tax codes to shield residents from paying more tax.
We will continue to follow further developments with respect to U.S. tax reform. In the meantime, if you have questions about personal or corporate tax planning, and how it may be affected by the new legislation, contact Feigenbaum Law. We offer customized tax and financial planning solutions to clients in the U.S., Canada, and around the globe. Contact us online or at (416) 777-8433 or toll-free at (877) 275-4792 to learn about how we can help with cross-border tax planning.