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JCT Reviewing Tax Overhaul for Possible Corrections

Posted on March 12, 2018 by Dylan F. Moroses

The Joint Committee on Taxation is reviewing the tax overhaul to identify areas in need of technical corrections, but a full analysis won't come anytime soon.

JCT Chief of Staff Thomas Barthold said March 9 that the fine-tuned description of the tax law passed in December (P.L. 115-97) will include a list of technical corrections and an explanation of otherwise “garbled” language in the Tax Cuts and Jobs Act.

The analysis, coming in the form of the JCT's “blue book” explanation of the law, could provide examples of certain policies where necessary, Bartold told the Federal Bar Association Section on Taxation conference in Washington. 

But Barthold also said the JCT has no timetable for its release.

“[There’s] not a set schedule. . . . We hope to have it out well before the end of this session,” Barthold said. “In terms of the scope, it’s on the magnitude of the Tax Reform Act of 1986.”

Barthold said that the comprehensive document could include recommendations where technical corrections are needed in the new tax law, but noted that the JCT’s document would not “change legislative history” or policy, and would likely take several months to compile.

“We got some stuff we wrote that’s admittedly . . . in poor English in some places in the conference report, missing some examples that we think would be useful elsewhere. He added that while the JCT could compile a cut-and-paste version by the end of the month, “we’re not going to do that because we’re trying to develop a fuller explanation.”

Barthold said that the JCT is busy identifying technical corrections in the TCJA, but noted that some changes will be more substantive than technical. 

“Technical correction, in our view, is a very narrow concept; if it’s clearly understood what the legislative intent was, but the statute itself is defective, then that’s what motivates the need for a correction,” Barthold said. He noted that people sometimes misconstrue certain substantial tax policy changes as technical corrections.

Barthold referenced specific parts of the TCJA in need of correction, including a problem in section 163(j) dealing with the effective date of changes to the tax treatment of net operating losses, and another on the life span of qualified improvement property. The American Institute of CPAs recently sent Congress a letter urging them to fix the latter provision.

JCT applies a multi-step process to determine what qualifies as a technical correction, including consulting with members of Congress, the IRS, and Treasury. Other factors, like whether the language in question can be clarified with guidance or if the statute reflects “congressional intent,” also play a role in identifying technical corrections, Barthold explained.

Congressional tax staff are also busy sifting through the law in search of any unforeseen errors.

Speaking alongside Barthold, House Ways and Means Committee Majority Chief Tax Counsel Barbara Angus told the audience that Republican taxwriters and staff are reviewing the legislation and taking meetings with people who have concerns about the law’s consequences.

Tiffany Smith, minority chief tax counsel for the Senate Finance Committee, said that committee Democrats are still working to understand all the changes in the TCJA. Kara Getz, chief tax counsel for House Ways and Means Democrats, told the audience that her boss — ranking minority member Richard E. Neal, D-Mass. — wants to see the tax-writing panel hold hearings on the scope of changes and corrections needed to the new tax law.

Barthold said that whether a technical corrections bill is unveiled this year is up to lawmakers.

Follow Dylan Moroses (@DMoroses3244) on Twitter for real-time updates.