Implementing Tax Package Will Take Discipline, Accountability

The $3.4 trillion tax-and-spending package signed by President Donald Trump last month is one big, complicated piece of legislation. Now that it’s law, the job of implementing the statutory changes takes center stage.

Implementing a law of such size and complexity requires a comprehensive plan, discipline, accountability, and an unwavering commitment to project management. Without these elements, implementation will lose focus quickly, and the likelihood of providing timely, comprehensive guidance to taxpayers will diminish, if not disappear.

In some ways, implementing the new tax law will be easier than implementing the Tax Cuts and Jobs Act of 2017. In other ways, it will be harder.

It’s easier in that many of the tax law’s provisions involve extensions of laws already in the federal tax code, which wasn’t the case with the TCJA. Although the new fiscal package contains modifications to existing law, the regulatory framework in place will require only minor changes.

For example, the individual rates and brackets are largely unchanged. Personal exemptions and certain itemized deductions, which were suspended in 2017, have now been repealed. Redesigning the Form 1040 and the withholding tables required significant effort in 2018 but should take only modest effort this time around.

But implementing the law is more difficult in some respects. New provisions will require new rules and changes to forms. Also, some changes to existing provisions—and many new provisions—are effective for the current taxable year.

The government had a full calendar year to get ready for the upcoming filing season after the TCJA—this time, it has less than six months.

Three-Part Process

It’s easiest to understand the government’s implementation challenges of new tax legislation by categorizing the process into three aspects:

• Developing filing tools: forms, instructions, and publications
• Updating technology
• Issuing regulatory and sub-regulatory guidance

While all three have unique challenges, they’re interrelated and require the same fundamental steps. Setting priorities and target dates, establishing accountability, and being willing to get guidance out sooner rather than later are all critical to providing timely, helpful guidance.

Setting priorities on what needs to be done—and when—is the crucial first step. This provides a roadmap for the rest of the journey.

Not every provision in the new law requires guidance. When setting priorities, realize that multiple simultaneous workstreams are necessary, often for the same provision, and communication protocols must be incorporated into the process.

One of the highest priorities will be updating the tax forms, instructions, and publications, along with IRS technology. It will require the simultaneous work of multiple teams that must communicate among themselves and with others who will be drafting formal guidance.

This was a constant challenge in implementing TCJA changes such as qualified business income under Section 199A or the elimination of personal exemptions, and it should be built into the plan.

Establishing target dates is critical—not only for forms and technology but also for regulatory and sub-regulatory guidance. Taxpayers shouldn’t have to wait years to get guidance.

Further, there must be accountability for completing tasks by the target date. Too often, regulatory deadlines are allowed to slip with no consequences. When interim deadlines are regularly missed, the solution may be to replace leadership of the team, some team members or even the entire team.

Guidance Challenges

One of the most challenging aspects of issuing regulatory guidance is that parts of the law are ambiguous. It’s an inevitable byproduct of the legislative process. A balance is necessary between thoroughness and timeliness.

There are no clear answers to some legislative ambiguities, so issuing what can be issued and coming back to the rest later is often better than issuing no guidance at all. The IRS often has a desire to wait for everything to be resolved first, but that doesn’t help taxpayers.

The government can offer guidance in many forms—news releases, fact sheets, statements, frequently asked questions, tax tips, and notices—in addition to regulations. Releasing these types of sub-regulatory guidance can benefit taxpayers struggling with a new law without the time-consuming process of issuing formal regulations.

The cliche that “it is easier to complain than to solve the problem” applies to tax guidance. My experience while at the IRS and the Treasury Department is that somebody on the regulatory team reads every single comment received about tax guidance.

If you or your organization has a point of view, take the time to make it known. You might be surprised by the impact you can have.

Tools in Hand

Timely implementation of the recently passed tax law will not be simple, but the Treasury and IRS have all the tools they need to get the job done.

If these tools are used to create a comprehensive multi-stream plan that strategically prioritizes guidance, discipline, accountability, and a commitment to project management, the likelihood of success increases significantly.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

David Kautter is RSM US’s advisory services leader and tax policy leader.

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