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IRS Releases Second Quarter Guidance Update; Focus On New Law

The Treasury and IRS have released their second quarter update to the 2017-2018 Priority Guidance Plan (Plan). The updated Plan now reflects 29 additional projects, including 18 projects that have become near-term priorities as a result of the Tax Cut and Jobs Act of 2017 (TCJA). As in the past but made more urgent by the TCJA, the IRS intends to update its cumulative Plan to consider comments received from taxpayers and tax practitioners relating to additional projects and to respond to developments arising during the plan year.

Response to new law

Part 1 of the updated Plan contains plans for guidance on 18 targeted areas, including the following:

  • Internal Revenue Code (IRC) Section 45S business credits with respect to wages paid to qualifying employees during family and medical leave
  • Application of the effective date provisions under IRC Section 162(m) to the elimination of the exceptions for commissions and performance-based compensation from the definition of compensation subject to the deduction limit
  • Fines and penalties under IRC Section 162(f) and new IRC Section 6050X
  • Computational, definitional, and other matters under new IRC Section 163(j) on the deduction of business interest
  • Bonus depreciation under new IRC Section 168(k)
  • Computational, definitional, and anti-avoidance matters under the new IRC Section 199A passthrough deduction
  • Adopting new small business accounting method changes under IRC Section 263A, 448, 460 and 471
  • Implementing changes to IRC Section 529 college savings plans
  • Implementing changes to IRC Section 1361 regarding electing small business trusts
  • Computation of estate and gift taxes to reflect changes in the basic exclusion amount
  • Withholding under IRC Sections 3402 and 3401 and optional flat rate withholding
IRS resources

Although IRS officials have said that its updated list is not exclusive, they have emphasized that the items on the list will be their first order of business, which they hope to get through by July. Treasury Secretary Steven Mnuchin predicted in mid-January that the IRS will hire more employees to implement the TGJA: “Our number one issue is implementing the new tax law,” Mnuchin said.

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