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Desmond Anticipates Finishing TCJA Guidance by Year-End

Posted on Nov. 11, 2020

The IRS Office of Chief Counsel plans to finish issuing most Tax Cuts and Jobs Act guidance in 2020 despite COVID-19 pandemic difficulties and regulatory demands from the relief bills.

Since the TCJA was passed at the end of 2017, the IRS has reviewed almost 10,000 comments and issued nearly 50 sets of proposed regulations, according to IRS Chief Counsel Michael Desmond.

The IRS has published or will soon be publishing final regulations for each of those sets of proposed regs, Desmond said November 11 at the American Bar Association Section of Taxation virtual tax conference in Philadelphia.

Desmond acknowledged that much of the IRS’s work on TCJA regulations was completed in the year between the bill’s passage and his assumption of the chief counsel role in 2019. There’s still a lot of work to do on the last pieces of TCJA guidance, he said, “but we’re certainly well on our way to doing that.”

The new year will coincide not only with a changing presidential administration, but also with the start of the filing season, Desmond noted. And the IRS and the Office of Chief Counsel are preparing for the possibility of a new round of pandemic relief, he said.

Desmond specifically addressed proposed regulations for the new provisions of section 451 enacted by the TCJA. Section 451(b) (REG-104870-18) requires accrual-method taxpayers to include almost all items of income in a tax year if those items are included on the relevant financial statements for the same year, and section 451(c) (REG-104554-18) clarifies the treatment of advance payments.

The IRS has done a lot of work finalizing those regs, and taxpayers can expect to see them soon, Desmond said.

Once the Office of Chief Counsel has finished issuing the TCJA-related guidance, its field offices will take the lead when the IRS turns to filing concerns and examinations, Desmond added.

Two Masters

Desmond pointed out that the IRS's responsibility for administering pandemic relief measures as tax expenditures highlights the agency's dual roles of collecting revenue and delivering economic benefits now that the latter have been placed in the Internal Revenue Code, he said. Those roles sometimes conflict, he said.

“The economic benefit function for the IRS has been with us for decades, but continues to expand, in part due to the IRS’s unique position in interacting regularly with more Americans than any other agency, and in part because the IRS has proven itself to be remarkably efficient in performing the task,” Desmond said. As much as the IRS is called on to provide taxpayer services, it must also retain enforcement as a central mission, he said.

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