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Kies Seeks Guidance for Claiming 2018 Mortgage Insurance Deduction

DEC. 26, 2019

Kies Seeks Guidance for Claiming 2018 Mortgage Insurance Deduction

DATED DEC. 26, 2019
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December 26, 2019

The Honorable David J. Kautter
Assistant Secretary (Tax Policy)
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220

Hon. Charles P. Rettig
Commissioner
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC 20224

The Honorable Michael J. Desmond
Chief Counsel
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC 20224

Re: Retroactive Reinstatement of Code Section 163(h)(3)(E)

Dear Messrs. Kautter, Rettig, and Desmond:

On behalf of my client the U.S. Mortgage Insurers (“USMI”), I would like to bring to your attention an important issue with respect to the retroactive reinstatement of Internal Revenue Code section 163(h)(3)(E) that was enacted by section 102 of Title I of Division Q of the Further Consolidated Appropriations Act, 2020 (H.R. 1865) (hereinafter, the “Act”).

Specifically, I refer to the fact that section 102 of the Act retroactively reinstated the deduction permitted by Code section 163(h)(3)(E) (the “Mortgage Insurance Deduction”) with respect to “amounts paid or accrued after December 31, 2017” and “before December 31, 2020.” In other words, in relevant part the Mortgage Insurance Deduction is permissible with respect to tax year 2018 — and the applicable federal income tax returns for tax year 2018 have long since been filed.

According to the most recent IRS statistics of income, it was estimated that more than 2.285 million taxpayers claimed the Mortgage Insurance Deduction in the 2017 tax year. While the enactment of the Tax Cuts and Jobs Act has likely reduced the number of taxpayers who would have claimed the Mortgage Insurance Deduction in 2018 had they been able to when they filed their return, it is nearly certain that there are millions of taxpayers who would have done so.

Thus, without guidance from the IRS and Treasury Department, these millions of taxpayers will be forced to file amended 2018 tax returns in order to claim the deduction for 2018. I'm sure you appreciate the immense administrative burden this would be for the IRS and taxpayers.

As such, we would like to request that the IRS and Treasury Department exercise their broad authority to issue guidance allowing affected taxpayers to claim the Mortgage Insurance Deduction for 2018 on their 2019 federal income tax return (in addition to being able to claim the deduction for 2019 on the same return). This action would save countless hours for both the IRS and taxpayers.

It is imperative that the IRS and Treasury Department provide this type of guidance in relatively short order, as the 2019 tax filing season is likely to open around one month from now.

USMI appreciates very much your leadership and support. We are happy to meet or discuss the aforementioned at your convenience. If you have any questions, please contact me at ken.kies@fpgdc.com or 202-772-2482.

Very truly yours,

Kenneth J. Kies
Federal Policy Group
Washington, DC

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