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Chief Counsel Prepping for What Comes After TCJA Guidance Push

Posted on Jan. 24, 2020

The IRS Office of Chief Counsel is beginning to look beyond the Tax Cuts and Jobs Act as it prepares to answer questions from field examiners and add guidance projects on more recent tax legislation.

“Our focus for at least the next year will continue to be on the Tax Cuts and Jobs Act, but there is other legislation that has moved in the last two years, and that’s added to the list of issues that we’re working on,” IRS Chief Counsel Michael J. Desmond said January 23.

Speaking at a District of Columbia Bar conference in Washington, Desmond pointed to two bills enacted in 2019 as new legislation feeding his office’s guidance priorities: the Taxpayer First Act (P.L. 116-25) and an appropriations bill (P.L. 116-94) that included tax extenders and the Setting Every Community Up for Retirement Enhancement (SECURE) Act.

Desmond said that most of the new guidance projects under the Taxpayer First Act will address procedural issues like establishing appeal rights. Meanwhile, benefits counsel has started analyzing and assembling an issues list for the SECURE Act, he added.

The post-TCJA plan doesn’t just involve shifting to guidance on new tax legislation, Desmond said. “Once [the TCJA] regulations and other rules are in place, the baton will shift over to the IRS to start processing returns, examining tax returns, and what I characterized back in December as the kind of bridge to compliance,” he said.

The other major consideration for chief counsel post-TCJA is what effect that law and the guidance thereunder will have on the division counsel offices, Desmond said. He explained that two-thirds of chief counsel’s 1,500 attorneys work in the 47 division counsel offices distributed around the country, where they litigate cases and advise operating division field examiners.

The Office of Chief Counsel will be looking for TCJA reporting issues, providing advice to exam teams, and anticipating the controversies that will end up in litigation, Desmond said.

So far, the field hasn’t reported many TCJA-related issues, but some taxpayers in the compliance assurance process and under current examination before they file their tax returns raised issues with the section 965 transition tax early on, Desmond said. Chief counsel attorneys are working alongside the Large Business and International Division on those issues for tax years 2017 and 2018, he said.

“Outside of CAP, it will obviously be some period of time before those [tax returns] are examined and the issues really come up in earnest,” Desmond said. “We do have a preview of some of those through the CAP program.”

Chief counsel is spending the time before those issues rear their heads training operating division personnel on the new rules, Desmond said. “A lot of what we’ve been doing on the guidance front, we’re trying to transition that, take that knowledge, and impart that to our folks out in the field,” he added.

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