For Tax Day this year, House lawmakers are focusing on a familiar target -- the Internal Revenue Service.
Pegged to Tuesday’s tax-filing deadline, Republican leaders scheduled a floor vote later this week on a bipartisan package to retool the agency.
If the measure gains momentum, the IRS could face restructuring as it struggles to implement a once-in-a-generation overhaul of the U.S. tax code. The agency has been crippled by years of budget cuts leaving it vulnerable to fraudsters and relying on computer program languages that date back to the 1950s. And a recent agreement will require some of the IRS’s tax regulations to be vetted by the White House Budget Office for the first time in decades.
Those headaches could mean the confusion surrounding the tax law isn’t likely to be cleared up anytime soon. Various industries and tax professionals are still struggling to understand dozens of the law’s provisions and interpret lawmakers’ intentions on changes such as the special break for pass-through businesses and new international tax measures. More mundane questions exist too: Can you still deduct some of the cost of dinner with a business client?
It makes the IRS’s usual job -- processing more than 120 million tax returns that arrive by mid-April and spitting back some $300 billion in refunds -- look easy.
There’s concern among tax professionals that until there’s clear IRS guidance, they’ll just have to make “gut decisions” for 2018 returns, said Jody Padar, chief executive officer of New Vision CPA Group in Mount Prospect, Illinois.
‘Bureaucratic Twilight Zone’
Senator Ron Wyden, the top Democrat on the tax-writing Finance Committee, said at a hearing last week that small businesses are stuck in a “bureaucratic twilight zone” because they have estimated tax payments due Tuesday, but still don’t know how the new law works.
The IRS has promised to issue guidance on several priority items by June 30. But that deadline seems more and more ambitious. Even providing details by that date on who’s allowed to take the pass-through deduction has been questioned by a former top Treasury official.
House Republicans have pushed for years to streamline the agency. Last week, the Ways and Means Committee unanimously approved the package of IRS bills, which call for changes like creating a new independent office for the appeals process. It would also require the agency to send Congress a written plan for its reorganization by Sept. 30, 2020. House leaders have said the delay is in part to give the IRS time to implement the new law.
House Ways and Means Chairman Kevin Brady told reporters Monday that he’s working with the Senate on the IRS overhaul bill and trying to get it to the president’s desk this year. He said the package wouldn’t require appropriators to provide additional money.