IRS Chief Counsel Highlights Post-TCJA Developments at D.C. Bar Tax Conference
February 04, 2020
“A bridge to compliance” was a running theme in the keynote speech by Internal Revenue Service (IRS) chief counsel Michael Desmond at the D.C. Bar’s 2020 Tax Legislative and Regulatory Update on January 23, a packed event that drew nearly 350 people.
The all-day tax conference featured speakers from the IRS and the U.S. Department of the Treasury, as well as staff from the House Ways and Means Committee, Senate Committee on Finance, and Joint Committee on Taxation.
In his speech, Desmond placed a strong emphasis on guidance and compliance since the enactment of the Tax Cuts and Jobs Act (TCJA). Passed in November 2017, the TCJA was the largest IRS Code overhaul in three decades. The act nearly doubled the standard deduction and limited two key itemized deductions, mortgage interest and state and local taxes. It also eliminated the individual mandate penalty imposed by the Affordable Care Act.
“Once [the TCJA] regulations and other rules are in place, the baton will shift over to the IRS to start processing returns [and] examining tax returns,” Desmond said.
Desmond also cited two recent bills that will affect his office’s guidance priorities — the Taxpayer First Act and the Further Consolidated Appropriations Act. Passed in July 2019, the former aims to broadly redesign the IRS by expanding taxpayers’ rights, improving customer service, modernizing its technology, and enhancing cybersecurity. Desmond noted that the majority of the new guidance projects under the Taxpayer First Act will focus on procedural issues such as providing appeal rights.
The latter, an appropriations bill also passed in July, included tax extenders and the Setting Every Community Up for Retirement Enhancement (SECURE) Act. SECURE helps Americans save for retirement by making it easier for small businesses to offer employees 401(k) plans, removing maximum age limits on retirement contributions, and relaxing rules on employers offering annuities through sponsored retirement plans.
In his address, Desmond also discussed how the TCJA will affect IRS division counsel offices. He reported that the IRS’s 1,500 attorneys are split between two distinct functions. In Washington, D.C., the IRS has approximately 500 attorneys working on tax policies and writing regulations involving the TCJA. Outside of the District, approximately 1,000 lawyers in 47 locations throughout the country litigate cases and advise examination agents in the operations division.
Desmond reported that although the IRS is focused on answering the public’s questions about changes concerning the TCJA and the two new bills, the likelihood of it being able to address all inquiries is impossible. “There will be gaps in what we issue,” he said. “We realize that that leaves some uncertainty for some taxpayers. But we do try to accommodate that.”
On a positive note, Desmond touted the flexibility of IRS regulation writers. “I think it’s incumbent of us to get our regulations for people to respond to. But those regulations will sometimes have unintended consequences. We do try to move quickly to address any unintended consequences,” he said.
This year’s conference also included sessions on corporate, partnership, and individual taxation; tax-exempt tax reform; international tax and repatriation issues; tax planning; and compensation and benefits reform. The event was presented by the D.C. Bar Taxation Community and Georgetown University Law Center.
