The Tax Cuts and Jobs Act enacted last December will have wide-ranging effects on individuals and businesses – and on the CPAs who advise them – for years to come. Mark Peterson, executive vice president–Advocacy, and Ed Karl, CPA, CGMA, vice president–Taxation, recently sat down with Kim Nilsen, the JofA’s publisher, to talk about the impact the new law will have on practitioners, and the steps the AICPA took to advocate on behalf of the profession as the legislation was being developed.
Here is an excerpt:
What are some of the provisions in the bill that the AICPA advocated for?
Peterson: “We were very pleased and supportive of the expansion of the cash method. And language that would have been harmful as it related to the ability to use deferred compensation, which was in earlier versions, was removed. Modifications to the interest deduction were very helpful. We know there is frustration, particularly for those of our members that are in high-tax states, about the state and local tax deduction changes. It really is a mixed bag. Again, very clear progress was made that was quite beneficial. But we feel strong disappointment in how service businesses were treated in the passthrough provision.”
Karl: “I will say the process is going to move on quite a bit in terms of guidance, and our tax team is likely to spend years working on the guidance that comes out to implement this tax law. And as Mark talks about simplification as a foundation, that is absolutely true and will continue, and that’s something that we do look at very carefully as we comment on the guidance that comes out.”
Can you talk more about next steps as we turn to implementation?
Peterson: “We were very engaged in the legislative process, and that started years ago, you know, hundreds and hundreds and hundreds of hours that went into the legislative process. But now our role with the tax-writing committees, with Treasury, with the IRS is to get the information to them that they need to craft the guidance. Our information is going to come from clients and from practitioners to address the implementation of this. That is going to be vital.”
Karl: “It’s an ongoing process. After the ’86 Act, we had changes virtually every year. As environmental factors change, as other issues come up, we’re there every step of the way to keep an eye on things and to continue to advocate on behalf of our members. So, it’s not an end game, it’s a continuation.”