Yesterday, House and Senate Republicans announced they had reached tentative agreement on legislation that would make sweeping changes to the U.S. tax code. While the text of the agreement has yet to be finalized, Republican leaders have indicated the agreement would make cuts to corporate and individual tax rates, adjust the cap on the mortgage interest deduction, and include a repeal of the individual mandate in the 2010 health care law. The final agreement is also expected to retain both the estate tax and the personal alternative minimum tax, though the exemption for the estate tax would be doubled.
The tentative bicameral agreement follows previous passage by the House and Senate of their own tax proposals. But because the tax reform proposals approved by the House and Senate differ from each other, a conference committee comprised of members of the House and Senate tax writing committees and leadership was convened to reconcile differences between the two versions of the bill.
The agreement overhauling the tax code must still be approved by the House-Senate conference committee which is expected to consider and advance the proposal later this week once the text of the agreement is finalized. Following expected approval by the conference committee, Republican leaders plan to have the Senate act first on the legislation as soon as early next week, followed by consideration and passage by the House. Should both chambers approve the agreement, it would then be presented to the President for his signature.
As the House and Senate continue working towards a final agreement on tax reform legislation, NTEU remains concerned about the impact of an agreement, if enacted, on the nation’s deficit and debt levels that will spur action to cut federal programs that include federal employee benefit programs, Social Security, and Medicare.
In addition, NTEU is concerned that should this agreement be enacted, implementation of the proposal will fall almost entirely on the IRS. In order to implement tax reform legislation and assist the taxpaying public, the IRS must, among other things, extensively reprogram its computers, develop new regulations and tax forms, educate taxpayers, businesses and the tax practitioner community so they can understand and comply with the new tax law, respond to what is expected to be a significant increase in taxpayer requests for direct assistance, and train IRS employees.
Unfortunately, little attention is being paid to the fact that the IRS will be charged with implementing the biggest overhaul of the U.S. tax code in 30 years, nor has any consideration been given to ensuring the agency has the resources necessary to carry out this monumental task. NTEU is working to ensure that legislators are aware of this additional reason to increase IRS funding.
IRS has already begun planning how to implement any tax reform legislation passed by Congress, and recently announced it has taken initial steps to prepare and issue guidance on tax withholding for 2018 in January to allow taxpayers and employers to adjust their withholdings.
Please be assured NTEU will continue to monitor congressional action on tax reform legislation and its impact on federal employees, and will keep you apprised of any important developments.
Should you have any questions, or require additional information, please contact your chapter president.