Five areas of focus as companies work to implement the TCJA
U.S. Companies continue to walk through challenges stemming from the 2017 tax reform law known as the Tax Cuts and Jobs Act (TCJA), which ushered in new rules, new compliance and reporting obligations, and new risks. Calendar-year taxpayers have filed their first federal and state tax returns under the full provisions of the TCJA, but Treasury and the IRS continue to issue and finalize guidance in key areas. The rules are complex, and many companies are finding they still have unanswered questions.
The TCJA’s rules affect various business functions and require greater communication among them. They also have implications for current, future, and, in some cases, past tax years. Companies need to be mindful of effective dates, transitions, and phase-in rules for different TCJA provisions as outlined in the statute and any Treasury or IRS implementing guidance. They also need to consider potential interactions among different provisions in the law that may have implications for tax planning and compliance.
To help with this process, what follows are five areas that may continue to pose TCJA implementation challenges for companies.
The volume of TCJA changes means companies are facing increased compliance challenges. These include new and expanded federal, state, and international tax computations; new disclosure statements; and new forms and schedules. Many of the TCJA’s computations require new data feeds — which may necessitate increased investment in tools and resources to collect, analyze, store, and submit the required information.
As Treasury and the IRS issue additional interpretive guidance, companies may need to revisit and adjust their return positions; for instance, new guidance may result in businesses needing to report uncertain tax positions (UTPs) or file amended returns.
In addition, absent guidance on the level of authority for return positions, businesses must decide how to make reasonable estimates and document support for those decisions and computations.
Forward-thinking companies understand that compliance is an ongoing exercise. When evaluating TCJA compliance readiness, some questions to consider include: