The IRS will issue guidance on the Code Sec. 199A passthrough deduction in July, Acting IRS Commissioner David Kautter has said. Kautter outlined the timeline of various guidance proposals at the American Bar Association (ABA) Section of Taxation May Meeting in Washington, D.C.
More specifically, the IRS expects to release proposed guidance on the passthrough deduction by the end of July, an IRS spokesperson told Wolters Kluwer on May 15. “The goal of the guidance is to get things out that are complete,” the IRS spokesperson said, reiterating Kautter. “But, it will not cover every question that taxpayers have,” the spokesperson added.
The new passthrough deduction was enacted under the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97) last December. The new law provides a 20 percent deduction for income from passthrough entities. However, certain factors including business activities, wages paid by the business, and property values limit the deduction.
Generally, Kautter anticipates follow-up questions from taxpayers and practitioners after the proposed guidance is released, the IRS spokesperson told Wolters Kluwer. Moreover, Kautter has said that it would be better to get the guidance out quickly in “fairly good shape,” to allow for public comment and input, rather than taking more time to draft the guidance internally, according to several reports. Further, Kautter has said that not everyone may agree with that approach, but that a “better product” will likely be created because of it.
By Jessica Jeane, Wolters Kluwer News Staff