Let the reconciling begin! In this context I’m talking about the House and Senate process that will attempt to resolve the differences between their respective tax bills. Once the conference committee process is underway (it has not yet started as of this writing), lawmakers will hash out the details in an effort to craft one unified bill that can muster approval in both chambers of Congress and eventually be sent to the President’s desk to be signed into law.
The conference committee charged with this responsibility will be made up of both Democratic and Republican members of the House and the Senate. Wouldn’t you love to be a fly on the wall during these meetings? Published reports state that they will hold only one public meeting, perhaps next week, with much of the negotiating going on behind closed doors, out of public view. If enacted, this tax bill will be the most comprehensive change to our tax system since 1986.
“Tax reform” was originally conceived as tax simplification, with the goal of passing a tax cut for the poor and middle class. From what I’ve seen of the two proposals, they are both anything but.
Although I’d love to, I’m not going to go on about the politics of the proposed tax changes, but what I can tell you is this:
- We most likely will have a tax bill that gets sent to President Trump’s desk for signature soon – and he will sign it. “Soon” may not be by Christmas as the President wants, but it does look like we’ll have a new tax bill. And whether it’s by Christmas or early next year, much of it will be effective starting January 1, 2018. Some provisions are proposed at this point to be retroactive to dates already passed in 2017.
- Tax simplification is a myth, at least as it pertains to most of our clients and friends. Many of the new tax provisions make tax return preparation more complicated, not less. Maybe not so for the H&R Block client base, but for the majority of upper middle class taxpayers and business owners, simplification is a fantasy.
- Many of us, particularly in the high tax states of the Northeast and California, will be paying more, if not much more, in taxes as a result of the elimination of deductions for state and local taxes, real estate taxes, miscellaneous itemized deductions, limitations on mortgage interest and the list goes on.
- There may be some year-end planning opportunities for some of you not currently affected by the Alternative Minimum Tax (which may or may not go away) by pre-paying some or all of your 2018 estimated state income and real estate taxes. Please consult your tax professional before doing either.
So what does this all mean? That’s a good question. And until a bill is signed into law, no one knows for sure what, if anything, will actually happen.
We at Marcum are following developments on the proposed legislation literally by the hour.
We’re here and ready to answer your questions now and when the bill ultimately is enacted. We’ve made plans to have people who ordinarily might take year-end vacations available to walk you through the changes and the planning opportunities, if and when the proposed tax changes become law. Year-end tax planning hasn’t been this exciting in a very long time.
So if you have questions, call us. As always, we’re here to help.