Corporate tax officials with more than a few years in the profession will remember the chaotic changes they endured under the 2017 Tax Cuts and Jobs Act.
Now, with many provisions of the law slated to expire at the end of this year, tax officers are wary that another difficult period of adjustment may be awaiting them.
It’s widely believed that the Republican-majority Congress will try to extend as much of the TCJA — enacted early in the first Trump Administration — as possible. However, it’s unclear what that will look like.
President Trump is advocating for reducing the corporate tax rate to 15% from the current 21%, which would deplete federal coffers even as he continues to pursue the opposite goal with his efforts to slash federal spending. Indeed, the budget cuts are presumably intended at least partly to help pay for the tax reduction.
Of course, uncertainty is not appealing to corporate tax professionals. Bloomberg Tax surveyed 434 of them, 81% of whom said they’re moderately or very worried about the impact of potential tax-law changes.
Even more of the survey participants (88%) said they’re finding it difficult to run modeling scenarios to assess the impact of the TCJA’s sunset, and only half have started doing so. “This difficulty stems partially from reliance on manual data gathering, as 63% of respondents manually gather data from the ERP or general ledger to perform tax calculations,” wrote Bloomberg, which sells tax software, in its research report.
Memories of the challenges that accompanied the law’s enactment more than seven years ago are likely contributing to tax officials’ angst. A vast majority (88%) of those surveyed were working in tax at that time, and among those, 92% reported that the TCJA was moderately to highly disruptive to their department’s processes. A majority (62%) said it took a year or more to feel confident that they had fully implemented the changes, according to the report.
Another hurdle for tax officers after the law was passed was staying current with evolving guidance, the report noted. Almost all (90%) of the survey respondents said it was moderately or very difficult to stay abreast of changes and implement new guidance.
A key concern both then and now lies with the timing of tax-provision calculations. “If legislation is passed on a very last-minute basis like in 2017, then there is a great push needed in a short period of time,” Bloomberg wrote.
Tax officers’ angst is at a high level particularly because it’s not yet known “whether the sunsetting provisions will expire, be extended as-is, made permanent, or replaced with new tax reform legislation entirely,” the report said.
