Tax Policy - Tax Reform - Tax Reform Technical Corrections

Policymakers Pledge to Issue Technical Corrections and Guidance to Implement New Tax Law

Treasury Secretary Steven Mnuchin testified before Senate and House tax-writers this week about implementation of the new tax law – including needed corrections affecting carried interest limitations and a drafting mistake that subjects qualified property improvements to a 39-year recovery period, rather than 15 years.

Secretary Mnuchin testified on tax issues before the Senate Finance Committee on Feb. 14, followed by his appearance before the House Ways and Means Committee on Feb. 15.

Ways and Means Chairman Kevin Brady (R-TX) pledged during a Feb 15 hearing to address errors included in the Tax Cuts and Jobs Act (P.L. 115-97).  Brady stated, "We know that certain parts of this provision are having unintended consequences" and that he was "committed to working with our Ways and Means Members, with Senator Hatch and the Senate Finance Committee, and the Administration and stakeholders to develop the right solution now – one that is thoughtful, carefully crafted, and successful  restoring balanced competition in the marketplace."  (Brady's Opening Statement, Feb. 15) 

[Earlier that day, Brady invited input from stakeholders on potential problems and unintended consequences arising from the new tax law. "We expect to develop a punch list of provisions that need to be addressed either administratively or through changes in the code itself," he said.  (BNA, Feb. 15)] 

During the House hearing, Rep. Jim Renacci (R-OH) explained to Secretary Mnuchin that Ways and Means members are working on a tax reform drafting mistake that should have provided for a 15-year recovery cost-recovery period to qualified property improvements, instead of the 39 year period that was enacted.   

Mnuchin responded to Renacci: "I am aware of the error and it obviously was unintended. We are looking at whether there is anything we can do with regulations. I think it is likely that this is something that may need to be fixed in the bill. We look forward to working with you." (Ways and Means CommitteeMnuchin's testimony and hearing video

If a focused corrections bill cannot be quickly passed by Congress, policymakers are considering adding a corrections provision to a must-pass spending bill to keep the government funded beyond by March 23.  (Bloomberg Law, Feb. 13) 

Mnunchin also testified during a Feb 14 Senate Finance Committee hearing that Treasury will issue guidance this month regarding new tax laws affecting carried interest. Under the new tax law, investment fund managers and others qualify for carried interest tax treatment after holding assets for three years, instead of one year.  Yet the new law doesn't apply to S corporations' carried interest profits. (The Hill, Feb. 14) 

"We will be putting out guidance and regulations to make sure that people can't abuse the pass-throughs," Mnuchin testified. "The IRS and [Treasury office of] tax policy intends to send out within the next two weeks guidance that we do believe that taxpayers will not be able to get that loophole by going through [S corporations]," he added.  (Bloomberg, and CQ, Feb. 14) 

In January, The Roundtable wrote to Treasury Secretary Mnuchin  offering several suggestions aimed at ensuring the long-term success of the Tax Cuts and Jobs Act (TCJA).  [Roundtable Letter, Jan. 18]

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Trump Administration Proposes Framework for Nationwide Infrastructure Improvements

The Trump Administration on Monday released its long-awaited Legislative Outline for Rebuilding Infrastructure in America, which proposes at least $1.5 trillion in new investment across infrastructure asset classes; incentivizing greater state and local funding; shortening the project permitting process to two years; investing in rural projects; and improving worker training. (White House Fact Sheet, Feb. 12)

The Trump Administration on Monday released its long-awaited Legislative Outline for Rebuilding Infrastructure in America  , which proposes at least $1.5 trillion in new investment across infrastructure asset classes. ( White House Fact Sheet  , Feb. 12)    

President Trump proposes that the government would spend $200 billion in infrastructure investment to spur states, localities and the private sector to raise the $1.3 trillion balance. 

According to the Administration's proposal, states, localities and the private sector are asked to "step-up" their presence to catalyze a larger, modernized, and broader investment market.  New federal funds would be allotted to boost existing federal infrastructure financing (like the TIFIA loan program for surface transportation) and expand federal financing platforms to reach airports, ports, short-line and passenger rail, rural broadband, stormwater, flood remediation and prevention, Brownfields remediation, and others. 

Transportation Secretary Elaine Chao will appear before Senate and House infrastructure panels in early March to discuss the Administration's proposal. (Bloomberg Law, Feb. 13)   

Since odds for passing a bill with additional spending this year are slim, serious consideration of a specific infrastructure bill is not expected until after the mid-term elections and a new Congress is sworn-in. 

Roundtable President and CEO Jeffrey DeBoer commented on the positive economic benefits that such an infrastructure program would bring to the nation. "Modernizing our roads, tunnels, mass transit, drinking water, power grid, and telecommunications systems – in rural and urban areas alike – are vitally important to economic growth, productivity and America's global competitiveness," DeBoer said. 

He added, "Real Estate Roundtable members are experienced in addressing the financing, permitting and government partnership issues that frequently slow or stop infrastructure projects.  We intend to provide positive feedback and ideas to all policymakers working to facilitate improvements in our nation's infrastructure."  (Roundtable Letter on Infrastructure Funding, Jan. 11) 

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Americans with Disabilities Act (ADA)

House Passes ADA Reform Bill to Counter “Drive-By” Lawsuits

The House of Representatives on Wednesday passed legislation (H.R. 620) to reform the American With Disabilities Act (ADA) to curb unscrupulous lawsuits alleging minor and easily correctable impediments to building access.  

The House of Representatives on Feb. 14 passed legislation (  H.R. 620  ) to reform the American With Disabilities Act (ADA) to curb unscrupulous lawsuits alleging minor and easily correctable impediments to building access.

Approved by a 225-192 vote, The ADA Education and Reform Act (H.R. 620), attracted 12 Democratic votes to address the rise in so-called "drive-by" lawsuits where disabled individuals never actually seek access to properties that are allegedly ADA non-compliant.  A 60 Minutes  segment in 2017 reported on lawyers filing ADA complaints simply after driving by a business or reviewing properties online via Google Earth.  Many business owners subjected to such "drive-by" ADA claims have found it less costly to settle complaints and avoid the litigation process. (International Council of Shopping Centers, ADA Lawsuit Reform) 

Under H.R. 620, individuals intent on suing hotels, restaurants or other businesses over an ADA violation must first give the business 60 days to address specific complaints, detailed in an initial written notice, about physical barriers that prevent access or otherwise discriminate against disabled customers. Before a law suit can be filed, another 60 days must be allowed for the business to make "substantial progress" toward remedying the problem. (Washington Post and BNA, Feb. 15) 

House Judiciary Committee Chairman Bob Goodlatte (R-VA) noted, "All this bill does is require those unscrupulous trial lawyers to do what ethical lawyers already do: give fair notice of a violation before thousands of dollars in attorneys' fees are racked up against a small business, diverting money from accessibility where it belongs," Goodlatte said.  (The Hill, Feb. 15, 2018) 

Tom McGee, president and CEO of the International Council of Shopping Centers (ICSC), applauded policymakers for "ensuring that the landmark [ADA] continues to protect disabled people from discrimination in their everyday life - from employment to accessing public places.  The retail real estate industry is fully committed to the collective goals of more accessibility and ensuring fair compliance with this important law," he said.  (Roundtable Weekly, Sept 8, 2017) 

ICSC and other real estate groups intend to pursue a strategy to pass ADA litigation reform in the Senate in the coming months.

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