On Aug. 16, the Department of the Treasury and the Internal Revenue Service published proposed regulations on the 20 percent pass-through deduction enacted in the Tax Cuts and Jobs Act (the tax cuts/reform legislation passed in Dec. 2017). AGC staff consulted with the Financial Issues Committee, and submitted comments to Treasury on Monday applauding some of the decisions in the proposed regulations, and calling for changes in others.
Specifically, AGC, applauded Treasury’s general approach to the regulations, and exclusion of construction from the definition of “specified service trade or businesses”. AGC also suggested some changes, including about how Treasury defines “trade or business” in the regulations, and suggested changes to their proposal on dealing with independent contractors.
AGC also provided input and comments to a number of coalition partners, including the U.S. Chamber of Commerce, the S-Corporation Association, the Parity for Main Street Employers Coalition, and the Real Estate Roundtable, that also submitted comments on the proposed regulations.
One of the most significant provisions of the new tax reform law is the inclusion of a new 20 percent deduction for the owners of pass-through businesses. AGC strongly supported this provision to ensure that the owners of pass-throughs received tax relief relative to businesses organized as C-Corporations, whose tax rate fell to 21 percent. While the legislation laid out the broad outlines of the deduction, as well as certain “guardrails” to prevent certain businesses from claiming the deduction, or preventing fraud and abuse, further guidance—i.e., this regulation—was needed from Treasury to actualize the deduction from concept to reality.
For additional information, please contact Matthew Turkstra, Director of Tax, Fiscal Affairs, and Accounting, at email@example.com, or (202) 547-4733.
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