Author: Trey Jackson

Senate and House Committees Approve Bills Addressing Foreign Investment Risk; Includes Language Affecting Real Estate

Posted on by Trey Jackson

Separate bills that would overhaul the process for reviewing foreign investment risk – including a purchase or lease by a foreign party of domestic properties located close to sensitive U.S. facilities – received unanimous approval Wednesday by the Senate Banking and House Financial Services Committees.  (Lexology, May 23)

Real estate provisions in  S. 2098  appear on pages 7 through 9.

  • The committees’ revised versions of the Foreign Investment Risk Review Modernization Act (FIRRMA) – S. 2098 and HR 5841 – seek to modernize and strengthen how the Committee on Foreign Investment in the United States (CFIUS) reviews acquisitions, mergers, and other foreign investments in the United States for national security risks.  Both bills would expand the list of covered transactions to include some foreign purchases and leases of real estate near military and other strategic facilities. (Real estate provisions in S. 2098 appear on pages 7 through 9.)
  • As a result of industry discussions with Senate and Treasury staff, the new legislative drafts include the addition of language designed to exempt real estate in ‘urbanized areas’ from the criteria of a covered transaction.  The Census defines an urbanized area as one comprising more than 50,000 people. 

FIRRMA may be ready for floor consideration in the House and Senate before the August congressional recess. The Trump Administration has shown support for reforming FIRRMA to strengthen CFIUS’ oversight. 

President Trump Signs Dodd-Frank Reform Bill With HVCRE Revisions

Posted on by Trey Jackson

Revisions to the 2010 Dodd-Frank Act – including significant Roundtable-supported reforms to the Basel III High Volatility Commercial Real Estate (HVCRE) Rule – were signed into law by President Trump yesterday, two days after the House passed The Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155). 

Revisions to the 2010 Dodd-Frank Act – including significant Roundtable-supported reforms to the Basel III High Volatility Commercial Real Estate (HVCRE) Rule – were signed into law by President Trump yesterday, two days after the House passed The Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155).

  • S. 2155 previously passed the Senate in March with the same clarifications and reforms as the House bill.  The HVCRE Rule created needless confusion and increased borrowing costs in the industry for CRE Acquisition, Development and Construction (ADC) lending.
  • Senate Banking Committee Chairman Mike Crapo (R-ID) commented, “This step toward right-sizing regulation will allow local banks and credit unions to focus more on lending, in turn propelling economic growth and creating jobs on Main Street and in our communities.” (Sen. Mike Crapo News Release, May 22)
  • Details of the new measure addresses key deficiencies in current and proposed regulations.  Real Estate Roundtable HVCRE Working Group Co-Chair Joseph Forte (Sullivan and Worcester) noted, “This legislative action is a welcome solution to a poorly designed regulatory capital scheme that has not matched with risk. This caused an unnecessary cost burden to all commercial banks and their real estate development customers.  In addition, it restores to borrowers the ability to offer appreciated land value as equity to banks, when validated through appraisal practices established in earlier statutes.”  (Passage of Dodd-Frank Reform Encourages Investment, Economic Growth in Local Communities –Roundtable News Release, May 22) 
  • The Roundtable and twelve other real estate organizations detailed the industry’s HVCRE policy positions and urged inclusion of the language in broader Dodd-Frank reform legislation (S. 2155). (Roundtable HVCRE Comment Letter, March 2)
  • “The Reform Bill, in provisions that are now effective, overrides certain highly conservative provisions in both the federal banking agencies’ (Banking Agencies) Basel III capital rule and their interpretations of it.” ( Dodd Frank 2.0: Reforming U.S. HVCRE Capital Treatment, Gibson Dunn, May 24)

Since 2015, The Roundtable’s HVCRE Working Group and industry coalition partners have played a key role in advancing specific reforms to the HVCRE Rule.  During next month’s Real Estate Roundtable Annual Meeting, HVCRE will be a focus of discussion, with more specific details offered during the Real Estate Capital Policy Advisory Committee (RECPAC) meeting on June 14.

Fed to Consider Changes to Volcker Rule

Posted on by Trey Jackson

The Federal Reserve announced this week that it will consider a proposal to modify the “Volcker Rule” at a May 30 meeting of its board.  As a provision of the 2010 Dodd-Frank Act that puts restrictions on proprietary trading practices at banks, enforcement of the Volcker Rule is currently shared by five separate federal agencies – The Fed, Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).  (Fed Statement, May 23)

The Federal Reserve announced this week that it will consider a proposal to modify the “Volcker Rule” at a May 30 meeting of its board.

  • “The Fed is the first regulator to set a date for discussing the proposal known as ‘Volcker 2.0.’ Four other agencies are also expected to adopt modifications to the rule. The changes will give large Wall Street banks more trading freedom, as regulators tweak restrictions on market making, hedging and other activities..” (The Wall Street Journal, May 25)
  • Fed Vice Chairman for Supervision Randal Quarles in a March speech said, “It should be clearer and more transparent what is subject to the Volcker Rule’s implementing regulation and what is not. The definition of key terms like ‘proprietary trading’ and ‘covered fund’ should be as simple and clear as possible.”  (American Banker, May 23)
  • House policymakers are considering adding to  must-pass budget legislation a measure that would put the Fed in charge of regulating the Volcker Rule.  The measure, sponsored by Rep. French Hill (R-AR), passed the House in April but has faces an uncertain fate in the Senate.  (U.S. House Considers Adding Volcker Rule Shift to Budget Bill, Bloomberg, May 21)

The Dodd-Frank reform bill signed into law yesterday by President Trump exempts banks with less than $10 billion in assets from the Volcker Rule (named for former Fed Chairman Paul Volcker).

Passage of Dodd-Frank Reform Encourages Investment, Economic Growth in Local Communities

Posted on by Trey Jackson

Roundtable-Supported Measure Will Promote Job-Creating Projects by Clarifying CRE Acquisition, Development and Construction (ADC) Regulations

(WASHINGTON, D.C.) — Financial deregulation legislation (S. 2155 ) passed today by the House of Representatives (258-159) includes significant reforms to the Basel III High Volatility Commercial Real Estate (HVCRE) Rule that will lower financing barriers for job-creating projects that bring positive investment to local communities throughout the country.

Today’s Dodd-Frank reform legislation, previously passed by the Senate in March, is expected to be signed by President Trump this week. Real Estate Roundtable President and CEO Jeffrey DeBoer noted the years of legislative effort to pass the Economic Growth, Regulatory Relief, and Consumer Protection Act.  “The HVCRE reforms included in this bill will help ensure that important real estate construction activities are funded, which is positive for local job creation and economic growth,” DeBoer said.

He added, “The Roundtable recognizes the diligent efforts of policymakers who worked to eliminate the needless regulatory confusion and increased borrowing costs that impeded Acquisition, Development and Construction (ADC) lending. We recognize the dedication of congressional leadership in the Senate and House, including Senate Banking Committee Chairman Mike Crapo (R-ID) and House Financial Services Committee Chairman Jeb Hensarling (R-TX), for their work to pass S. 2155 – and we look forward to President Trump’s signature on this important legislation,” DeBoer said.

The bipartisan HVCRE measure originally was co-sponsored by House Financial Services Committee members Robert Pittenger (R-NC) and David Scott (D-GA) as the Clarifying Commercial Real Estate Loans bill (H.R. 2148) – and passed the House by voice vote in November of last year.  The Senate Banking Committee then took up an identical HVCRE bill (S. 2405) co-sponsored by Senators Tom Cotton (R-AR) and Doug Jones (D-AL), which passed in March as part of the Senate’s broader Dodd-Frank reform legislation (S. 2155).   Today’s passage by the House of S. 2155 / H.R. ?? includes the same language and clarifications to the Basel III High Volatility Commercial Real Estate (HVCRE) Rule.

The new measure addresses key deficiencies in the agencies’ current and proposed regulations by providing the following modifications and clarifications to either an HVCRE or High Volatility Acquisition, Development or Construction (HVADC) loan:

  • Commercial borrowers will be able to satisfy the 15% equity requirement through the appreciated value of contributed land/property – versus the cost basis under the current rule.  
  • A new exemption would be added to the HVCRE rule covering acquisition/refinancing loans for performing income producing properties.   It clarifies that loans made to acquire existing property with rental income and/or do cosmetic upgrades and other improvements don’t trigger the capital penalty.
  • Allows borrowers to use internally generated capital in the project and, once the development/construction risk period has passed, outside the project, rather than forcing them to refinance the loan (possibly away from the original lender).
  • All ADC loans made prior to January 2015 would be grandfathered and do not have to satisfy current HVCRE exemption criteria.
  • Banks would able to withdraw HVCRE status prior to the end of an ADC loan’s term.

The Real Estate Roundtable’s HVCRE Working Group, co-chaired by Sullivan and Worcester Partner Joseph Forte, and PNC Real Estate Senior Vice President William Lashbrook, played a key role in advancing these reforms since 2015. 

Forte said, “This legislative action is a welcome solution to a poorly designed regulatory capital scheme that was not matched with risk. This caused an unnecessary cost burden to all commercial banks and their real estate development customers.  In addition, it restores to borrowers the ability to offer appreciated land value as equity to banks, when validated through appraisal practices established in earlier statutes.  In clearly defining HVCRE exposures, this legislative solution halts the regulatory experimentation in creating pools of commercial real estate development risk, including last year’s HVADC trial balloon of a use of proceeds test on unsecured transactions, requiring capital support where it did not exist. ”  

The Roundtable and twelve other real estate organizations on March 2, 2018 sent a comment letter detailing the industry’s HVCRE policy positions and urging inclusion of the HVCRE reforms in a broader Dodd-Frank reform package (S. 2155).

Ways & Means Launches Hearings on Impact of Tax Reforms; Top Treasury Official Outlines Timeline for Implementation Guidance

Posted on by Trey Jackson

The House Ways and Means Committee this week held the first in a series of hearings on how the Tax Cuts and Jobs Act (TCJA) is affecting job creation and the economy five months after its enactment.

House Ways and Means Chairman Kevin Brady (R-TX) in his  opening statement offered a list of favorable economic statistics and projections that he said are attributable to the new law

Treasury Assistant Secretary Sketches Timetable for Regulations Implementing Tax Reform 
Certain provisions of the TCJA of interest to commercial real estate could be addressed in upcoming IRS guidance or in a congressional technical corrections bill.

  • Acting IRS Commissioner David Kautter on May 12 said that Treasury and the IRS hope to complete proposed regulations on section 199A passthrough deduction by mid- to late-July. (Tax Notes, May 15, “Kautter Talks Timelines for TCJA Guidance Projects” and Roundtable Weekly, May 4).
  • Kautter added that the target date for a notice of proposed rulemaking on section 163(j) business interest deduction limitation is late summer or early fall. (Roundtable Weekly, April 6).)
  • Natalie Tucker, legislation tax accountant at the Joint Committee on Taxation, recently  said that the cost-recovery period for qualified improvement property rises to the level of consideration for a “technical correction.”  While Congress was formulating the TCJA, a new category—qualified improvement property—wasn’t assigned a cost-recovery period, and fell to the 39-year period by default, rather than the intended 15-year period.  That was not the intent of Congress and therefore qualifies for inclusion in a technical corrections bill, according to Tucker.  (Bloomberg Law, May 11, “Agreement Reached on Three ‘True’ Technical Corrections”)

Along with TCJA rulemaking and implementation, the legislation’s impact on CRE will be a focus of discussion at The Roundtable’s Annual Business Meeting and Policy Advisory Committee Meetings on June 14-15 in Washington, DC.

Senate and House Committees to Mark Up Bills Addressing Foreign Investment Risk Review on May 22; Includes Language Affecting Urban Real Estate

Posted on by Trey Jackson

Legislation that would reform the process for reviewing foreign investment risk introduced by Senator John Cornyn (R-TX) in the Senate and Congressman Robert Pittenger (R-NC) in the House – including a purchase or lease of domestic properties in close proximity to sensitive U.S. facilities by a foreign party – will be marked up May 22 by both the Senate Banking Committee and the House Financial Services Committee.

The Senate Banking Committee will mark up S. 2098 – the  Foreign Investment Risk Review Modernization Act of 2017 (FIRRMA)  – on Tuesday, May 22.  The revised real estate provision appears on page nine of the committee’s amended  legislative discussion draft .   

  • The legislation (S. 2098) is intended to modernize and strengthen the process by which the Committee on Foreign Investment in the United States (CFIUS) reviews acquisitions, mergers, and other foreign investments in the United States for national security risks.
  • The Senate Banking Committee will mark up S. 2098 – the Foreign Investment Risk Review Modernization Act of 2017 (FIRRMA) – on Tuesday, May 22.  The revised real estate provision appears on page nine of the committee’s amended legislative discussion draft.  
  • The original Senate legislative draft raised concerns about the implications for real estate investment in urban areas that may be in close proximity to “sensitive U.S. military installations or other U.S. government facilities”.  As a result of industry discussions with Senate and Treasury staff, the new draft Manager’s Amendment includes the addition of a definition that would exempt real estate in ‘urbanized areas’ – as defined by the U.S. Census Bureau – from the criteria of a “covered” transaction.  The Census Bureau identifies two types of urban areas: (1) Urbanized Areas (UAs) of 50,000 or more people; and (2) Urban Clusters (UCs) of at least 2,500 and less than 50,000 people).
  • The Hill reports that the House Financial Services Committee will also mark up a CFIUS bill next week.  (The Hill, May 16, House Panel Will Consider Bill to Boost Foreign Investment Review Powers Next Week)
  • According to Bloomberg Law, The House committee will take up a modified bill from the original (H.R. 4311) on May 22. “I think that we’ll hopefully have a bill that’s broadly supported on both sides of the aisle,” Hensarling said. “We’ll see what happens on Tuesday.” (Bloomberg Law, May 17, Foreign Investment Bill to Get Votes in House, Senate Panels, subscription only)

“The revised bill, according to drafts reviewed by The Wall Street Journal, would have the government vet domestic and overseas transactions through separate processes. The proposed legislation spells out CFIUS’s authority to vet the purchase or lease of real estate near sensitive U.S. facilities, and its right to review any deal structured to evade its jurisdiction such as transactions that use shell companies to obfuscate the would-be buyer’s ownership.  Both the Senate Banking Committee and the House Financial Services Committee … now plan to mark up the bill’s text as soon as next week after reaching the compromise.”  (The Wall Street Journal, May 17, Legislation to Curb Chinese Deals Moves Through Congress)

House Expected to Vote May 22 on Dodd-Frank Reform Bill That Include HVCRE Revisions

Posted on by Trey Jackson

The House of Representatives is expected next week to pass a bipartisan package of revisions to the Dodd-Frank Act of 2010 and send it to President Trump for his signature. The House bill (S. 2155), which passed the Senate (67-31) in March, includes significant Roundtable-supported clarifications to the Basel III High Volatility Commercial Real Estate (HVCRE) Rule – a top industry priority that will benefit CRE acquisition, development and construction (ADC) lending and promote economic growth.

The House is expected to vote on S. 2155 – the Economic Growth, Regulatory Relief, and Consumer Protection Act – as early as Tuesday, May 22 – separate financial deregulation legislation championed by House Financial Services Chairman Jeb Hensarling (R-TX) is expected to soon follow.

What it Means for CRE 
 
The HVCRE measure contains important clarifications and reforms to the Basel III High Volatility Commercial Real Estate (HVCRE) Rule, which has created needless confusion and increased borrowing costs in the industry. 

  • Under the new measure, commercial borrowers will be able to satisfy the 15% equity requirement through the appreciated value of contributed land/property – versus the cost basis under the current rule. The measure also clarifies that loans made to acquire existing property with rental income and/or do cosmetic upgrades and other improvements don’t trigger the HVCRE capital penalty. (Roundtable Weekly, May 4 and May 11)
  • The Roundtable and twelve other real estate organizations on March 2, 2018 sent a comment letter detailing the industry’s policy positions and urging inclusion of the HVCRE measure within the broader Dodd-Frank reform package (S. 2155).

HVCRE reform has been a top policy priority of The Real Estate Roundtable and its industry coalition partners, who have submitted numerous policy comment letters to policymakers since 2015. The Roundtable’s HVCRE Working Group has also played a key role in advancing these welcome reforms.

House Will Vote on Dodd-Frank Reform and HVCRE Before Memorial Day

Posted on by Trey Jackson

House Majority Leader Kevin McCarthy (R-CA) yesterday said the House will vote on the Senate’s Dodd-Frank reform bill (S. 2155),  before Memorial Day.  S. 2155 includes a measure to reform the Basel III High Volatility Commercial Real Estate (HVCRE) Rule – a top Roundtable priority.  (Roundtable Weekly, May 4)

House Majority Leader Kevin McCarthy (R-CA) said the House will vote on the Senate’s Dodd-Frank reform bill (  S. 2155  ),  before Memorial Day.

  • Ryan: GOP has deal on bill easing Dodd-Frank, The Hill (May 8) – House Speaker Paul Ryan (Wisconsin) on Tuesday said the House will hold a vote on the Senate Dodd-Frank reform bill in exchange for the Senate taking up a separate set of financial reform bills  supported by House Financial Services Committee Chairman Jeb Hensarling (R-TX) Texas).
  • House Speaker Ryan, American Banker (May 8) – “I had a good meeting with [Senate Majority Mitch McConnell] over the break on this and so we’ve got an agreement to be moving different pieces of legislation.” 
  • Bill to Roll Back Post-Financial-Crisis Banking Rules Gets Clear Path to Passage, Washington Post, May 8 –- As the sponsor of more ambitious Dodd-Frank reforms approved by the House last year, Hensarling said he was confident that the new approach to separate the legislative effort into two bills would “create regulatory policy that will help us achieve sustained 3% economic growth.”

    The Roundtable and 12 other real estate organizations on March 2, 2018 sent a  comment letter  urging all members of the Senate Banking Committee to enact the HVCRE measure by including the measure in the broader Dodd-Frank reform package (S. 2155).

HVCRE Reform Measure Included  

  • (Roundtable Weekly, Jan. 12) – The Senate bill would clarify which types of loans should be classified as High Volatility Commercial Real Estate Loans (HVCRE) to ensure they do not impede credit capacity or economic activity, while still promoting economically responsible commercial real estate lending.  
  • GlobeSt.com, (March 19) – “The HVCRE rule, promulgated by Basel III, went into effect in 2016. It established a new risk-weight category requiring banks to hold more capital – 150% or one and half times as much – for such loans. The result has been a pull back on construction lending among other types of bank finance.” 
  • Real Estate Industry Comment Letter, (March 2) – The Roundtable and twelve other real estate organizations on March 2, 2018 sent a comment letter urging all members of the Senate Banking Committee to enact the HVCRE measure by including it in the broader Dodd-Frank reform package (S. 2155).

Since 2015, The Roundtable’s HVCRE Working Group and industry coalition partners have played a key role in advancing specific reforms to the HVCRE Rule.  During next month’s Real Estate Roundtable Annual Meeting, HVCRE will be a focus of discussion, with more specific details offered during the Real Estate Capital Policy Advisory Committee (RECPAC) meeting on June 14.

Coalition To Insure Against Terrorism (CIAT) Submits Comments to Treasury on Effectiveness of Terrorism Risk Insurance Act(TRIP)

Posted on by Trey Jackson

The Roundtable and its partners in the Coalition to Insure Against Terrorism (CIAT), submitted  detailed comments Monday on the overall effectiveness of the Terrorism Risk Insurance Program (TRIP) to the U.S. Department of Treasury’s Federal Insurance Office (FIO).

This week’s   comments   support TRIP as a “tremendous success” yet provide recommendations on three primary aspects of the program: Standalone terrorism insurance; Nuclear, Biological, Chemical or Radiological (NBCR) availability; and Cyber terrorism.

The Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) requires  Treasury to issue proposed rules to implement changes to TRIP, which is set to expire on Dec. 31, 2020 (Roundtable Weekly – Jan. 16, 2015) 

As FIO works on preparing its 2018 report on TRIP’s effectiveness, the coalition’s comment letter presents views from policyholders and risk managers – and supplement earlier remarks submitted by CIAT in 2016 (Roundtable Weekly, June 3, 2016). 

This week’s comments support TRIP as a “tremendous success” yet provide recommendations on three primary aspects of the program: Standalone terrorism insurance; Nuclear, Biological, Chemical or Radiological (NBCR) availability; and Cyber terrorism. 

The CIAT comments note there has been no evidence that private markets can develop adequate terrorism risk capacity without some type of federal participation.  The letter also notes that “in the wake of a major terrorist attack, (the program) ensures that a significant portion of the costs of recovery would be borne by the private sector.”  

The comments also include a suggestion that FIO should consider making the program permanent, stating that most other countries insurance programs are “of continuous duration, and it would benefit market stability to make TRIP permanent as well.” 

How other nation’s implement terrorism risk insurance programs was the focus of a discussion with Julian Enoizi, chief executive of Pool-Re during last week’s Spring Roundtable Meeting in Washington, DC. 

Additionally, Marsh  recently released its 2018 Terrorism Risk Insurance Report, which presents data on purchasing and pricing trends in the terrorism insurance marketplace. The report finds that the highest terrorism insurance take-up rates by industry in 2017 were real estate companies, education entities, health care organizations and financial institutions.  It also explores how the terrorism insurance market continues to innovate and respond to the needs of global organizations in light of an evolving risk landscape.  (BusinessInsurance, April 20, 2018) 

With TRIP set to sunset at the end of 2020, The Roundtable has formed a Terrorism Risk Insurance Working Group to explore potential options in advance of the reauthorization debate that is expected to begin in earnest next year.  The Working Group’s goal is to develop a strategy for a permanent, or long-term, national terrorism insurance program that would enable policyholders to secure the terrorism risk coverage they need without facing periodic renewals by the government.

Top Democrat on House Ways & Means Committee Requests Treasury Guidance on New Pass-Through Deduction

Posted on by Trey Jackson

Clarifying guidance on the new pass-through deduction enacted in last year’s tax overhaul bill is needed “as soon as possible,” according to a letter sent this week by House Ways and Means Committee Ranking Member Richard Neal (D-MA) to Treasury Secretary Steven Mnuchin and Acting Internal Revenue Service Commissioner David Kautter.  (Neal Letter, May 1)

  Clarifying guidance on the new pass-through deduction enacted in last year’s tax overhaul bill is needed “as soon as possible,” according to a letter sent this week by House Ways and Means Committee Ranking Member Richard Neal (D-MA) to Treasury Secretary Steven Mnuchin and Acting Internal Revenue Service Commissioner David Kautter.  (Neal Letter, May 1)

The new tax relief for pass-through businesses is a core element of the Tax Cuts and Jobs Act signed by President Trump in December – and is vital to ensure that the legislation treats all types of businesses, including real estate, fairly and equitably.  (Roundtable Weekly, Dec. 22, 2017) 

The Tax Cuts and Jobs Act reduced the top tax rate on corporations by 40 percent. The new 20 percent pass-through deduction (section 199A) can lower the top tax rate on qualifying pass-through business income to 29.6 percent. Such income was previously taxed at a top rate of 39.6 percent.  

In January, The Roundtable wrote to Treasury Secretary Mnuchin  offering several suggestions designed to maximize the economic impact of the pass-through deduction and avoid unnecessary disruptions to business activity.  [Roundtable Letter, Jan. 18]. 

Specifically, the letter urged Treasury to issue guidance: 

  • clarifying that until final regulations are issued, all qualified trade or business activities may be aggregated at the partner level for purposes of the provision’s wage and asset tests;
  • allowing businesses to qualify for the pass-through deduction with respect to permissible services, even if the business also engages in service activities that are excluded from the deduction (assuming the permissible services are provided on an arm’s length basis); 
  • clarifying that the transfer of real estate in a like-kind exchange does not adversely affect a taxpayer’s pass-through deduction;
  • confirming that the benefit of the deduction extends to shareholders invested in REITs through a mutual fund;
  • construing the “principal asset” test in a manner that does not treat the skill or reputation of a firm’s employees as an “asset” of the business, unless they are reflected in an amortizable tax asset (such as workforce in place); and 
  • confirming that, in the context of the pass-through deduction, the reasonable compensation rules apply exclusively to S corporations.

    The new tax law, enacted last December, was the subject of a Senate Finance Committee hearing last week, where Senate Democrats focused on the pass-through deduction.  (  SFC hearing  , Early Impressions of the New Tax Law – April 24)

In Neal’s letter sent this week, the top democrat on the tax-writing House Ways and Means Committee cites taxpayer (and tax advisors) confusion over the deduction, stating, “Without computational and definitional guidance to assist taxpayers in determining whether, and to what extent, they may quality for the pass-through deduction, it is  difficult for them to properly calculate their quarterly estimated tax payments.”  (Neal Letter, May 1)

Neal adds, “As a result, taxpayers are left struggling to understand its implications, and opportunities to exploit its ambiguities abound. I urge Treasury and IRS to issue guidance as soon as possible to address these concerns.”

He also urges the Trump Administration to issue guidance to prevent abuses of the pass-through deduction. “As taxpayers and practitioners navigate the outer limits of the pass-through deduction, we’re concerned about signs of aggressive tax-minimization strategies,” Neal states in the letter.

The new tax law, enacted last December, was the subject of a Senate Finance Committee hearing last week, where Senate Democrats focused on the pass-through deduction.  (  SFC hearing  , Early Impressions of the New Tax Law– April 24)