Delay to Proposed Regulations on Section 199A
July 24, 2018 by PMAA |
As reported by PMAA last week, the IRS has stated that regulations interpreting Section 199A [which provide pass-through entities with a new 20 percent deduction on “qualified business income” under certain circumstances] is one of its top priorities with respect to rolling out regulations to implement the 2017 Tax Cuts and Jobs Act. However, this week it was announced that the release of proposed rules on Section 199A, which was previously promised for late June/early July, will now be delayed until the end of July. Unfortunately, for the small businesses who are eagerly awaiting these rules, it is possible that we will see further delay in the release of the proposed rules which, even after they are released, will have a long way to go before they are finalized. Because there are so many unanswered questions with new Section 199A, including even the most fundamental question of whether a particular business is considered a service business and thus subject to more stringent rules, it is unlikely that all of the guidance and proposed regulations will be issued at one time.
PMAA is a member of the Small Business Legislative Council (SBLC) in which SBLC is working on a primer for small businesses on Section 199A but has been waiting to release it pending issuance of the proposed rules. If the proposed rules are delayed past the end of July, the SBLC will release an initial version of the primer and then update it when the proposed regulations come out.