United States

What Can Businesses Do to Prepare for the Possibility of Tax Reform?

Dec 06, 2016
From the Tax Governance Institute

This article and the Understanding the Tax Reform Process: FAQ document have been updated for what's happened lately.

Go here for the June 2017 updates

__________________________________________

Is tax reform "on"? It's looking like it could be. Following the recent elections, key Republicans are gearing up to advance significant tax legislation soon. Although enactment of tax reform legislation in the near future is by no means certain, the odds for reform being enacted soon appear higher than they have been at any other time since the Tax Reform Act of 1986 became law.

Excerpted from Understanding the Tax Reform Process: FAQ, released by KPMG LLP (KPMG), the following outlines what businesses can do now to prepare for the possibility of tax reform. 

Preparing for Tax Reform

Given the increased likelihood that tax reform may move forward in the next couple of years, businesses may want to develop strategies for (1) monitoring tax reform proposals and developments, (2) assessing how proposals might affect them, (3) incorporating the possibility of significant tax law changes into current planning, and (4) communicating with Congress on significant issues.

More specifically, given that the [House Republican] blueprint is likely to be the starting point for tax reform, business may want to do the following:

  • Read the blueprint and KPMG's initial observations regarding the blueprint
  • Consider how the blueprint might apply to their particular facts and circumstances--and identify areas in which technical details are not sufficiently clear
  • Look to H.R. 4377 and the 2005 Advisory Panel Report for ideas as to how some details might be fleshed out (keeping in mind that these are just reference points and details of tax reform may be different)
  • Consider how planning might be affected by proposals in the blueprint (keeping in mind that enactment is not a certainty)
  • Develop a high-level economic model of the possible effects of tax reform on the specific business, using reasonable assumptions or alternative scenarios in situations in which details of blueprint are not clear
  • Discuss the potential impact of tax reform with the "C suite," considering the potential impact on the business's tax burden as well as broader effects on a company's products, business model, the competitive landscape, and the economy [KPMG's The Trump Administration and Tax Reform presentation may help with these discussions.]
  • Develop strategy for monitoring ongoing legislative developments
  •  For areas of significant concern, identify potential allies (trade associations. industry groups, etc.)
  • Consider advocacy priorities and reasonable legislative options, including possible carve-outs
  • Develop appropriate transition rule proposals.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultants with your tax adviser.

For more information, contact a professional with KPMG's Washington National Tax (WNT) practice:

John Gimigliano
Principal in Charge, Federal Legislative & Regulatory Services (FLRS)
jgimigliano@kpmg.com

Carol Kulish
FLRS Director
ckulish@kpmg.com

Tom Stout
FRLS Director
tstout@kpmg.com

Jennifer Bonar Gray
FLRS Director
jennifergray@kpmg.com

Ronald Dabrowski
Technical Deputy to the WNT Principal in Charge
rdabrowski@kpmg.com

tax-reform-faq

Understanding the Tax Reform Process: FAQ includes answers to 18 questions across the following topic areas:

  • Prospects for tax reform
  • Process and timing
  • Key players
  • The substance of tax reform: Likely starting points
  • Revenue considerations
  • Winners and losers
  • Effective dates and transitions rules
  • Preparing for tax reform.