We have read about tax simplification and post card tax returns for many months, but that is not the reality with the new tax law known as the Tax Cut and Jobs Act. Our federal income tax law and income tax calculation process is more complicated than ever before. The new tax law keeps almost all of the prior complex federal tax code and then adds about a thousand additional pages to it. Many more IRS regulations and procedures will be issued over the coming year as discussed here by NPR yesterday, third party guidance and court decisions will follow as we work out the details of the new law. My online friend Tommy pictured here in this funny photo of himself looking overwhelmed with the amount of information in the new law.
Within a matter of months we will again hear complaints about the complexity of the tax law and how it needs to be replaced with something easier and more fair. Back to square one. In the meanwhile, this is a good time for tax professionals at the expense of taxpayers just trying to cope.
In a related issue, I read that a few people intend to actually read the new tax law, cover to cover, so to speak. That’s just a waste of time IMO and certainly not the best way for anyone to glean the most useful information. Most of the new code won’t apply to me or you and if you are a tax professional, to any of your clients. It makes far more sense to me approach it from a topical perspective starting with the issues most likely to affect us. I would start with a summary of related issues (like KPMG’s report) and then go to the code only when some detailed point needs to be clarified. Some professionals exalt the virtues of “primary source” but in reality it is how the law is interpreted and administered by IRS that is more important in almost all taxpayer cases. The possibility that a tax representative can cite original authority and overcome an IRS position is remote and rare.