Embracing the Certainty of Change: In challenging times, accept change and leverage opportunity.

• Author: Willis, Ben

In a world where new laws and regulations seem to spring from nowhere, everything is subject to change. So, what should you do, TEI member? First, accept that uncertainty will be the norm with respect to domestic and international corporate tax policy. The congressional intent behind the laws that Treasury has to execute won't be clear. Treasury's authority to clarify the law through delegated authority is ever shifting, and courts will never be able to clearly define the limits of Treasury's interpretation of those laws. On top of that, retroactive laws and rules are entirely possible.

That morass of uncertainty means that your advisors' opinions on tax positions won't be fixed, and your audit risks will fluctuate according to how aggressive tax enforcement is and how comfort levels shift as new guidance comes to light. Tax abuses and benefits are in the eye of the beholder or even the political party that happens to be in power. Sometimes the Internal Revenue Service will be too aggressive and get enforcement wrong. The IRS is sometimes right. Ultimately, you will end up amending your company's tax returns going forward--multiple times and likely en masse.

But you're in good company, TEI member. Change can be disruptive, but many opportunities exist in this new world of tax uncertainty. And as a corporate executive, your understanding of your company's leverage as a taxpayer in the following four arenas will help maintain your opportunities to generate tax savings: policy ambiguity, filing flexibility, enforcement shifts, and advisor connections.

Leverage Policy Ambiguity

Remember the Trump administration's March 2019 policy statement that Treasury won't argue that subregulatory guidance has the force and effect of law? The reason was, simply, that subregulatory guidance doesn't have the force and effect of law. Even IRS forms and instructions must be backed by statutory authority. Subregulatory guidance hasn't been subject to the notice-and-comment procedures of the Administrative Procedure Act (APA) or other congressionally imposed requirements for Treasury's words to have weight equal to full force and effect of Congress' own. Judges aren't going to support the executive branch's attempts to usurp Congress' power to legislate any more than they'd allow their own judicial powers to be usurped. But the IRS often binds itself through its positions, which, in all forms, confer some degree of interpretive value.

Budget reconciliation legislation is becoming the new norm. But enforcement can shift as quickly as a president can sign an executive order telling IRS agents to stand down. Your business directly and indirectly supports a massive amount of the revenue the fisc collects. Treasury's power comes from the fact that you're good at your job. You are essential to the economy.

I know, you've heard...