The TCJA: A disruptive factor for the 2019 tax filing season.

• Author: Oppe, Ami
• Position: Tax Cuts and Jobs Act of 2017

For the 2019 tax filing season, the phrase "same as last year," or SALY, will, in many cases, no longer apply. The tax legislation known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, enacted on Dec. 22,2017, contains the first major overhaul of U.S. federal taxes in more than 30 years. This law is a significant disruptive factor that has cut off the SALY approach for many CPAs dealing with their clients.

The TCJA affects all types of clients--individuals, trusts, estates, corporations, and passthrough entities. It also affects clients of all sizes--sole practitioners, small businesses, middle-market companies, large multinationals (U.S. entities and foreign entities with U.S. operations), and tax-exempt entities. CPAs are rethinking their operating and business approaches as the needs of taxpayers have changed.

The impact of the TCJA on taxpayers varies and depends on the industry and the taxpayer. Most of the TCJA's provisions became effective for 2018 and have various expiration dates through 2027. The TCJA created new tax rate brackets; eliminated personal exemptions for individuals; lowered the tax rate for corporations; changed deductions, credits, and exclusions; changed the individual alternative minimum tax (AMT) exemption and phaseouts; repealed the corporate AMT; changed compensation and benefits; and added new international provisions for businesses.

Keeping these changes in mind, CPAs may need to reassess the timing and content of their client data requests and organizer questionnaires. As a starting point, CPAs must stay up-to-date on the TCJA's provisions, the status of IRS guidance and regulations, and potential future tax legislation including technical corrections. Year-end planning is a good time to evaluate tax filing statuses, tax filing positions, and choice-of-entity decisions, and to consider other actions that must be completed before Dec. 31.

CPAs should consider accelerating the tax fifing timeline to allow more lead time for review and discussion with clients. This may mean holding client interviews and distributing organizers before year end. With change comes opportunity, meaning this is also a good time for CPAs to deploy new outreach for potential clients.

Impact on client base

Reviewing client lists now is critical for CPAs. Some individual clients may not see the value of having a CPA prepare their returns if they think they will no longer receive a benefit for itemized deductions. These clients as well...