Biz groups praise tax law fixes in Brady's bill

Biz groups praise tax law fixes in Brady's bill
© Greg Nash

Business groups are praising the new tax package from House Ways and Means Committee Chairman Kevin BradyKevin Patrick BradyLawmakers join Nats Park fundraiser for DC kids charity On The Money: Fed chief hints strongly at rate cut | Powell lays out 'serious concerns' over Facebook crypto project | Trump official to investigate French tech tax | Acosta defends Epstein deal Trump administration launches investigation into French plan for tax on tech giants MORE (R-Texas) for including technical corrections to the 2017 tax-cut law.

The bill Brady released Monday includes five provisions that aim to correct areas of the 2017 tax law where there were unintended consequences.

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The new bill is expected to pass the House this week, but it faces significant obstacles in the Senate where it will need some bipartisan support.

Nonetheless, business groups have been pressuring lawmakers to make technical corrections to the 2017 law and were pleased to see them included in legislation. They view Brady's package as a potential starting point for negotiations among lawmakers.

“At this point, we are very positive that we got technical corrections introduced in a bill,” Rachelle Bernstein, vice president and tax counsel for the National Retail Federation, told The Hill.

Two technical corrections in Brady's bill would address priorities of the retail industry. One pertains to how quickly retailers and restaurants can write off the costs of improvements to their facilities, while the other would correct the effective date for a provision in the 2017 tax law that bans businesses from carrying back net operating losses to previous years. 

Another provision in Brady's bill would help businesses receive tax refunds.

Under the 2017 tax law, businesses have to pay a "transition tax" on earnings they had held overseas before the law's enactment, and companies can pay the tax over the course of eight years. 

The IRS said earlier this year that companies with transition tax liability who overpaid their taxes couldn't receive a refund. Instead they had to apply their overpayment toward paying the transition tax even though that tax can be paid over time. This decision was strongly opposed by the business community.

Brady's bill would reverse the IRS policy and clarify that overpayments of tax don't have to be applied to remaining installments of the transition tax.

The National Association of Manufacturers (NAM) cheered the provision.

"Reversing the IRS policy would help ensure that the [2017 tax law] has the intended effect of spurring economic growth by providing certainty to taxpayers, and manufacturers urge Congress to adopt this provision," Chris Netram, vice president of tax and domestic economic policy for the NAM, said in a blog post Wednesday on the group's website

In the Senate, Brady's bill would need 60 votes, and Republicans only have 51 seats. That means some Democrats would need to back the bill for it to be enacted.

But Democrats view the bill negatively. They have criticized the bill because they weren't involved in writing it, and many Democrats don't want to approve technical fixes to the 2017 tax law unless more substantive changes are also made.