President Trump’s first budget proposal provided no new information on tax reform, but included three narrow tax proposals to strengthen IRS enforcement.
The three provisions would:
- Require Social Security numbers to claim the earned income and child tax credits
- Grant Treasury the authority to regulate return preparers
- Expand IRS authority to automatically correct certain return errors
The provisions were somewhat of a surprise considering how unpopular the IRS has been with Republican lawmakers over the last several years. Presidential budgets do not carry the force of law and should be considered statements of policy goals.
Trump’s budget does pledge to enact tax reform, reinforcing that it remains a top priority. But the budget itself only repeats the same bullet points from the outline without elaboration (see Tax Legislative Update 2017-04
for more information). The budget assumes tax reform is revenue neutral, but Mick Mulvaney, the director of the Office of Management and Budget, made clear that the revenue goal was merely a placeholder for administrative convenience and not a statement of policy. Administration officials continue to send mixed signals on whether they want tax reform to be revenue neutral.
The budget also includes a list of tax expenditures (revenue losses from exemptions, credits, and other preferences in the tax code) with a promise to examine their effectiveness. But this list is produced annually by Treasury, and these provisions were always expected to be assessed as part of tax reform.
Director, Washington National Tax Office
T +1 202 861 4144
Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.