As you’ve likely followed through media reports, Congress has been barreling through efforts to pass tax reform legislation by the end of this year. The House passed its version of a tax reform bill on Nov. 16, the Senate passed its version of a tax reform bill on Dec. 2. Although separate and distinct bills, both are titled "Tax Cuts and Jobs Act" and have the same bill number, H.R. 1.
To assist in understanding the proposals, ABA’s outside consultants, Capitol Tax Partners, developed a summary chart explaining the two bills, which can be accessed here. You can also review the bill text for both the House bill or the Senate bill.
Neither bill makes modifications to the bus industry's fuel tax refund (click here to ask a question about getting the fuel tax refund). However, the bills do eliminate a number of tax breaks, address pass-through business income, and retain the Alternative Minimum Tax for corporations. For specific business-related questions, we strongly advise you to consult with your financial advisors.
As to next steps, because there are significant differences between the House and Senate bills, the two chambers will "conference" the bill, which is to say a small group of House and Senate Republicans and Democrats will work to reconcile the differences between the two versions of the bill, with the goal of agreeing on a final bill draft to present to the full House and Senate for a vote. Once the bill passes, it will then be presented to President Trump for signature. Members from the House and Senate, along with key tax writing staff, have already undertaken discussions to reconcile the bills, over the course of the past several weeks. For the most part, though, these efforts have only involved Republicans, leaving out the Democrats.
Currently, there is optimism that an agreement on a final tax reform bill could come as early as this week, and it is expected the final package will look more like the Senate bill, than the House bill, to fit within the Senate budget rules. Yet, there remain a number of hurdles in terms of reconciling the two bills, particularly in terms of lobbying efforts in the wake of cuts to popular tax breaks and the retention of the Alternative Minimum Tax for corporations. Further, because the Republicans are relying entirely on Republican votes to pass the final bill, they cannot afford to lose support from their Senate members as the Senate majority is very slim. Nonetheless, with the 2018 mid-term elections coming up and no major legislative victories yet for the Republicans this year, a great deal is riding on their efforts to pass a tax reform proposal. So, the race continues to meet the end of year deadline.
ABA will continue to provide updates as appropriate on this important legislative effort.