2017 TCJA Proposed Tax Reform

photo credit: Business Insider- Trump tax plan chart

What is the process for proposed tax reform???

There is a lengthy process before tax law (or any proposed changes) can be enacted.

“The Constitution says that “all bills for raising revenue shall originate in the House of Representatives” and that “Congress shall have the power to lay and collect taxes.” Presidents can, and frequently do, recommend changes to current tax laws, but only Congress can make the changes.

As the [Ways and Means] Committee [is the tax writing committee of the House of Representatives] reaches tentative decisions on the proposals, they draft them into legislative language. It also prepares a detailed report on the proposed Legislation. The report can be longer than the bill itself, and presents the Committee’s (the ‘House’) reasons for recommending the bill. The Internal Revenue Service and the courts may use this Committee report as an interpretation of the legislation. Once the bill and the report are completed, they get introduced in the House of Representatives for consideration

The [Senate Finance] Committee begins its formal work on the legislation after the House has passed its version of the bill. It holds hearings similar to those held earlier by the House Ways and Means Committee. Instead of considering the tax proposals made by the [the President] Administration, however, it considers the bill passed by the House.

Witnesses appear at the Committee hearings in the same order as in the Ways and Means Committee. They direct their testimony to the House version of the bill.

After the hearings are finished, the (Senate Finance) Committee marks up the House bill, similar to the markup by the Ways and Means Committee (the House). When the (Senate Finance) Committee completes its markup, the bill is usually very different from the one passed by the House. It then gets reported to the full Senate for floor action.

A report gets filed along with the bill. The report explains in detail the amendments made by the (Senate) Finance Committee.

The entire Senate debates the bill as reported by the Committee. During the debate, the Senators may further amend the bill before they bring it to a vote.

If the Senate passes the House version of the bill, without amendments, it gets sent directly to the President.”

– Resource Center. “Writing and Enacting Tax Legislation.” Taxes, U.S. Department of the Treasury, 5 Dec. 2010, 10:28am, www.treasury.gov/resource-center/faqs/Taxes/Pages/writing.aspx.

Passport may be Revoked if you have Tax Issues

There was a law passed, sometime ago now, that allows your tax issues to affect your international travel plans.

The Internal Revenue Service is set to enforce the directives beginning January of 2018.

Under this law, governed by Internal Revenue Code Section 7345, the IRS will notify the State Department to revoke your current passport and/or deny passport applications due to ‘certain’ tax delinquencies.

The law also gives the IRS discretionary enforcement options.

The State Department generally will not issue a passport to you after receiving certification from the IRS.

What does this mean for your current or future travel plans?

If you already have a U.S. passport, you can use your passport until you are notified by the State Department that it has been revoked.

What if I need my passport to keep my job?

You must fully pay the balance, or make an alternative payment arrangement to have your certification reversed.

How will I know if my passport is revoked?

The IRS will send written notice by regular mail to your last known address.  This is usually the address provided on your last filed tax return.

However, Taxpayer Advocate Service has identified cases in which taxpayers affected are not receiving proper written notification of revocation status.

“The passport language in the broader [Collection Due Process] notice is delivered at a time when the taxpayer is focusing on resolution of the debt and claiming [Collection Due Process] rights – thus the language is buried among the other information and may not constitute effective notice.’ – National Taxpayer Advocate. (2017, July 7). The IRS’s New Passport Program: Why Notice to Taxpayers Matters (Part 1 of 2). Retrieved November 07, 2017, from https://taxpayeradvocate.irs.gov/news/the-irs-s-new-passport-program-why-notice-to-taxpayers-matters-part-1-of-2


What if I satisfied or ‘settled’ my tax debt?

The IRS will make this reversal within 30 days and provide notification to the State Department as soon as practical.

Because revocation will not be reversed automatically, there are cases in which an application of reversal may be required.  You should receive a written notice of reversal in the mail.

Contact your tax professional to determine actions appropriate to ‘settle’ your seriously delinquent tax debt.

Once you ‘settle’ your tax debt or make appropriate arrangements, there are remedies to reverse the delinquent status with the State Department and remove restrictions for your passport.

You may contact the State Department at the National Passport Information Center to verify if your passport status: 1.877.487.2778.

If you have tax issues – obtaining representative may be crucial.  Review our blog on benefits of tax representation.

Read more: https://www.irs.gov/businesses/small-businesses-self-employed/revocation-or-denial-of-passport-in-case-of-certain-unpaid-taxes

Use your Tax Refund to Buy Savings Bonds

Did you know you could purchase Savings Bonds with your Tax Refund?

The option to purchase savings bonds via tax refund, for yourself or another person became available in 2010.

This is a great gift to your children, grandchildren, nieces or nephews.  The bonds will be mailed to your address with the beneficiary’s name on the bond.

Do I have to use all of my refund to purchase bonds?

  • You can use all or part of your tax refund to purchase I bonds.
  • Your request for bonds must be in increments of $50.
  • Any remaining refund amount not used to purchase bonds will be mailed to you as a paper check or you may elect to have the remaining amount directly deposited into a checking or savings account.

Can I buy savings bonds for a child, grandchild or someone else using this tax refund method?

  • Yes. You can use your refund to buy savings bonds and designate ownership or co-ownership for someone else, such as a child, grandchild or anyone, or elect a beneficiary using form 8888.

If you are a client and interested in purchasing Savings Bonds this upcoming tax season, let us know or contact our office at 508.203.1676.

  1. https://www.irs.gov/refunds/using-your-income-tax-refund-to-save-by-buying-us-savings-bonds
  2. https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm


Taxpayer learns a lesson: Deductions Disallowed

When selecting a licensed professional to handle your tax filings and issues, make sure their area of focus has or is in taxation.

Larry bird’s business partner, Christopher Cooke, learned this lesson the hard way.

When attempting to take deductions for a property used as a Bed & Breakfast, his response, upon examination, to the Tax Court was that he relied on the advice of his CPA.  The Tax Court determined that his deductions would be disallowed and subject to accuracy related penalties.

“[Mr. Cooke] offered no evidence of the CPA’s competence as a tax professional or that he provided the CPA with all the necessary and accurate information required to provide proper advice. Thus, the Tax Court found that he was liable for the penalties.”  –  Howard, Beth. “Deductions Disallowed for Operator of Larry Bird’s Former House as a B&B.” Tax Matters, Journal of Accountancy, 1 Aug. 2017, www.journalofaccountancy.com/issues/2017/aug/operating-deductions-disallowed-larry-bird-former-house.

When seeking advice, ensure you are dealing with a licensed tax professional.

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What is an Enrolled Agent (EA)?

An Enrolled Agent (EA) is a tax expert that can handle the same issues as a Certified Public Accountant (CPA) or Tax Attorney, when it comes to representation before the Internal Revenue Service (IRS).

“EA’s tend to focus on preparing taxes, and many specialize in tax resolution.  An EA is authorized by the U.S. Department of the Treasury to represent taxpayers before the IRS for audits, collections, and appeals.” – Kulp, Kayleigh. “EA vs. CPA: Which is Right for You?” Fox Business. Fox Business, 26 Mar. 2012. Web. 6 July 2017.

While a CPA may perform many accounting and financial services, some may not specialize in taxation.

An Enrolled Agent is a federally authorized tax practitioner who may also handle many state tax issues with a duly authorized Power of Attorney.  See our blog on “Why do I need a Power of Attorney?”

Like CPAs, Enrolled Agents must maintain a certain number of hours of continuing education to maintain their license.

There are factors to consider when determining which licensed tax professional to hire.


To learn more about my professional credential, as an EA, and experiences select the link below.

Shanikwa Davis, EA, MST

Principal Owner @ S. Davis Tax Consultants

Are you married and don’t want to file a joint return with your spouse?

Did your spouse underreport or exclude income from a return and you are now under review?  Is the assessed liability due to your spouse’s income or lack of withholding?

You may be eligible for innocent spouse relief, separation of liability or equitable relief of tax, interest and penalties related to your federal tax liability.

There are conditions that must be met to qualify for any of the options.  Several factors are considered to determine if it is unfair to hold you responsible for the full understatement or underpayment of tax.

Does your spouse owe a past due such as child support, federal or state tax or federal non-tax obligation?  Worried about your income tax refund being applied to that obligation? 

If you are not required to pay some of your spouse’s past due amounts, you may be eligible for relief.  The non-obligated spouse may submit an injured spouse claim and allocation request.

Why would I file a return with my spouse and submit one of the above relief requests, instead of filing separately?

  • Many credits available are disallowed when you file a separate return. Electing ‘married filing separately’ status will result in loss of credit for dependent care, earned income credit and the education credit and deductions. Certain other credits are reduced to half.

Why would I file a return with my spouse and submit one of the above relief requests, instead of filing as head of household?

  • To be eligible for head of household status, you must be unmarried or ‘considered unmarried’ on the last day of the year. You may contact our office to determine if you are considered unmarried.
  • If you are married and not considered unmarried, you CAN NOT elect Head of Household filing status.

Publication 971 provides additional information and helpful charts at the end of the publication.

If you would like to file or determine eligibility of relief, you may contact our office at 508.203.1676.


Shanikwa Davis, EA, MST

Principal Owner @ S. Davis Tax Consultants