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Office of the Assistant Secretary of the Treasury (Tax Policy)

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Open Recommendations (1 total)

Tax Cuts and Jobs Act: Considerable Progress Made Implementing Business Provisions, but IRS Faces Administrative and Compliance Challenges

GAO-20-103
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1 Open Recommendations
1 Priority
Agency Affected Recommendation Status
Office of the Assistant Secretary of the Treasury (Tax Policy)
Priority Rec.
The Assistant Secretary of Tax Policy should update Treasury's internal guidance to ensure that Treasury's regulatory impact analyses include examination of the distributional effects of revenue changes when regulations influence tax liability. (Recommendation 5)
Open
Treasury disagreed with this recommendation. In September 2023, Treasury officials said Treasury applies a facts-and-circumstances approach to identifying instances when economic analysis is appropriate. We maintain that decisions Treasury and IRS made when developing regulations to implement the Tax Cuts and Jobs Act could potentially impact tax liability by billions of dollars per year, thereby warranting economic analysis. As of March 2024, Treasury officials stated that they generally do not agree with conducting distributional analysis of tax regulations and do not plan to address this recommendation. To fully implement this recommendation, Treasury needs to update its internal guidance for conducting impact analyses to include examination of distributional effects of revenue changes when regulations influence tax liability. By excluding analyses of distributional effects due to changes in tax liability, including effects on tax revenue collection, Treasury and IRS risk making regulatory decisions that have significant economic effects without fully understanding the consequences of their decisions.
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