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April 16, 2018

Karen Kraushaar, Director of Communications
(202) 622-6500

Tax Cuts and Jobs Act: Assessment of Implementation Planning Efforts

WASHINGTON – The Treasury Inspector General for Tax Administration (TIGTA) today released its audit report of the Internal Revenue Service's (IRS) efforts in implementing the Tax Cuts and Jobs Act of 2017.

The Act makes significant changes to the tax code affecting individuals, businesses, and tax-exempt organizations. It also contains 119 new provisions that are administered by the IRS and affect both domestic and international taxes. The Joint Committee on Taxation estimates a net reduction in tax of almost $1.5 trillion over Fiscal Years 2018 through 2027 under this law.

TIGTA's new report concludes that the IRS's Legislative Affairs function monitored the pending legislation to identify provisions that would affect the IRS and informed the various IRS operating divisions so they could begin to assess how to handle the implementation. Once the law was enacted, the IRS immediately began the task of implementing the new provisions. In addition, the IRS established a multifaceted oversight structure to coordinate implementation activities among the various IRS operating divisions. This included creating an Executive Steering Committee led by the Acting IRS Commissioner, the Tax Reform Implementation Office, and the Tax Reform Implementation Council. The IRS worked with the Department of the Treasury and estimated that implementation of the Act would cost approximately $397 million. This includes hiring an estimated 1,734 full time equivalent positions to implement tax reform over the next two calendar years.

The IRS also took adequate steps to develop the new tax withholding tables. The Tax Cuts and Jobs Act included a provision that made significant changes to income tax rates, income tax deductions and credits, and Federal income tax withholding. The IRS, in conjunction with the Department of the Treasury, designed the Tax Year 2018 withholding table to work with an employee's existing Form W-4. The IRS also updated its online withholding calculator to work with the revised tax tables to provide taxpayers with the ability to estimate their tax liability and withholding under the Tax Cuts and Jobs Act. The calculator also provides taxpayers with a suggestion as to the number of withholding allowances they should claim for the remainder of Tax Year 2018.

This audit report was prepared only for the purpose of providing information; therefore, no recommendations were made in this report.

Read the report.