When I say the Wild Wild West, what thoughts come to mind – Billy the Kid and Doc Holliday? A time in American culture where the quickest guns make the rules? Where you can order a whiskey at your local saloon and then jump on your horse and ride off in to the sunset with no worries? Oh, the good ol’ days of the Wild West.
What would you say if I told you those days may be coming back sooner than we think? Maybe April 15, 2019! Why? Because of our new tax law, The Tax Cuts and Jobs Act (TCJA), which passed December 2017. This change was huge. It changed the rules for everything and everyone affected by the Internal Revenue Code: individuals; corporations, large and small; estates; gifts; trusts; international; and even the states got into the act.
I tried to describe this situation from the perspective of a CPA to a friend of mine this way: Imagine a doctor leaving work on Friday knowing certain medications cure certain ailments and a specific surgery can fix other conditions. Then he shows up to work on Monday and the entire human body has changed, so the medicine that worked Friday does not work anymore.
And not only that but the ailment does not even exist any longer, so the medicine is useless. Instead we have these brand-new ailments that are popping up all over the place and you need to cure them now with medicine that does not exist yet. Don’t get me wrong; I am not complaining, as this is the profession that I chose, and I really like what I do. But there’s no denying that the TCJA has thrown CPAs and tax advisors a serious curveball.
Of course, it’s important to remember that the TCJA was not the only major tax change to hit in 2018. A few notable others include:
- Many states, including my state of Georgia, have enacted changes to their tax laws to work with the TCJA.
- The Supreme Court also got into the act with their decision on Wayfair to allow economic nexus. What is that, you ask? Well in a nutshell, it gives states the power to assess sales tax on companies that are not physically in the state but have a certain number of sales or a certain dollar amount of sales in their respective state. What it means is that for a lot of the previously untaxed online purchases you make, you probably will start paying sales tax. Most of you probably already saw this when you purchased something on cyber Monday.
- Then the IRS tried to help. It has been coming out with many proposed rules and regulations to help tax professionals with answers to the questions that the TJCA created. Some of these are 184 pages of thrilling reading, and there is even one about nine pages long just on the definition of a meal.
As Americans it is our inherent nature to take a mile when someone gives us an inch; we can look no further than our tax code to see that principle taken to extremes. The prior code had a lot of black and white in it and we still managed to make it gray. Now imagine what we can do when Congress gives us gray to begin with! As the new tax law currently stands there are more unanswered questions than answers, but we still must comply with the laws to the best of our ability and make the best decisions we can.
So instead of Billy the Kid and Doc Holliday, we have Democrats and Republicans; instead of the quickest gun setting the rules, we have the IRS and the Supreme Court trying to make sense of the laws; and instead of getting a shot of whiskey and riding our horses in to the sunset, we just get our whiskey and ask Uber to take us far away.